Cigarette producer cites falling sales due to high duties and increase of illegal cigarettes in the market.
PETALING JAYA: British American Tobacco Malaysia Berhad (BAT Malaysia) will shut down its factory here, citing falling sales due to the presence of illicit cigarettes in the market and high duties imposed by the government.
In a statement, the major cigarette producer explained the restructuring was in line with the company’s efforts towards realising a new and more sustainable business model, amidst an increasingly challenging business environment.
BAT Malaysia lamented that over the last five years, cigarette taxes have increased 110 per cent, which led to rising production costs.
Illegal cigarettes, meanwhile, currently made up more than 40 per cent of the total market.
“In the end, the decision to wind down the factory was unavoidable,” the statement read.
The winding down of factory operations, expected to be completed by the second half of 2017, will affect 230 employees who will be provided a benefits package as well as the option to undergo a career-transition programme.
BAT Malaysia, which manufactures Dunhill, Peter Stuyvesant and Pall Mall, also said it will be sourcing tobacco products from other BAT group factories in the region.