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Boost for tobacco brands as poll confirms consumer fears over counterfeit impact of plain packaging

One of the arguments made against the introduction of plain packaging for cigarettes and other tobacco products is that the absence of branding would exacerbate the problem of counterfeiting, with potentially unsafe products becoming more accessible. As Malaysia lays the groundwork for a plain packaging regime, a recent poll of Malaysian consumers would seem to support that concern.

A nationwide survey carried out by the Merdeka Center for Opinion Research, on behalf of the Malaysia Singapore Coffee Shop Proprietors’ General Association (MSCSPGA), has found that 81% of Malaysians believe that plain packaging would make it easier for counterfeiters to produce fake tobacco products. Moreover, 65% of respondents are concerned that this would lead to an increase in criminal activity in the country; while 88% think that the introduction of plain packaging would boost sales of fake and smuggled cigarettes as smokers turn to the black and grey markets to buy cheaper packs. However, it is not clear if respondents believe this will happen as a reaction to the plain packaging itself and a desire for branded packs, or more simply because black and grey market alternatives sell for less.

To my knowledge, Malaysia is the only east Asian government that has so far announced plans to introduce plain packaging regulations for cigarettes and other tobacco products – though at this stage, the proposals remain far from concrete. “We are planning to do that in stages, but at this moment, we don’t have a firm date,” Chong Chee Keong, director of the disease control division of Malaysia’s Ministry of Health, told the Malay Mail back in February, adding that the government believes plain packaging measures would have the biggest impact on reducing smoking, particularly among younger and less frequent users. As expected, the announcement was met with support from health campaigners and opposition from the tobacco industry, which claims that such measures trample its trademark rights.

Smoking is prevalent in Malaysia, with the country’s Ministry of Health reporting approximately 4.7 million smokers out of a population of around 30 million as of April 2015. Smoking among males is particularly widespread, at 38%; older World Health Organisation data from 2008 puts this figure significantly higher, at 54.4% of the male population.

In any case, smoking remains a major public health issue in this rapidly developing country. With an estimated 20,000 deaths each year from directly smoking-related illness, it is clear why the government is keen to take action. Late last year, it increased excise tax on cigarettes by 40%, following a 12% hike in 2014, in addition to the recent introduction of a 6% goods and services tax. Tobacco companies raised prices as a result of these moves and argued that the government’s moves would further contribute to Malaysia’s already ingrained problems with counterfeit and grey market cigarettes.

According to the MSCSPGA, these account for about half of all of the cigarettes sold in the country at present. In Malaysia, where smoking is still legal in many public places and any bans that do exist are often not strictly enforced, cafes and restaurants – including those represented by the MSCSPGA – benefit from being able to sell tobacco products on their premises. Ho Su Mong, president of the MSCSPGA, told the Mail that fakes and smuggled cigarettes are costing retailers over 500 million ringgit (US$122 million) in lost income every year.

With this knowledge, it is clear why the MSCSPGA commissioned the survey and this economic interest will likely be pointed to by plain packaging proponents.

Nevertheless, the survey results will come as a much-needed fillip – albeit a small one – to trademark owners in the tobacco industry, and other sectors where plain packaging could potentially be implemented, at a time when they are most certainly on the back foot. Whether consumer concern causes the government to pause for thought remains to be seen.

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