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However, with cheaper alternatives available, the citizens turned to illegal cigarettes with price tags of RM3 – RM8 (US$0.71 – US$1.89). Customs director-general Datuk T. Subromaniam appeared to be in denial, as he commented , “It (tax increase on cigarettes) is merely a measure to reduce the number of smokers in Malaysia and increase tax revenue. We cannot solely blame taxation for the rise in illicit cigarettes.” On a larger scale, Malaysia’s tobacco industry has taken a hit. In the first half of 2017, British American Tobacco – the country’s biggest cigarette manufacturer – reported a drop in 22.1% of revenue when compared to the same period in 2016. The decreasing revenue trend continues with further contraction of the legal cigarette market. According to Framework Convention on Tobacco Control (FCTC), excise duty should constitute at least 70% of the final retail price. The government had been quick to implement excise tax that constitutes roughly half of retail price today. However, the same speed did not apply to FCTC’s guidance on tobacco control programmes.
The share of smuggled cigarettes is expected to rise to about 8 percent this year from 2 percent in 2016, according to the company. The numbers for the market share shift being claimed for beedis are exaggerated, said Health Minister Rajitha Senaratne. The government is in discussions with farmers cultivating tobacco to wean them away from the crop, he said. Sri Lanka hasn’t seen any evidence of an increase in the market share of beedis as imports of tendu leaf haven’t climbed, said Palitha Abeykoon, chairman of the National Authority on Tobacco and Alcohol. Tighter regulations on the beedi segment are being considered, he said. The authority estimates market share using surveys that are based on prevalence of use and not stick count. The government statistics are based on officially imported tendu leaves, according to Ridley. Since there has been evidence of a local source of tendu leaves as well as seizures of smuggled tendu leaves, these are “additional components” that need to be included in the calculation, she said. Some smokers of Capstan cigarettes, the company’s lowest-priced brand, have cut back on the number of sticks they buy after the price increases and also purchase beedis, said K.K. Badra, 58. She runs a kiosk that sells soft drinks, packaged snacks and other food items apart from tobacco products in Maligawatta, a Colombo suburb.