PETALING JAYA: British American Tobacco Bhd (BAT) is currently awaiting approval for its tobacco heating product (THP) and its flagship product Glo from the tobacco control sector and deputy director-general of health (public health) under the Health Ministry.
“We have submitted our application to the relevant authorities in December last year, the price of our THP will be subject to the regulatory bodies,” said BAT managing director Erik Stoel at a media briefing today.
He expects some consumers to adopt the potentially risk reduced product as the vapour produced product has less harmful chemical compared with conventional cigarettes.
““The groups global forecast estimates that the global THP market to grow to £5 billion (RM27.1 billion) in the next four to five years,” he said.
In Malaysia, BAT’s competitor Phillip Morris Malaysia Bhd was the first big tobacco firm to introduce such product.
In addition, BAT is also conducting a pilot project to introduce a cigarillo tobacco product in East Malaysia, to help counter the illegal cigarette trade.
“At the moment, we are two weeks in with our project, Dunhill HTL cigarillos in East Malaysia, which retails for RM9 for a pack of twenty.”
Stoel said affordability is one of the key factors in combating illicit cigarettes in Malaysia. The research on illicit cigarette studies by Nielsen estimates that the volume share of illicit cigarette stands at 60%.
He estimates that the profit of illicit cigarette to be RM1.2 billion compared with RM700 million recorded by the legal trade. The prevalence of illicit cigarette was one of the decision for the company to close its Virginia Park factory in Petaling Jaya in 2016.
Currently, BAT is in its first year of full import business model, with 98% of their product is imported. It has managed to reduce the lead times by ten days for finished goods and prepaid excise duties, from 26 days to 16 days and 21 days to 11 days, respectively.
“The factory is in operation since December last year and it is a means to retain our manufacturing license. Should the situation with illicit cigarettes improve, we might expand our manufacturing capacity in Malaysia,” said Stoel.
“We welcome the government’s commitment in tackling this problem, especially with the increase of penalty related to illicit cigarette. The fine of RM100,000 and six months jail term show that the government is serious in their enforcement,” he added.
Last year, the authorities raided 325 outlets involving a total of 100 million cigarettes.