Black Market Hurts Local Businesses

Stop criminal encroachment to help support and encourage local businesses.

 

2020 has been one of the most difficult years for SMEs and local businesses, but the black market is making it even harder.

Malaysian businesses, whether it is a coffee shop, restaurant or clothing store, have had to struggle through a COVID-19 pandemic and MCO restrictions. Many business owners have had to temporarily or permanently shut their doors – meaning jobs and livelihoods have been put at risk. [1]

As a result of the economic shock, many businesses have had to rely on the stimulus plans in order to survive.
But it has all been made worse by the unfair advantage the black market has, which is hurting SMEs and local businesses every day through their illegal activities.

Black market products, often sourced from outside Malaysia and smuggled through various entry points, undercut Malaysian businesses. Local businesses unable to compete with criminal gangs selling their illegal products on the black market.

The damage caused to legitimate businesses is huge, preventing growth and stealing away profits. It is taking RM300bn out of Malaysia’s economy in uncollected taxes every year – equivalent to RM82 million every day. [2] This is money that could be used to help build businesses back up and recover from COVID-19.

 

But instead, these billions are going towards the pockets of criminal gangs.

The presence of a large black market deters the development of legitimate economic and business growth, meaning workers and businesses owners are left behind. [3]

Illegal trade also props up further illegal activity, corruption and discourages legitimate business operations and international investment. [4] This means it is not just the businesses of today that will suffer, but also the businesses of tomorrow.

One example of the black market undercutting legitimate businesses and cheating the system was during the MCO. Legitimate businesses were forced to close or adapt to the MCO restrictions, but the black market and illicit traders exploited this opportunity and ramped up their activities. This led to an unfair playing field for registered tax paying businesses, and meant they could not compete with cheaper, illegal products being sold. [5]

In the case of illicit tobacco, demand for illicit cigarettes increased during the MCO period as legitimate manufacturers were not even allowed to distribute items like cigarettes.

But with the restrictions in Malaysia now easing, the black market has continued to undercut and hurt Malaysian businesses.
This cannot be allowed to continue. Let’s help to stop the black market.

 

[1] Malay Mail, ‘Still reeling from MCO, coffee shops struggle to keep their businesses afloat amid Covid-19 fears’, 2 July 2020.

[2] The Sun Daily, ‘Tackle black market to help jump-start economy’, 8 May 2020.

[3] Focus Malaysia, ‘Shadow economy – why does it matter?’, 16 March 2020.

[4] Oxford Economics, The Economics of the Illicit Tobacco Trade in Malaysia. 2019.

[5] Free Malaysia Today, ‘MCO a boon to illicit cigarette trade, say business groups’, 22 April 2020.