Monday September 13, 2004

MM Focus: Cigarettes prices to go up by RM1.10
per pack today

Smokers can expect to pay RM6.50 for a 20-stick pack of premium brand cigarettes from today. The retail price increase of RM1.10 per pack, or about 20 per cent, is by far the highest ever, implemented by tobacco companies following the Government’s decision to raise excise duty by a record 40 per cent under the 2005 Budget proposals announced last Friday.
Prime Minister Datuk Seri Abdullah Ahmad Badawi said when tabling the Budget that the increase in excise duty on cigarettes from RM58 to RM81 per 1,000 sticks, along with the increase in excise duty on liquor, was aimed at promoting a healthy lifestyle.
Tobacco companies had last raised the price of their 20-stick pack of premium brand cigarettes by eight per cent or 40 sen to RM5.40 in September last year.
Price was raised by nine per cent or 40 sen per pack to RM5 in October 2001, after only 12 months earlier it was increased by 7 per cent or 30 sen to RM4.60.
From today, prices for the medium (14 sticks) and small (10 sticks) will rise to RM4.70 and RM3.60 respectively. These represent increases of 80 sen and 60 sen respectively.
Shop outlets contacted last night confirmed the higher prices from today.
Bloomberg quoted AmSecurities Sdn Bhd head of research Gan Kim Khoon as saying that the higher prices should lead to a drop in sale volumes in the next couple of months before consumption patterns were readjusted.
The cigarette industry had warned that higher duties might result in an increase in demand for smuggled and contraband cigarettes.
“Consumers who cannot afford to pay the higher prices will be encouraged to settle for cheaper illegal products,” said British American Tobacco (M) Bhd managing director Andrew Gray.
“This is likely to defeat the effort invested so far in combating the illegal cigarette market.”
BAT is the largest cigarette manufacturer in Malaysia and controls about 67 per cent of the local market.
The illegal cigarette market is estimated to cost the Government RM1.3 billion in lost revenue.

Parent site: "Focus on Malaysia"