20/09/2012

Tobacco and alcohol companies want the Government to maintain excise duties

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British Tobacco (M) Bhd (BAT) managing director William Toh said BAT Malaysia-Market factors to watch on Sept 20 (Thursday)
was appreciative of the decision taken in the last budget to not increase
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the cigarette excise duty and hoped that the Government would consider
the positive and encouraging impact of its decision last year. Analysis: Rare earth prices to erode; what are rare earths

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In an email reply, he pointed out that “results of the latest illegal
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cigarettes study from March to May 2012 commissioned by the
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Confederation of Malaysia Tobacco Manufacturers have shown a
promising 2.6% drop in illegal cigarette trade incidence from 37.3% to Genting HK still interested in Australia's Echo
34.7%”.

“We are not against excise increases but we have always maintained
that any increase should be moderate and gradual to ensure the illegal
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cigarette situation is not exacerbated,” Toh said.
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He added that “drastic tax increases will only negatively impact the room to climb
legitimate tax-paying industry (without promising) an overall positive Analysis: Rare earth prices to erode; what are rare earths
impact on Government revenues nor the health agenda”.
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He said that such a move would only benefit the smugglers. AirAsia keen on Philippines' Zest Airways?

Malaysia-Market factors to watch on Sept 20 (Thursday)

Toh believed that moderate excise tax policy and enhanced enforcement
efforts like maximum penalties against those caught manufacturing, Astro TV locks in cornerstones for IPO

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20/09/2012
Tobacco and alcohol companies want the Government to maintain excise duties
transporting and selling illegal cigarettes made part of an effective long Report: Aeon in talks to buy Carrefour’s M’sian ops
term strategy to curb illicit cigarette trade “as the gains derived far Court case of high-flyer corporate lawyer begins
outweigh penalties imposed when illegal operators are caught”.
Gabungan AQRS slips, ignores RM303m MRT contract

Philip Morris (M) Sdn Bhd corporate affairs director Richard James also KLCI falls more than 7pts in early trade
commended the Government for maintaining the excise duty and that
“enforcement efforts that have seen progress on the illicit cigarette
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front”.
Unfortunately, there aren't any positions in this field.
“We hope these early positive signs can be consolidated with a Please check back soon!

moderate approach to cigarette excise in the upcoming budget,” he said.

“Experience has shown that large tax increases shock consumers into
the illicit trade, as well as undermine government revenue and
enforcement efforts.

“We are also very encouraged by recent efforts by enforcement

agencies to tackle sales below the minimum cigarette price of RM7,
which is a growing problem across the country,” James added.

Meanwhile, alcoholic beverage groups also echoed the tobacco

companies' sentiments, urging the Government not to increase excise
duty for beer products.

Carlsberg Malaysia managing director Soren Ravn told StarBiz that

further excise duty hikes could significantly impact legitimate beer volume Budget w ish list presented by Cuepacs
growth in Malaysia possibly leading to the increase of the illegitimate Voicing their view s on MBPJ's budget
Voicing their view s on MBPJ's budget
beer volume growth.
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area
He said that maintaining excise duties also supported the Economic US housing market recovery picks up
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“We also urge the Government to maintain the current alcohol import
duty until the Malaysian Alcohol Tax Reform is in place, so that it will not
affect the industry or government revenue, or cause other unintended
consequences,” Ravn said.

To that, he added that Carlsberg would be pleased to work closely with

the Government on any potential Alcohol Tax Reform that is more
efficient and equitable.

“The current tax structure for alcohol products is complicated with at

least 12 different categories of rates applying across different products.

“We hope that for a more balanced representation, beer prices are
compared against the average disposable income,” he said.

Malaysian beer excise duty is the highest in Asia-Pacific and second

highest in the world after Norway which has a higher disposable income.

Guinness Anchor Bhd (GAB) managing director Charles Ireland also

noted the disparity between beer prices and the local per capita income,
agreeing that the current alcohol tax structure could be more in line with
global standards.

As for the issue with contraband beers, Ireland said he was “delighted
with the progress” of the enforcement initiatives that government
authorities such as Royal Malaysian Customs, Royal Malaysian Police,
Marine Operations Force and Malaysian Maritime Enforcement Agency
have made in the last two years.

Ireland hoped that the enforcement would be enhanced as the

contraband beer manufacturers continue to pose unfair price
competition as they do not pay taxes and duties.

“From an economic perspective, I do believe if the situation does

improve dramatically and there is a huge reduction in contraband beers,
consumption of legitimate beers will go up and that will create additional

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20/09/2012
Tobacco and alcohol companies want the Government to maintain excise duties
revenue opportunities for the Government.”

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