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Fulltext Cigarette purchasing behaviour in Thailand and Malaysia: comparative analysis of a semi-monopolistic and a free-market structure

Ross H, Driezen P, Sirirassamee B, Kin F

Glob Public Health, 2009;4(6):588-99.
PMID: 19548160 DOI: 10.1080/17441690903072204

A wide range of cigarette prices can undermine the impact of tobacco tax policy when smokers switch to cheaper cigarettes instead of quitting. In order to better understand this behaviour, we study socio-economic determinants of price/brand choices in two different markets: a semi-monopolistic market in Thailand and a competitive market in Malaysia. The hypothesis that the factors affecting the price/brand choice are different in these two markets is analysed by employing a 2005 survey among smokers. This survey provides a unique perspective on market characteristics usually described only in business reports by the tobacco industry. We found that smokers in Thailand have fewer opportunities to trade down to save money on cigarettes, but pay lower prices than smokers in Malaysia, despite Thailand's higher tax rate. The Malaysian market, on the other hand, offers many possibilities to shop around for cheaper cigarettes. Higher income and education increase the price paid per cigarette in both countries, but the impact of these factors is larger in Malaysia. This has implications for sensitivity to cigarette prices. Using tax policy alone should be a more effective tobacco control measure in Thailand as compared to Malaysia. The effectiveness of a tax increase in Malaysia can be improved by adding programmes focusing on smoking cessation among low-income/low-educated smokers.
Demand analysis of tobacco consumption in Malaysia

Ross H, Al-Sadat NA

Nicotine Tob Res, 2007 Nov;9(11):1163-9.
PMID: 17978990

We estimated the price and income elasticity of cigarette demand and the impact of cigarette taxes on cigarette demand and cigarette tax revenue in Malaysia. The data on cigarette consumption, cigarette prices, and public policies between 1990 and 2004 were subjected to a time-series regression analysis applying the error-correction model. The preferred cigarette demand model specification resulted in long-run and short-run price elasticities estimates of -0.57 and -0.08, respectively. Income was positively related to cigarette consumption: A 1% increase in real income increased cigarette consumption by 1.46%. The model predicted that an increase in cigarette excise tax from Malaysian ringgit (RM) 1.60 to RM2.00 per pack would reduce cigarette consumption in Malaysia by 3.37%, or by 806,468,873 cigarettes. This reduction would translate to almost 165 fewer tobacco-related lung cancer deaths per year and a 20.8% increase in the government excise tax revenue. We conclude that taxation is an effective method of reducing cigarette consumption and tobacco-related deaths while increasing revenue for the government of Malaysia.
Magnitude of illicit cigarette trade in Malaysia: empirical evidence compared with industry studies

Bui WKT, Ross H, Mohamed Nor N

Tob Control, 2024 Apr 19;33(3):341-345.
PMID: 36207128 DOI: 10.1136/tc-2021-057210

BACKGROUND: The tobacco industry contends that the illicit market in Malaysia occupies 62.3% of the total cigarette market. If this is true, Malaysia has one of the largest shares of illicit cigarettes in the world.
METHODS: This study employs a rigorous gap analysis to measure the size of the illicit cigarette trade in Malaysia and compare it with the industry estimates.
FINDINGS: We found that in 2019, the illicit cigarette market share ranged from 38.2% to 52.5%, depending on assumptions with respect to consumption under-reporting, which is substantially less than the industry estimates. We found that the size of the illicit cigarette market was not driven by higher excise tax: doubling the excise tax rate from RM0.20 to RM0.40 per stick in November 2015 resulted in only a slight increase in the illicit cigarette market share and no increase in the number of illicit cigarettes in the market.
CONCLUSIONS: Therefore, a reduction in cigarette excise taxes, as suggested by the industry, will not solve the problem of illicit cigarette trade in Malaysia. Instead, the government should ratify the Framework Convention on Tobacco Control's Protocol to Eliminate Illicit Trade in Tobacco Products and implement the strategies outlined in the protocol.
Cigarette price level and variation in five Southeast Asian countries

Liber AC, Ross H, Ratanachena S, Dorotheo EU, Foong K

Tob Control, 2015 Jun;24(e2):e137-41.
PMID: 24500266 DOI: 10.1136/tobaccocontrol-2013-051184

OBJECTIVES: To monitor and analyse impacts of the interaction between tobacco excise tax policy and industry price strategy, on the price level and variation of cigarettes sold in five Southeast Asian countries (Indonesia, Cambodia, Lao PDR, the Philippines and Vietnam).
METHODS: Prices of cigarette sold by sticks and packs were collected through an in-person survey of retailers during 2011. Mean cigarette prices and price variation were calculated in each study country for single cigarettes, whole packs and brand groups.
RESULTS: Price variation of whole packs was greater in countries with ad-valorem excise tax structures (Cambodia, Lao PDR and Vietnam) than in countries with multitiered specific excise taxes (Indonesia and the Philippines). The price variation for single sticks appeared to be driven by local currency denomination. Cigarettes sold individually cost more per stick than cigarettes sold in whole packs in every brand group except for Indonesia's domestic brands.
CONCLUSIONS: Tobacco industry strategy and excise tax structure drove the price level and variation of cigarettes sold in packs, while currency denominations influence the selling price of single sticks. To maximise the effectiveness of tobacco tax policies, countries should adopt specific excise tax structures to decrease cigarette price variation, which would minimise opportunities for smokers to 'trade down' to a cheaper brand to avoid a tax-driven price increase.
KEYWORDS: Low/Middle Income Country; Packaging and Labelling; Price; Surveillance and Monitoring; Taxation
Fulltext The impact of the Malaysian minimum cigarette price law: findings from the ITC Malaysia Survey

Liber AC, Ross H, Omar M, Chaloupka FJ

Tob Control, 2015 Jul;24 Suppl 3:iii83-iii87.
PMID: 25808666 DOI: 10.1136/tobaccocontrol-2014-052028

Study the effects of the 2011 Malaysian minimum price law (MPL) on prices of licit and illicit cigarette brands. Identify barriers to the MPL achieving positive public health effects.
Fulltext The empirical analysis of cigarette tax avoidance and illicit trade in Vietnam, 1998-2010

Nguyen MT, Denniston R, Nguyen HT, Hoang TA, Ross H, So AD

PLoS One, 2014;9(1):e87272.
PMID: 24489886 DOI: 10.1371/journal.pone.0087272

Illicit trade carries the potential to magnify existing tobacco-related health care costs through increased availability of untaxed and inexpensive cigarettes. What is known with respect to the magnitude of illicit trade for Vietnam is produced primarily by the industry, and methodologies are typically opaque. Independent assessment of the illicit cigarette trade in Vietnam is vital to tobacco control policy. This paper measures the magnitude of illicit cigarette trade for Vietnam between 1998 and 2010 using two methods, discrepancies between legitimate domestic cigarette sales and domestic tobacco consumption estimated from surveys, and trade discrepancies as recorded by Vietnam and trade partners. The results indicate that Vietnam likely experienced net smuggling in during the period studied. With the inclusion of adjustments for survey respondent under-reporting, inward illicit trade likely occurred in three of the four years for which surveys were available. Discrepancies in trade records indicate that the value of smuggled cigarettes into Vietnam ranges from $100 million to $300 million between 2000 and 2010 and that these cigarettes primarily originate in Singapore, Hong Kong, Macao, Malaysia, and Australia. Notable differences in trends over time exist between the two methods, but by comparison, the industry estimates consistently place the magnitude of illicit trade at the upper bounds of what this study shows. The unavailability of annual, survey-based estimates of consumption may obscure the true, annual trend over time. Second, as surveys changed over time, estimates relying on them may be inconsistent with one another. Finally, these two methods measure different components of illicit trade, specifically consumption of illicit cigarettes regardless of origin and smuggling of cigarettes into a particular market. However, absent a gold standard, comparisons of different approaches to illicit trade measurement serve efforts to refine and improve measurement approaches and estimates.
Fulltext Malaysia Abridged SimSmoke model - towards achieving 2025 and 2045 smoking prevalence targets

Mohamed Nor N, Ross H, Thinng WBK, Abdul Ghani J, Hassan N, Baharom N

Malaysian Journal of Medicine and Health Sciences, 2018;14(3):8-15.
MyJurnal

Introduction: In respond to the World Health Assembly global NCD target of 30% reduction in the prevalence of adult tobacco use by 2025, Malaysian government called for lowering its smoking prevalence to 15% by 2025. In addition, moving towards the endgame target of less than 5% smoking prevalence in 2045. Methods: Malaysia Abridged SimSmoke model, a simulation model uses specific policy parameters, the most recent smoking prevalence, and population size for Malaysia is developed to estimates and access the impact of MPOWER policies in achieving the targets. Results: The 15% prevalence rate in 2025 can be achieved if the Malaysian government increase tobacco excise tax to 72% of the retail price, implement and enforce comprehensive smoke-free air policies, ban all forms of advertising/promotions and run intensive mass media campaigns. Such approach would reduce the number of smokers by about 2.6 million, averting almost 1.3 million premature deaths in the long term. The tobacco endgame target of less than 5% smoking prevalence by 2045 is achievable if the excise tax is further increased to 86.5% of the retail price while all other tobacco control policies are kept at the enhanced level. Conclusions: Both the targeted smoking prevalence are a realistic proposition if the proposed measures are fully implemented. It requires a whole government approach with the MOH as a leading agency driving the process. It is important to monitor both the compliance with the new measures and smoking prevalence to make sure that Malaysia is on track in achieving its targets.
Prevalence and correlates of roll-your-own smoking in Thailand and Malaysia: Findings of the ITC-South East Asia Survey

Young D, Yong HH, Borland R, Ross H, Sirirassamee B, Kin F, et al.

Nicotine Tob Res, 2008 May;10(5):907-15.
PMID: 18569766 DOI: 10.1080/14622200802027172

Roll-your-own (RYO) cigarette use has been subject to relatively limited research, particularly in developing countries. This paper seeks to describe RYO use in Thailand and Malaysia and relate RYO use to smokers' knowledge of the harmfulness of tobacco. Data come from face-to-face surveys with 4,004 adult smokers from Malaysia (N = 2,004) and Thailand (N = 2000), collected between January and March 2005. The prevalence of any use of RYO cigarettes varied greatly between Malaysia (17%) and Thailand (58%). In both countries, any RYO use was associated with living in rural areas, older average age, lower level of education, male gender, not being in paid work, slightly lower consumption of cigarettes, higher social acceptability of smoking, and positive attitudes toward tobacco regulation. Among RYO users, exclusive use of RYO cigarettes (compared with mixed use) was associated with older age, female gender (relatively), thinking about the enjoyment of smoking, and not making a special effort to buy cheaper cigarettes if the price goes up. Finally, exclusive RYO smokers were less aware of health warnings (RYO tobacco carries no health warnings), but even so, knowledge of the health effects of tobacco was equivalent.
Fulltext Improving estimates of the illicit cigarette trade through collaboration: lessons from two studies of Malaysia

Kunji Koya R, Branston JR, Gallagher AWA, Bui WKT, Ross H, Mohamed Nor N

Tob Control, 2024 Jan 17.
PMID: 38233111 DOI: 10.1136/tc-2023-058333

This paper critically analyses contrasting estimates of Malaysia's illicit cigarette trade in 2011, 2015 and 2019 by Bui et al and Koya et al who previously produced independent estimates at about the same time using tax gap analysis. Collaboration between the two authors' teams emerged due to the discrepancies in their results, generating this paper to explore the methodological issues identified and hence produce revised estimates of the rate of illicit. Key issues identified were: Bui et al's assessment of legally imported cigarettes impacting all years; their exclusion of ad valorem duty affecting the 2011 and 2015 estimates; Koya et al overlooked the value of cigarettes for export market in their ad valorem calculation and used the sales value of imported tobacco/tobacco products, not just cigarettes, both of which impact estimates for 2011 and 2015. Recalculations using Koya et al's consumption data reveal that in 2019, illicit cigarettes accounted for about 70% of the market, which is higher than Bui et al's estimate (38%) but slightly lower than Koya et al's (72%). For 2011 and 2015 where ad valorem applied, the corrected estimates show a share of the illicit cigarette market of approximately 41.1% and 52.7%, respectively, differing from Bui et al's 0% in 2011 and 29.6% in 2015, and Koya et al's 51% in 2011 and 55% in 2015. This paper provides essential lessons for addressing methodological issues between authors' teams and updated estimates of Malaysia's illicit cigarette trade, verifying that Malaysia faces a substantial illicit cigarette trade problem.
Approaches for controlling illicit tobacco trade--nine countries and the European Union

Ross H, Husain MJ, Kostova D, Xu X, Edwards SM, Chaloupka FJ, et al.

MMWR Morb Mortal Wkly Rep, 2015 May 29;64(20):547-50.
PMID: 26020137

An estimated 11.6% of the world cigarette market is illicit, representing more than 650 billion cigarettes a year and $40.5 billion in lost revenue. Illicit tobacco trade refers to any practice related to distributing, selling, or buying tobacco products that is prohibited by law, including tax evasion (sale of tobacco products without payment of applicable taxes), counterfeiting, disguising the origin of products, and smuggling. Illicit trade undermines tobacco prevention and control initiatives by increasing the accessibility and affordability of tobacco products, and reduces government tax revenue streams. The World Health Organization (WHO) Protocol to Eliminate Illicit Trade in Tobacco Products, signed by 54 countries, provides tools for addressing illicit trade through a package of regulatory and governing principles. As of May 2015, only eight countries had ratified or acceded to the illicit trade protocol, with an additional 32 needed for it to become international law (i.e., legally binding). Data from multiple international sources were analyzed to evaluate the 10 most commonly used approaches for addressing illicit trade and to summarize differences in implementation across select countries and the European Union (EU). Although the WHO illicit trade protocol defines shared global standards for addressing illicit trade, countries are guided by their own legal and enforcement frameworks, leading to a diversity of approaches employed across countries. Continued adoption of the methods outlined in the WHO illicit trade protocol might improve the global capacity to reduce illicit trade in tobacco products.