‘Illicit cigarettes to outsell legal ones’

Malaysia’s tobacco manufacturers have asked the government to suspend any further excise duty increase to allow the market to stabilize, reports The Star.

In a statement on Friday, the Confederation of Malaysian Tobacco Manufacturers (CMTM) said the industry was facing a major crisis following an excise increase of 40 percent in November.

“Legal industry volumes have been severely impacted, registering a significant decline by approximately 30 percent post the unprecedented excise increase,” it said. “This would mean that excise revenue collection would be considerably lower than before November 2015.”

CMTM said the excise increases, combined with a challenging economic environment and weak consumer sentiment had caused illicit sales to skyrocket. According to Nielsen, Illegal cigarettes now account 45.6 percent of the market.

“This essentially means that almost one out of every two packs sold in Malaysia is illegal,” CMTM said, adding that the illegal segment was anticipated to overtake the legal segment in Malaysia soon.

CMTM said the excise increase had disrupted the progress that Customs had made in its fight against illegal cigarettes.