Malaysia: Brewers happy – no alcohol tax hike in 2011 Budget

Malaysia’s two largest brewers were relieved to learn that 2011 Budget does not stipulate alcohol tax hike, The Sun Daily reported on November, 6.

Guinness Anchor Berhad (GAB) and Carlsberg Brewery Malaysia Berhad said any further duty increase would have had an adverse impact on all stakeholders connected to the industry, which has over 53,000 under its direct or indirect employment.

“Overall it makes no sense to increase taxes given the already high rates in Malaysia,” said GAB managing director Charles Henry Ireland.

In the context of Malaysia’s modernisation efforts, Ireland suggested that future changes to the structure of alcohol excise duties should be in line with global best practices, as there is currently a distortion in excise taxes across different beverage categories.

"Excise tax is much higher on beer and stout compared to products with eight times the amount of alcohol," he said, adding that equalising structures across the different types of alcohol could enable the government to collect at least as much or probably more taxes without necessarily increasing tax rates.

He added that high domestic taxes encouraged illicit activities such as smuggling which takes away from industry volume and profitability, therefore reducing government revenue.

Meanwhile, Carlsberg Brewery Malaysia Berhad managing director Soren Ravn said in a press statement that the government's decision was in line with certain focus areas of its Economic Transformation Programme (ETP) in which the tourism, wholesale and retail sectors are National Key Economic Areas (NKEAs).

"Carlsberg Malaysia will continue to be part of the catalyst to drive the economic growth in the areas of FDIs, tourism, and retail sectors while at the same time continuing to reinvest in the local economy through production and capacity expansion," said Ravn.

06 November, 2010