Customs fraud cost Malaysia $823m

Loss over three years largely due to falsified documents that do not declare taxable items

PETALING JAYA • Malaysia has lost over RM2.5 billion (S$823 million) in revenue to customs fraud over the last three years.

This was largely due to freight forwarders falsifying documents, said the Customs Department, where shipments containing taxable items were declared to be other products.

A total of RM1.06 billion in taxes and duties has gone uncollected this year alone, with goods worth RM731 million smuggled into the country, said Customs director-general Subromaniam Tholasy on Wednesday.

The country's top three smuggling hot spots are Port Klang in Selangor; Bukit Kayu Hitam, a border town in northern state Kedah; and Sibu, Sarawak.

In 2015, the value of smuggled goods seized throughout Malaysia by Customs was RM416 million, rising to RM447 million last year.

Taxes and duties "lost" totalled RM854 million last year, up from RM635 million in 2015.

  • $350m

    The equivalent to RM1.06 billion, the total amount of taxes and duties that has gone uncollected this year alone, with goods worth RM731 million smuggled into Malaysia, said Customs director-general Subromaniam Tholasy.

Earlier on Wednesday, Datuk Seri Subromaniam told a press conference in Sibu that 20 forwarding agents nationwide may have their licences revoked next year for their alleged involvement in smuggling.

He warned forwarding agents that they could not claim ignorance about the content of containers rented by clients.

"They must bear responsibility. As forwarding agents, they should know who the importers are and what they are bringing into the country," he said.

"They should not just 'wash their hands of the issue' and claim they did not know the items imported."

There are more than 3,000 forwarding agents in Malaysia and the department has stopped issuing new permits since 2006.

In Sibu and Sarikei, the department foiled attempts to smuggle goods worth RM27 million with a tax value of RM6 million between October and this month.

These included items such as fireworks, cigarettes and beer from China, which had been declared as furniture and other goods. Mr Subromaniam said action would be taken against the three forwarding agents involved in that case.

"This includes suspending their licence indefinitely and revoking it later if they are convicted under section 114 of the Customs Act 1967," he said.

According to Mr Subromaniam, a first-time offender convicted of smuggling is liable to a fine of not less than 10 times and not more than 20 times the value of the goods smuggled or three years' imprisonment, or both.

For the second and subsequent offence, the penalty is a fine of not less than 20 times and not more than 40 times the value of the goods or a jail sentence of not more than five years, or both, if convicted.


A version of this article appeared in the print edition of The Straits Times on December 29, 2017, with the headline 'Customs fraud cost Malaysia $823m'. Subscribe