Ken Research announced recent publication on, “Cigarettes in Malaysia 2017“. Report gives a detailed understanding of consumption to align your sales and marketing efforts with the latest trends in the market. Identify the areas of growth and opportunities, which will aid effective marketing planning. The differing growth rates in regional product sales drive fundamental shifts in the market. This report provides detailed, authoritative data on this changes-prime intelligence for marketers. Understand the market dynamics and essential data to benchmark your position and to identify where to compete in the future.
The market for cigarettes in Malaysia has experienced contrasting trends in recent years. Recently the legitimate market has suffered badly from a series of price and tax increases, culminating in a combination of tax rises and a crackdown on black market activities. Malaysia is a production centre of choice for BAT, PMI and JTI to service other South East Asian regional markets, although output fell by around a third in 2013 to 17.87 billion pieces and was 16.33 billion pieces in 2015. Imports have not historically been very significant, although officially reported volumes appear unreliable. There are no signs that the industry expects a substantial reduction in black market levels in the short term as price is such an important factor for the vast majority of consumers.
Cigarette consumption in Malaysia has fluctuated since 1990 although more recently been in sharp decline. A 9.7% fall in 2009, a 1.9% drop in 2010 and a 2.3% fall in 2011 were a result of rises in excise duty and increased non-duty paid sales. Although volumes were up by 2.7% in 2012, this was in anticipation of another tax hike at the beginning of 2013. The impact of this rise was to reduce sales by 16.2% to 12.18 billion pieces with another tax-inspired fall of 13.3% to 10.56 billion pieces in 2014. Sales are set to decline again in 2015.
For the coming Budget 2017, Malaysian government can seriously consider a proposal to raise the tobacco tax and tobacco-based products like cigarette prices drastically if they are really serious about curbing the smoking habit among the public which are now been becoming a plague in our society and starting to influence our youth as well. This is because using price and tax measures to reduce the demand for tobacco and its based products like cigarette can be seen as one of the most effective ways to reduce cigarette consumption among smokers and deter potential smokers. This measure has also been recognised by a few tobacco control experts and the parties in the World Health Organization Framework Convention on Tobacco Control, of which Malaysia is a party since September, 2005.
The WHO-FCTC is a treaty adopted by the 56th World Health Assembly on May 21, 2003. The FCTC is a supranational agreement that seeks “to protect present and future generations from the devastating health, social, environmental and economic consequences of tobacco consumption and exposure to tobacco smoke” by enacting a set of universal standards stating the dangers of tobacco and limiting its use in all forms worldwide. Since smoking has been regarded by many as a cause of many preventable illness and could even lead to premature death, there have been many efforts carried out by the government to control and curb the cigarette selling and smoking habit among the public. This is done by strengthening the existing legislations as well as through education in schools and initiating awareness campaigns over the danger of smoking. Such efforts have been done for the last many years.
There have been small efforts on the part of the government through the Health Ministry in increasing the price of cigarette but this is not enough to deter the heavy and addicted smoker from purchasing the item. There also has been a proposal put forward by the government to extend the smoking-prohibited zones in the country involving public areas and air-conditioned eating areas. The government’s ongoing efforts to control as well as creating awareness amongst the public on the issue regarding cigarettes should be praised by all. However, for the coming Budget 2017, another bold step should and must be taken by the government namely by increasing the tax on tobacco as well as the cigarettes prices as part of the effort to deal with the ongoing problem. Cigarettes duties have been increased in every budget for the past five years. Last year’s 50c increase was the largest increase in 12 years and the government has now repeated that increase. The previous increases were 40c in 2015, 10c in 2014 and 2013, and 25c in 2012. The hike is the only tax increase in Budget 2017, Minister for Finance Michael Noonan said today. It means that there are no excise duty increases in the other traditional ‘old reliable’ of alcohol or petrol. There will also be a pro-rata increase in other tobacco products, such as pouches of rolling tobacco.
Topics Covered in the Report
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Ankur Gupta, Head Marketing & Communications