Health Ministry to announce amount of cigarette price hike next month
KUALA LUMPUR: The uncertainty facing tobacco companies may soon be lifted, after Health Minister Datuk Seri Dr Dzulkefly Ahmad noted yesterday that retail prices for all brands of cigarettes will be increased in three weeks.
Dzulkefly was cited by Bernama as having told parliament that the prices of tobacco products, including cigarettes, should be increased following the move to the nationwide sales and services tax (SST) on September 1st.
“The recent implementation of the SST will lead to an increase in the prices of all types of tobacco products, including cigarettes,” he said in the report. On October 5, Dzulkefly reportedly said the potential price increases would be RM 1.30 for imported cigarettes and 90 sen for local cigarettes.
Since the beginning of last month, the Department of Health (MoH) has remained silent on the minimum level of increase in retail prices for cigarettes, leaving tobacco companies in limbo. The Department of Health administers tobacco price approvals under the Tobacco Products Control Regulations 2004.
After the increase in cigarette prices of the big three tobacco manufacturers following the implementation of the SST, British American Tobacco (Malaysia) Bhd (BAT Malaysia) and JT International Bhd (JTI Malaysia) reduced their prices for three weeks later in the absence of price indications from the ministry.
According to a spokesperson for BAT Malaysia, the company was invited this week to meet with the Ministry of Health on the price increases.
“Pending the outcome of this meeting, we hope to get a better guidance that is aligned with our interpretation, so that the price volatility caused by the different interpretations of the SST will soon cease and allow industry players in Malaysia to navigate. in this complexity and minimize the impact on consumers, ”the spokesperson told The Edge Financial Daily.
When contacted, JTI Malaysia Managing Director Cormac O’Rourke said the company, over the past month, has written to the Health Ministry on several occasions to seek clarification on the interpretation of the proposed price increases.
“We stressed that the amount of the increase should be the differential between the SST and the goods and services tax (GST) rates given that the SST is a direct replacement for the GST,” he said. he declares.
“Despite repeated requests for clarification, we have yet to receive any official response.
“We take note of the Minister of Health’s announcement that his ministry is coordinating new prices for all tobacco products, including cigarettes. We await this clarification before making any further decision on the matter, ”added O’Rourke.
The Department of Health also did not respond to requests for comment from The Edge Financial Daily.
Meanwhile, Dzulkefly’s remarks yesterday raised concerns over the timing of next month’s announcement of the next retail price hike for cigarettes, as it will coincide with the 2019 budget tabling slated for November 2. . Already, the business sector is concerned. will include higher taxes or new taxes as the government seeks to increase its revenues to reduce the national debt.
Tobacco players had previously warned that a further increase in excise duties on cigarettes would lead to an increase in the illegal cigarette trade, with a consequent loss of industry and retail margins, and that this would only reduce government revenue collection.
It has been reported that today around 60% of cigarettes sold in Malaysia are illegal due to excessive tax increases and lax enforcement.