E-Malt.com News article: Malaysia: Higher alcohol excises will encourage illicit parallel imports – Carlsberg Malaysia MD

Raising excise duty on alcohol will encourage illicit parallel imports which is a problem in Malaysia just as contraband cigarettes is a problem for the cigarette industry, The Malaysian Reserve reported on October 2.

“We have seen an increasing level of parallel imports in the beer industry and some of these parallel imports (relatively unknown brands coming into the country selling at cheaper prices) are selling at lower price than local producers.

We are concerned that a further hike in the beer taxes will encourage parallel imports that would not be beneficial for the local producers who pay tax,” Carlsberg Malaysia Bhd MD Henrik Juel Andersen said.

“We hope that the government will continue to protect the local industry,” said Andersen.

The market has been abuzz with the speculation that the “sin” sector will be taxed more ahead of Budget 2014. So far, the tobacco industry has been slapped with a 14% additional excise tax and excise duty.

Alcohol last saw an excise hike in 2005 and, according to Andersen, that puts Malaysian alcohol tax as the second-highest in the world and the highest in Asia.

Andersen hopes that alcohol tax will not go up especially with the coming Visit Malaysia Year 2014 where more than 25 million tourists are expected to come to Malaysia.

“We felt it can have a negative impact on tourism especially with the Visit Malaysia Year 2014 coming,” said Andersen.

Andersen said Carlsberg will try not to increase its price due to the rise in oil price and he acknowledged that it is important to keep cost down to make beer affordable for consumers in Malaysia.

“You can’t make that kind of direct link between beer pricing and consumption but surely a price increase will discourage the consumption of beer not only in Malaysia but all over the world which is also why we hope the tax will not increase,” commented Andersen on whether there is a correlation between rising price and consumption.

Commenting on the current alcohol tax structure, he said it was not consistent and that there is an opportunity for the government to relook at the tax structure of the entire alcohol industry.

Moet Hennessy Diageo Malaysia Sdn Bhd MD Mathieu Duchemin concurred with Andersen’s views on both issues.

“Champagne is taxed four times more than other alcohol due to additional layer of tax,” said Duchemin who opined that the tax structure should use alcohol content of product as the basis for tax.

Carsberg and Guiness Anchor Bhd (GAB) are two big players in the local beer industry.

For its financial year ended Dec 31, 2012, Carlsberg revenue was RM1.58 billion and net profit was RM193.8 million. GAB had a RM1.67 billion revenue and RM217.6 million net profit for its financial year ended June 30, 2013.


02 October, 2013