AS Budget 2022 beckons, British American Tobacco (M) Bhd (BAT Malaysia) has urged the Government to include further measures to clamp down on the tobacco black market through enhanced enforcement initiatives.
Additionally, the only listed cigarette manufacturer on Bursa Malaysia also requested the Government to maintain tobacco excise by not further increasing the price gap between legal products and those in the black market.
On the same note, BAT Malaysia said there is a need to introduce a risk proportionate taxation and regulatory framework for reduced-risk products such as nicotine vapour.
Applauding the Government’s Budget 2021 enforcement measures to fight the tobacco black market, BAT Malaysia managing director Nedal Salem said results of these preliminary measures can be seen through the Nielsen’s Illicit Cigarettes Study in Malaysia May 2021 where the incidence of illegal cigarettes has decreased by 5.9% to 57.9% in May 2021 from 63.8% in 2020.
“However, criminal syndicates are now circumventing these enforcement efforts by smuggling through coastal routes, utilising private jetties and unofficial landing spots along Malaysia’s long coastline,” he lamented.
“Media reports show that the Marine Police has seized more than RM220 mil of smuggled items from January to June 2021 compared to RM55.75 mil for the same period last year. More than 70% of these were illegal cigarettes and liquor followed by drugs.”
In the upcoming Budget 2022, Salem urged the Government to enhance enforcement at weak spots around coastal areas while maintaining the current stay on tobacco excise to address the price gap between the legal and black markets.
“Given the affordability pressures brought on by COVID-19, a wider price gap would certainly increase the demand for illegal cigarettes and the lucrativeness of smuggling,” he justified.
Within its key focus of reducing the health impact of its business, BAT Malaysia also called for the establishment of risk proportionate regulation and taxation for reduced-risk products such as nicotine vapour.
“Currently, there are more than one million vape users in Malaysia using unregulated products. It is important for regulations to be introduced to ensure vape users have access to products that are regulated and compliant to quality and safety standards,” noted Salem.
“Taxation and regulations also need to be evidence-based by taking account of the reduced-risk nature of these products but does not treat them in the same way as conventional cigarettes. This will then give consumers access to scientifically substantiated, reduced-risk alternatives.”
At the close of trading today, BAT Malaysia was up 4 sen or 0.28% to RM14.54 with 162,500 shares traded, thus valuing the company at RM4.15 bil. – Oct 20, 2021
