Malaysia: High excises ruining the beer industry

Breweries in Malaysia have cautioned that the RM4.77bil beer and stout industry will face tougher times if excise duties are increased further, thestar.com reported on July 29.

Malaysian excise duty rates were the highest in Asia and second highest in the world, after Norway. The Government increased the excise duty three years consecutively from 2004 to 2006 with an unprecedented 27% hike in 2006.

Guinness Anchor Bhd managing director Charles Ireland said another round of excise duty hike could result in smuggling becoming more lucrative and increased competition from wine, spirits and compounded hard liquor.

“The Government would be right not to increase excise tax this year. The industry is under tremendous pressure and we expect it to remain negative in the next year or so.

“Even more people will switch to wine, spirits and compounded hard liquor, which have higher alcohol content, thus promoting irresponsible drinking and causing health hazards.”

Based on a consumption forecast model, when excise duties increase, beer and stout consumption will decline 6.5% and 20.8% respectively.

Government tax collection had already reached an optimum level and any further increase would only lead to lower tax collection, Ireland added.

29 July, 2008