http://www.thestar.com.my
Thursday September 16, 2004

Demand for cigarettes still strong

KUALA LUMPUR: Smokers are not snuffing out despite all the Government’s anti-smoking campaigns.

Increasing tobacco taxes and banning of all forms of cigarette advertisements seemed to have little impact on consumption, according to the National Tobacco Board.

When the measures were introduced in 2002, consumption dropped by only one per cent while cigarette sales slipped from 19.423 billion sticks in 2001 to 19.204 billion the following year.

The board, a statutory body set up to oversee tobacco planting programmes as a way to increase the income of rural folks, released their 2002 annual report to MPs yesterday.

“Domestic demand indicated that the cigarette market in Malaysia has remained stable,” it said.

The country has 14,000ha of dedicated tobacco planting land, with most of it located in Kelantan, Terengganu, Kedah and Perlis.

The report said tobacco production rose steadily while the Government yielded RM1.8bil in import duty, excise, sales and corporate tax from the RM4.5bil industry that year.

It added that tobacco accounted for some RM700mil in exports in 2002 and local productions also helped the country to save RM300mil in foreign exchange.

The report also said the industry benefited 118,000 individuals including farmers, factory workers, processing workers, distributors and retailers.

“Most, or 38%, of the RM156.7mil in proceeds from sales of processed tobacco is enjoyed by the growers,” the report added.

Although the board remained optimistic of the future consumption level, it cautioned that the full implementation of the Asean Free Trade Area (Afta) in 2010 posed a threat to the industry.

It said several neighbouring countries such as Thailand and Indonesia had already listed tobacco and related products under the Afta’s Common Effective Preferential Tariff scheme to sharpen their competitive edge.

“We need drastic changes in production systems to increase productivity and lower the cost to remain competitive when Afta sets in,” said the report.