Malaysia: Price-Sensitive Smokers May Opt For Cheap Cigarettes

Source from:  Malaysia Digest  10/10/2013

MANY Ipoh folk anticipated an increase in cigarette prices this year, but they did not expect the price hike to be such a drastic one.

Saiful Badruddin, 48, said he was taken aback by the increase announced by British American Tobacco (BAT) Malaysia on Sept 29.

Saiful, who smokes a packet of cigarettes every three days, said he would now need to pay RM1 more for each 20-stick packet of cigarettes.

"This means every month, I need to fork out an additional RM10, which, cumulatively, is a large sum," he said.

He said the Government should have taken into account that cigarette prices were revised almost every year before imposing such an extreme increase.

The price hike, he said, would not cause him to cut down on smoking. As a lorry driver, he claimed that he needed to smoke to stay awake.

"Smoking keeps me alert, especially on days when I need to deliver goods to Tanjung Malim as early as 4am," he said, adding that he delivered ice to shops in various towns in the southern part of the state.

It was reported that BAT Malaysia, which holds about 60% share in the local cigarette market, had to increase prices of its cigarette range following a 14% increase in tobacco excise duty.

In other words, the price of a pack of 20s has increased by RM1.50 from current prices of various cigarette brands since Sept 30.

JT International Bhd (JTI Malaysia), another cigarette manufacturer, also followed suit by raising the price of its cigarettes the day after BAT's announcement.

The increase was said to be the biggest single hike in recent years.

Another smoker, who only wished to be known as Tang, described the price hike as "an unreasonable move".

Tang, 35, opined that the price of a packet of cigarettes should not increase by more than fifty cents.

"I did not complain when cigarette prices went up by about twenty to thirty cents, because the adjustment was rational.

"But this time, the increment is just outrageous," he said.

Tang, an automobile technician who earns a meagre income, said he smoked about eight sticks of cigarettes a day, and had decided to cut down to six.

Non-smokers such as Gan Kok Yong, 25, opined that the cigarette price hike would only prompt smokers to opt for cheaper or illicit cigarettes.

Gan, a 25-year-old fire protection system technical specialist, said smokers were just like drug addicts, who could not give up their addiction easily.

"I believe smokers who have access to smuggled cigarettes would go for the illegal products because they are cheaper than those sold in the market.

He opined that smokers in the middle or lower-income groups would become poorer as a result of the price hike.

Technical engineer Tan Murali, 24, said the Government should explain the reasons for the increase of 14% in the excise duty.

"They should justify their action so that we know where they spend the taxes on," he said.

Like Gan, Tan opined that most smokers were price-sensitive and would find ways to purchase less expensive cigarettes.

"Smokers would opt for cheap and low-quality cigarettes, even though they know some of them are hazardous to health," he said.

Tan, who is also a non-smoker, said he did not think that his family members who smoked, would give up smoking just because of the price hike.

Kong Heng coffee shop operator K.T. Chan said cigarettes sales in the shop had gone down by 70%.

"Now, I can only sell about three to four boxes of cigarettes a day," he said, adding that he used to sell 10 boxes of cigarettes daily.

He said many of his customers, who did not complain about the fifty cents increase in cigarette prices early this year, had expressed dissatisfaction over the drastic hike.

"There is nothing I can do, as I don't control the prices," he said.

Chan, who smokes two boxes of cigarettes a day, said he had also cut down the cigarettes smoked.

Ameryeen Tom Yam restaurant proprietor Ameer Nordin said he could not foresee changes in the sale of cigarettes in his shop, as it was the first time that the Government had imposed such a drastic price hike.

"Even though the price increases almost every year, sales in my shop are steady," he said.

"I don't know how they feel about the price hike this time, as I have not received much feedback from them yet," he said.

From a business perspective, Ameer said earnings from the sale of cigarettes were supplementary and were not the main source of revenue.

A cigarette distributor, who declined to be named, said the same amount of cigarettes would be distributed to retailers.

"We will monitor sales for one month, and report to the headquarters in Shah Alam, Selangor," he said. Enditem