Malaysia’s scream test – TI spins “black market” scare

31 March 2017:

A few days ago, Malaysia’s Deputy Health Minister announced there are plans to increase the prices of cigarettes in the near future as a means to deter people from smoking. Cigarettes are currently sold at RM17 per pack (US$3.86) and the target is to raise the price to RM21.50 ($4.88) per packet.

Immediately on cue, tobacco industry group, the Confederation of Malaysian Tobacco Manufacturers, immediately issued a statement saying “any further price increases would not impact smoking rates as smokers would turn to the very cheap and readily available illegal cigarette segment which is already spiralling out of control.” The same old scare tactic to ward off any talk of tobacco tax and price increase.

The Deputy Minister raised a pressing problem – the Government’s anti-smoking campaigns have so far failed to deter Malaysians from smoking. Adult male smoking was 50% in 1987. After 30 years and many tobacco control measures later, it reduced at glacial speed down to 44%. The National Health and Morbidity Study shows smoking among children reduced by only 0.6% (from 24.6% to 24%) after 5 years of campaign.

In the 1990s, about 10,000 Malaysian died every year due to tobacco related diseases. The figure has now doubled to 20,000 a year. Meanwhile cigarettes remain affordable. Despite tax increases, real cigarette prices have not been commensurate with inflation and cost of living. Substantial price increases are effective in reducing smoking as children and the poor are most price sensitive.

Cigarette black market is the tobacco industry’s favourite bogey man. It is dangled every time the government suggests an effective tobacco control measure that will reduce smoking.

Last month the government conducted a consultation process on licensing cigarette retailers. The Malaysia-Singapore Coffee Shop Proprietors’ General Association (MSCSPGA), whose primary business is food and drinks, was up in arms urging the Government not to license for retailers claiming it can increase sale of illegal cigarettes.

Coffee shops are supposed to provide a smoke-free environment for their customers which often include families with small children. Tobacco is not a food item. It is strange for the MSCSPGA to want to continue selling cigarettes without license when its customers can’t even smoke in its premises.

Malaysia has about 4.5 million smokers and 80,000 retailers selling cigarettes, a simple ratio works out to one shop selling cigarettes to every 57 smokers. Thailand has 570,000 cigarette retailers and has a much lower smuggling problem than Malaysia. Thailand just passed legislation to increase its retailer license fee.

The tobacco industry in Malaysia is screaming. The government is on the right track and should increase tobacco tax and prices.