JOHOR BARU, MALAYSIA: Cigarette production dropped by 20% in the last five years due to massive smuggling.

"About four to five years ago we were producing 20 billion sticks yearly but now, it has dropped to 15 billion sticks," Confederation of Malaysian Tobacco Manufacturers chief executive Shaik Abbas Ibrahim said.

He said local production also dipped due to the cheap availability of contraband cigarettes.

"The illegal cigarettes are sold for RM10 for three packets," he told reporters after witnessing the destruction of RM8mil worth of cigarettes at the Customs headquarters in Larkin yesterday.

Unpaid duty and taxes on the cigarettes, seized between December 2004 and July 2008, were about RM8mil.

Shaik Abbas said the confederation had launched an anti-illicit trade in tobacco products campaign in April and were concentrating on Felda areas because they were among the biggest markets for illegal cigarettes.

Customs director-general Datuk Ibrahim Jaapar said the smuggled cigarettes from neighbouring countries were shredded and disposed of at landfills.

Ibrahim said that smuggling activities caused substantial tax revenue loss to the economy.

"The perpetrators were caught and issued with fines but we are unable to get the masterminds of the syndicates," he said.