Kuala Lumpur, 30 March 2017
Hilmi Yahaya’s proposal to increase legal cigarette prices from RM 17 to RM 21.50 per pack, the equivalent of a 27 percent increase, will only make illegal cigarette trade flourish, says the Institute for Democracy and Economic Affairs (IDEAS).
Commenting on the proposal, IDEAS Chief Executive Wan Saiful Wan Jan said, “I commend the Deputy Minister and the Ministry of Health for demonstrating a commitment to safeguard public health. They have good intentions, but their proposed solution is wrong because it will only encourage illegal activities without reducing the number of smokers.”
Wan Saiful added, “The government itself has said that demand for cigarette in Malaysia is inelastic.  Just visit the Ministry of Health’s official anti-smoking campaign website and you will find that they themselves say Malaysian smokers are not very responsive to changes in price, and even though they have imposed higher taxes, the decrease in smoking is still slight  (http://taknak.myhealth.gov.my/en/cigarette-tax-strategy/). This is the Ministry itself saying that the higher tax strategy does not work.”
“Today 1 out of every 2 packs sold in Malaysia is illegal.  From 2003 to 2013, the illegal tobacco market grew by 46 percent, and this is parallel to increases of tobacco taxes.  If a higher tax is imposed, even more people will choose illegal cigarettes because smokers will simply look for cheaper alternatives.  I am worried that by doing this, the government is indirectly helping to fund criminals and gangsters. This is why I think the best way to reduce smoking is to make available cigarette alternatives and to ramp up educational activities,” concluded Wan Saiful.

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