KUALA LUMPUR: Despite a minor decrease in the black market for cigarettes, British American Tobacco (Malaysia) Bhd (BAT Malaysia) stressed the importance of increased enforcement to eliminate the illicit trade of cigarettes and tobacco in the country.

At the recently-concluded 61st annual general meeting (AGM), BAT Malaysia managing director Nedal Salem shared his concern about the tobacco black market impacting the legal industry.

"The reopening of Malaysia's borders on 1 April 2022 may potentially increase the tobacco black market trade.

"On this front, we urge the government to focus on tackling the tobacco black market that currently commands approximately 60 per cent of the total market and causes a loss of RM5 billion in tax revenue every year," he said in a statement.

He said smugglers are also using vessels to bring in their black market goods.

"Hence, we urge the government to continue to increase enforcement, especially in coastal areas, and maintain policy stability, including closing the price gap between legal and black market tobacco products," Nedal said.

Moving on, Nedal said BAT Malaysia is also encouraged by the government's focus on regulating the vape industry in

Malaysia.

"We believe any regulations must be science-based to lessen the impact of smoking.

"Regulation will allow vape users access to alternatives with reduced-risk potential to smoking and ensure the products used are compliant with quality and safety standards," Nedal said.

At the AGM, the company shared its financial performance for its 2021 financial year (FY21).

BAT Malaysia turned in a stellar performance in FY21, with volume growth for the first time since 2002 and profit growth for the first time since 2015.

This positive trajectory was due to the reduction in tobacco black market incidence and its increase in the share of the market, which improved revenue and profit from operations.

BAT Malaysia's profit from operations was recorded at RM411 million for FY21 compared with RM346 million for the previous financial year, an increase of 19 per cent or RM65 million.

Revenue increased by 14 per cent or RM322 million compared to the same period last year, driven by a higher volume of 10 per cent that grew for the first time since 2002 due to a reduction in the tobacco black market incidence.

Operating expenses were slightly higher by five per cent or RM12 million, mainly driven by strategic investments BAT Malaysia and its subsidiaries have undertaken to support its growing portfolio in preparation for the legalisation of nicotine vapour products as announced in Budget 2022 and the Stop the Black Market campaign.

Total market share registered a significant share growth across all segments, reaching 52.4 per cent, up by 0.8 percentage points compared with 2020, driven by the strength of Dunhill and the growing value for money (VFM) portfolio.

BAT Malaysia declared a net dividend of 98 sen per share for FY21.

"As we look into 2022, we are optimistic about BAT Malaysia's prospects and will continue to work in all areas, especially in reducing the health impact of our business," Nedal said.