KUALA LUMPUR: JT International Bhd (JTI Malaysia) has called for the Health Ministry to clarify its position in relation to the implementation of SST, claiming that its inaction had resulted in a price war in the market.
“In Malaysia, any cigarette price change is subject to regulatory approval by the Health Ministry.
“In relation to any tax driven price increase, it is illegal for any tobacco manufacturer to absorb any quantum of the increase,” said JTI Malaysia MD Cormac O’Rourke said in a statement on Friday.
He noted that when GST was zero-rated on June 1, 2018, both the Health Ministry of Health and Finance Ministry had issued specific statements that tobacco companies were prevented from reducing prices equivalent to the 6% GST imposed on the product.
Following the introduction of SST, prices of cigarettes are by law required to be increased under regulations administered by the Ministry of Health.
As of September 5, JTI increased the prices for all its products based on the differential tax rates between GST and SST.
“However, the current situation where there are differences in prices set by tobacco manufacturers has triggered a pricing dynamic in the market not seen in Malaysia for many years.
“For instance, there were products where prices had increased only to revert to old pricing days later.
“As of today, based on our observations, it would look like there has been a rowback on certain cigarette brand prices in the market place to pre-SST prices,” he said.
He urged the Health Ministry to intervene and decide on a price point that takes into account the required pass on of the differential rate of SST against GST, as well as not allow any company to gain a price advantage by discounting.
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