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Monday September 30, 2013 MYT 3:50:00 PM
Monday September 30, 2013 MYT 4:12:10 PM
PETALING JAYA: British American Tobacco (BAT) Malaysia has increased prices of its cigarette range following a 14% increase in excise duty, the biggest single hike in recent years.
The price of a pack of 20s will go up by RM1.50 to RM12 from Monday.
BAT Malaysia managing directive Stefano Clini said the increase in duty was shocking and could lead to an increase in illegal cigarette trade.
"This announcement is indeed shocking and disappointing.
It said the company’s pricing decision took into account the loss of legal volumes due to illegal cigarettes, consequential loss of industry’s and retailers’ margins and ongoing inflationary pressure.
“In spite of these measures, we will be hard pressed to counteract our loss of returns due to volumes lost to illegal cigarettes and this drastic excise increase will further compound our losses. As such, it has left us with no choice but to take a significant price increase,” said Clini.
BAT Malaysia also suggested that to increase their revenue the government should combat the illegal cigarette trade first rather than increasing taxes dramatically.
According to BAT, approximately RM2 billion in revenue is lost due to illegal cigarettes.
BAT is hopeful that the government will enhance its enforcement and seriously consider deploying more deterrent laws such as mandatory imprisonment for dealing in illegal cigarettes.
BAT shares surged RM1.98 to RM64.48 at 3.52pm as funds supported the stock after it fell to a low of RM62.20 after the 14% hike in excise duty.
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