Malaysia’s tobacco sector under pressure
The outlook for Malaysia’s tobacco sector next year is bleak as increasing cigarette prices, the illegal cigarette trade and a preference for vaping are expected to cause a decline in cigarette sales volumes, according to a story in The Edge Financial Daily.
Analysts contacted by the Daily were quoted as saying that cigarette prices had risen because of an excise duty hike of more than 40 percent in November.
“Basically, we are negative [on the outlook], as pricing of cigarettes has gone above the ‘pain threshold’,” said Kay Hian, head of research for Malaysia Vincent Khoo. “So we expect significant volume drops that would nullify expansion in gross margin,”
He expects smokers to cut consumption of duty-paid cigarettes or switch to cheaper duty-paid cigarettes, illicit cigarettes or electronic cigarettes.
The electronic cigarette industry seemed itself to take a hit earlier this week when it was reported in The Star that many vapers in the Malaysian state of Johor were switching to smoking pipes and hand-rolled cigarettes in the run-up to the state-wide ban on vaping products that is due to take effect from January 1.
And in a separate story, The Star reported that Malaysia’s National Fatwa Council, which delivers religious rulings, had declared the use of electronic cigarettes as haram (forbidden) for Muslims.
However, one source said that the council’s ruling would not have any effect.
Rizani Zakaria, president of the Malaysian E-Vaporisers and Tobacco Alternative Association, said sales of e-vapor products would not be affected by the National Fatwa Council’s edict that vaping is ‘haram’ or forbidden, according to a story in the Malay Mail, relayed by the TMA.
He said that the e-vapor industry was already well established and that a similar edict against tobacco cigarette smoking had not stopped smokers.
The association’s president said he hoped the council would reconsider the matter and focus on the potential for electronic cigarettes to help smokers quit tobacco cigarettes. The council, he added, should not have grouped vaping with smoking.