THE proposed excise tax on all cigarette and tobacco products at duty-free areas will cause a negative multiplier effect on the Malaysian economy, said one of the largest duty-free retailing groups in Malaysia The ZON Duty Free (The ZON).
According to The ZON director Ong Bok Siong, the plan may end up discouraging tourists to visit the to-be semi duty-free zones, which will ultimately threaten jobs as well as de-incentivise foreign and local investments into said areas.
“Like us, duty-free retailers are already struggling very hard to cope with the severe drop in tourism and travel activities. Now is the wrong time to impose excise duty on cigarette and tobacco products in duty-free areas as the products are very popular among both international and domestic travellers, forming a significant part of the retailers’ revenue,” he explained.
Citing data from market research firm Globaldata, Ong stated that duty-free sales are expected to decrease by US$29.4 bil in the Asia Pacific region this year.
Moreover, Ong also expects consumer spending to be conservative in the near future.
“If the industry’s revenue stream is pressures even further amidst this bleak outlook, some duty-free retailers may be forced to reduce its workforce or close altogether. Surely this outcome is misaligned with the Government’s aim to reinvigorate the economy that has been hurt by the crisis,” he said.
“We urge the Government to abandon the intention to tax duty-free cigarettes as the focus now should be to assist businesses to get back on their feet so they can bring a positive contribution to rebuild the economy,” he added. – Nov 20, 2020
