Stefano Clini, Managing Director of Carlsberg Malaysia, added: “The illicit trade detracts billions of Ringgit in government revenue and from thousands of employees, distributors, retailers and investors who rely on legitimate beer sales as a source of income. As an industry, we believe any increase in excise duties and taxes will exacerbate the demand for contraband, which is particularly prevalent in East Malaysia. Contraband beer also poses health and safety risks to consumers with zero oversight and regulatory control on its brewing, distribution, pricing, and alcohol content, unlike legitimate and licensed products brewed to exacting quality standards with natural ingredients. We thank the Government for their ongoing efforts in combatting contraband hand-in-hand with the industry to the benefit of legitimate brewers and Malaysian businesses.”
The two brewers have been significantly impacted by the Covid-19 pandemic, following the suspension of brewing and distribution operations due to the six-week Movement Control Order (MCO) from 18 March and as a consequence reported significant decline in revenue for the first half of the 2020 financial year (1HFY20).
The wider impact to the industry was most keenly felt by the closure of F&B outlets since the MCO, where 11,000 businesses suspended operations leading to an estimated gross revenue loss of RM900 million while placing 110,000 jobs at risk. CMBB estimates that around 1,080 of these outlets are now permanently closed, impacting an estimated 10,700 jobs.
Apart from its recommendation for no further excise duty and tax increases, CMBB urges the Government to consider introducing support packages to help struggling operators of bars, and entertainment outlets who still remain closed since the beginning of MCO earlier this year. It is estimated that around 3,800 of these outlets will remain closed at least until 31 December 2020 with some 38,000 jobs at risk. CMBB will continue to support affected outlets through its ongoing engagement with Government with an aim to create more awareness of the issues faced by local businesses and explore ways they can be allowed to operate in full compliance of SOPs with the health and safety of people being the first priority.