Malaysia: Government must use tax measures to protect public health — Southeast Asia Tobacco Control Alliance

9 September 2020


I am responding to the article highlighting BAT Malaysia’s survey on tobacco black market in Malaysia published in the Malay Mail on 3 September 2020. According to this survey two thirds of the Malaysians believe high tobacco pries is the cause of black market and want the government to take action.

This industry led conclusion inevitably points to just one recommendation to the government — not to increase tax in the next budget. This has been the oft-repeated mantra of the tobacco industry throughout the year.

This survey conveniently feeds into the tobacco industry’s narrative that tax increase worsens smuggling. In actual fact there has been no tax increase on tobacco for the past five years in Malaysia. Is it the high prices that is causing the smuggling problem?

These past months, as in past years, the tobacco industry has been running a well-coordinated campaign to dissuade the government from increasing tobacco tax. Its main argument remains the same — tax increase will lead to more smuggling and that Malaysia is already at crisis situation.

Other tobacco companies too have been making similar statements that the government is losing revenue due to smuggling and oppose tax increases.

In reality an effective way to help government curb losses is to reduce the huge medical bill on tobacco related diseases which far outweighs what the government may earn in taxes.

According to the World Bank, taxes and prices have only a limited impact on the illicit cigarette market. In fact, in some lower income countries, where cigarette taxes and prices are low, have higher levels of cigarette smuggling than higher income countries with high taxes and prices.

Neighbouring countries, such as Indonesia, Thailand, and Philippines, have raised taxes to reduce tobacco use.

The tobacco industry claims to be concerned about people’s job security and income stability amid the on-going Covid-19 crisis. If this is true, stopping smoking, a harmful, wasteful activity which makes smokers more vulnerable to risks during the pandemic, is vital. Tax increase on tobacco and higher cigarette prices will help citizens quit smoking.

In Australia, smokers cited expensive cigarettes as their top reason for quitting and social isolation during the pandemic has further motivated smokers to quit. This September, while still facing the pandemic, Australia has again increase cigarette tax rates by 12.5 per cent, raising prices to about A$40 per pack.

Although tobacco use kills 20,000 Malaysians every year, the tobacco industry is persuading the government to safeguard its business by not increasing tax and forgo the opportunity to help five million Malaysian smokers quit.

Meanwhile last month, BAT Malaysia launched a new brand of cheap cigarettes, priced at only RM11.50 per pack, which is clearly aimed at youth and low wage earners.

BAT Malaysia “Stop the Black Market” campaign is premised on high smuggling rates in Malaysia based on a 2019 Oxford Economics study (also commissioned by BAT) that has been exposed for its flawed methodology.

Over the years, BAT Malaysia has launched similar short-lived campaigns against illicit cigarettes that are timed just when the government is mulling a tax increase and dissipate afterwards.

The Malaysian government should not give in to the tobacco industry’s tactics yet again and miss out on proven measure to help Malaysians quit smoking. Tax increase is effective to help people quit tobacco use.

Sophapan Ratanachena-McWhortor is Tobacco Tax Program Manager Southeast Asia Tobacco Control Alliance (Seatca)

This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.


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