Tobacco in Malaysia

The tobacco industry has contributed to the growth of Malaysian economy where the industry ranked 5th out of 92 sectors with the total economic output being RM11.7 billion or 3% of GDP . Moreover, tobacco plantation in Malaysia grew from a mere of 8 hectares in 1959 to 12,148 hectares in 2004; whereby East Malaysia has approximately 1,200 hectares. Therefore, the industry indirectly contributes significantly to the country’s economy where more than 190,000 employment in 2003; as per study conducted by Ernst and Young in 2005.

Despite the economic growth and upward tobacco cultivation, the industry has its challenges covering issues such as illicit cigarettes; rising taxes and government urge on restrain smoking. According to the Confederation of Malaysian Tobacco Manufacturers (CMTM), the occurrence of illegal cigarettes increased from 11.5% in 2004 to 36.3% in 2010. As a result, Malaysia is projected to be among the top three nations in Asia with a high level of illegal cigarettes with an estimated projection of 40.4% in 2014. Price range of there illegal cigarettes is from RM1.80 to RM3.20 per packet, depending on the brand.

In Malaysia, the tobacco industry has three main players – British American Tobacco (BAT), JT International and Philip Morris. The mentioned companies have a range of of brands to supply individual preferences. As at October 2012, the cigarette price ranges from RM7.00 per pack of 20 sticks to RM10. Thus, the local players have a high potential in breaking through the tobacco demand and supply as it is less competitively