KUALA LUMPUR, 30 Sept 2013 – British American Tobacco Malaysia is shocked over the increase of tobacco excise by an excessive 14%, a move that the industry has cautioned will play directly into the hands of criminal syndicates of illegal cigarettes trade.
This comes in the wake of tense economic pressures already set by the recent fuel price hike and inflation, which have put considerable stress on disposable income and exacerbated the rising cost of living.
Commenting on the excise increase, Stefano Clini, Managing Director of British American Tobacco Malaysia said, “This announcement is indeed shocking and disappointing. The industry is not opposed to excise increases and has always advocated for a moderate and gradual approach, precisely to avoid the current situation of a sudden and huge excise hit after 2 years of no excise increases. Such a move will exacerbate the already high levels of illegal cigarettes in Malaysia and dampen all efforts that have been taken thus far to address this national scourge.”
British American Tobacco Malaysia has since announced an increase on the prices of all its cigarette brands effective 30 September 2013. The Company’s pricing decision took into account the loss of legal volumes due to illegal cigarettes, consequential loss of industry’s and retailers’ margins and ongoing inflationary pressure.
“We have been operating at optimal cost efficiency and increased our export volumes by expanding contract manufacturing over recent years to sustain returns to investors. In spite of these measures, we will be hard pressed to counteract our loss of returns due to volumes lost to illegal cigarettes and this drastic excise increase will further compound our losses. As such, it has left us with no choice but to take a significant price increase.” Clini added.
The illegal cigarette trade will now be given second wind to surge ahead to the detriment of legal volumes, as the price shock will drive consumers to switch to cheaper and wide available illegal alternatives. In fact, a far more sustainable method to increase Government revenue than increasing taxes drastically would be to give top priority to tackling the illegal cigarette trade. There is approximately RM2 billion in revenue out there that is lost to illegal cigarettes. Hopefully the
Government will enhance its enforcement efforts and seriously consider deploying more deterrent laws such as mandatory imprisonment for dealing in illegal cigarettes, to curb the growth of this national scourge.
For more information on British American Tobacco Malaysia, please visit www.batmalaysia.com
About British American Tobacco (Malaysia) Berhad
British American Tobacco (Malaysia) Berhad (British American Tobacco Malaysia) emerged on 3rd November 1999 from the merger of Rothmans of Pall Mall (Malaysia) Berhad and Malaysian Tobacco Company Berhad. These two long established tobacco companies brought with the merger, experience and an unrivalled portfolio of highly successful international brands to create the largest tobacco company in the country.
British American Tobacco Malaysia manufactures and markets high quality tobacco products designed to meet diverse consumer preferences. Its brand portfolio includes well-established international names like DUNHILL, KENT, PALL MALL and PETER STUYVESANT. British American Tobacco Malaysia has about 1,000 employees who are involved in the full spectrum of the tobacco industry, from leaf buying and processing to manufacturing, marketing and distribution.
British American Tobacco Malaysia is part of the British American Tobacco group, which is the world’s most international tobacco group and the second largest stock market listed tobacco group by global market share.
For more information, please contact British American Tobacco Malaysia:
Mr Chin Tuck Weng, Senior Corporate Affairs Manager at 03-7491 7318 or Chin_Tuck_Weng@bat.com
Ms Maxine Lim, Corporate Affairs Manager at 03-7491 7539 or Maxine_Lim_Jen_Ai@bat.com