KUALA LUMPUR: The 10% hike in alcohol excise duty under Budget 2026 could fuel the growth of illicit beer and reduce government tax revenue, says the Confederation of Malaysian Brewers Berhad (CMBB).
The association said the increase would further widen the price gap between legitimate and illegal products.
"CMBB expresses regret over the government’s decision to raise excise duty on alcohol by 10%, resulting in a new rate of RM192.50 per 100% volume per litre," the statement said.
This is especially given the current economic challenges and the pressures already faced by the food and beverage industry.
"Malaysia already has one of the highest beer excise rates globally, and any increase will further widen the price gap between legitimate and illicit beer.
"Higher beer excise duties are correlated with an increase in the availability of illicit beer," it said, adding that this will pose a threat to government revenue collection.
CMBB said industry estimates that around 25% of beer consumed locally is illicit, resulting in an estimated RM1.2bil loss in tax revenue each year.
"This loss is expected to grow with the increase in excise rates," it added.
CMBB also noted that the brewing industry remains a key contributor to Malaysia’s economy, generating RM7.1bil annually and contributing RM3.3bil in tax revenue.
The industry also supports over 52,000 jobs across the manufacturing, logistics, retail and hospitality sectors, it added.
CMBB said the industry will continue to work with the Customs Department and other agencies to combat illicit alcohol through enforcement, awareness and collaboration.
Under the national Budget 2026 tabled on Oct 10, Prime Minister Datuk Seri Anwar Ibrahim announced that excise duties on cigarettes and alcoholic beverages will be raised from Nov 1 as part of efforts to promote a healthier lifestyle.
