PETALING JAYA: The Confederation of Malaysian Brewers Bhd (CMBB) expressed regret over the government’s decision to raise excise duty on alcohol by 10%, emphasising that Malaysia already has one of the highest beer excise rates globally.
The tax hike resulted in a new rate of RM192.50 per 100% volume per litre, especially given the current economic challenges and the pressures already faced by the food and beverage industry.
CMBB highlighted that any increase will widen the price gap between legitimate and illicit beer.
“This will pose a threat to government revenue collection, the industry and consumers. Higher beer excise duties are correlated with an increase in the availability of illicit beer,” it said in a statement today.
CMBB also noted that the industry estimates that around 25% of beer consumed locally is illicit, resulting in a loss of RM1.2 billion in tax revenue each year. This loss is expected to grow as excise rates rise.
“The beer industry will continue to support the Royal Malaysian Customs Department and the government’s Multi-Agency Task Force in their ongoing efforts to curb illicit beer and to protect government revenue.
“Addressing this challenge requires a balanced, collaborative approach –combining enforcement, awareness, and partnership between industry and authorities,” CMBB said.
The brewing industry remains a key contributor to Malaysia’s economy, generating RM7.1 billion annually, contributing RM3.3 billion in tax revenue, and supporting over 52,000 jobs across manufacturing, logistics, retail, and hospitality sectors.
Carlsberg Brewery Malaysia Bhd and Heineken Malaysia Bhd, the two brewers in Malaysia, have consistently raised concerns that raising excise duties on alcohol would fuel the illicit alcohol trade, undermining legitimate businesses and resulting in significant government revenue losses.
Both brewers have previously highlighted that Malaysia already has one of the highest excise duty rates on beer globally, and further hikes could exacerbate the issue by making illegal, duty-free products more attractive to consumers.
Carlsberg Malaysia emphasised that the illicit trade poses health risks because contraband products have no regulatory oversight, while Heineken Malaysia stressed that tax increases will hurt local retailers and businesses dependent on legal alcohol sales.
The brewers have been advocating stronger enforcement against illicit trade rather than increasing alcohol taxes, citing estimates that contraband beer accounts for a significant share of the market, especially in East Malaysia, resulting in hundreds of millions in lost government revenue annually.
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