Kota Kinabalu: Sabah can produce niche branded Borneo premium cigars, according to Mikhail Thiruevarsu the CEO of Aquilius Industries who secured the rights for Sabah as a country representing Borneo to organise the inaugural “Cigar Smoking World Championships (CSWC) Borneo 2025” at the Hilton, here, recently.
Known as “Thiru”, he was once employed by British American Tobacco (BAT) Malaysia, a member of the Confederation of Malaysian Tobacco Manufacturers (CMTM), and is well acquainted with Sabah tobacco farmers growing Burley tobacco plants to harvest and process their leaves in Keningau for premium cigarette brands like Dunhill.
Burley tobacco is a renowned heirloom variety known for its light-colored, thick and robust leaves with a slightly lighter shade of green than Virginia.
After being air-cured, the tobacco turns brown with virtually no sugars left in the leaf, giving it an almost cigar-like taste. It needs heavier soils and more fertiliser than Virginia.
Combined with Virginia and Oriental tobacco, Burley makes up an ideal blend, used in renowned cigarette brands.
“The tobacco leaves for cigar have to be left for some two years, not to be harvested in months. So can the farmers have the patience of holding out that long without income?” he posed.
Smallholders growing for cigarette companies might not be able to, but as commercial plantation operation for cigar factory could, in the long term, if any investor cares to venture into this industry in Sabah.
The forecast for the import of cigars and cigarettes to Malaysia shows a consistent growth from 2024 to 2028.
Starting at US$285.1 million in 2024, the imports are expected to increase steadily to US$318.58 million by 2028.
This represents a year-on-year growth of approximately 3 per cent annually. Such a trend suggests a growing demand for these products within the Malaysian market.
The Malaysian tobacco growing industry Malaysian tobacco comprises Malaysian flue-cured Virginia leaf (MFCV) grown mainly in West Malaysia, plus a small amount of burley tobacco grown mainly in East Malaysia.
Approximately 12 million kg of MFCV is produced and sold at a market price, gazetted by the National Tobacco Board.
Nearly 1.6 million kg of burley is produced. There are close to 14,000 farmers and 302 curers involved in the local tobacco growing sector, with farms mainly situated in Kelantan and Terengganu, as well as Kedah, Perlis and Sabah.
Sabah has a complex history on tobacco and cigars, influenced by its past as British North Borneo and the introduction of multinational brands.
While the cigar industry in Malaysia is experiencing a decline in both imports and exports, Sabah’s unique historical and cultural context could present opportunities for niche markets and specialized products.
Thiru admitted that cigar smoking where the smoker does not inhale, is a social habit that does not attract youths who smoke or vape.
So the Government has no compelling reasons to ban unlike the controversy over illegal vape products that may contain narcotics or other dangerous chemicals.
In North Borneo history, there was a published cigar advertisement in the North Borneo Herald in 1916 that showed the then North Borneo Chartered Company government’s guarantee on the various cigars produced locally.
Today, the tobacco industry in Sabah, Malaysia, while not as prominent as in the past, still holds a place in the region’s history and local economy, particularly with the production of local tobacco products like “Sigup Daun” and “curut” (local cheroots).
While large-scale commercial cigar production may not be as prevalent, there’s a vibrant cottage industry where tobacco is grown, processed, and sold locally.
Cigar prices in Malaysia vary widely depending on the brand, size, and type, with some premium cigars costing even over RM700 per stick. Smaller premium cigars are more affordable, priced around RM247 and RM271 respectively.
Malaysia’s cigar imports are projected to reach 51,810kg by 2026, down 6.7 per cent annually from 77,550kg in 2021.
Since 1994, the country’s demand has declined by 7.8 per cent a year.
Exports are estimated to reach 25,640kg by 2026, decreasing 16.5 per cent yearly from 70,440kg in 2021.
Since 1994, Malaysia’s supply has decreased by 10.9 per cent year on year.
In 2021, it was the 25th largest exporter globally, with Switzerland leading the way at 70,440kg. Myanmar, Nicaragua and Germany took the second, third and fourth spots.
In 2023, the revenue for tobacco products in Malaysia was RM3.97 billion. From 2024 onwards, forecast data shows a consistent year-on-year increase, with revenues reaching RM4.03 billion in 2024, RM4.09 billion in 2025, RM4.15 billion in 2026, RM4.21 billion in 2027, and RM4.27 billion in 2028.
Analysing the yearly growth from 2023 to 2024, the revenue increases by 1.51 per cent, and from 2024 to 2025, it increases by 1.49 per cent. The compound annual growth rate (CAGR) from 2023 to 2028 is approximately 1.46 per cent, indicating a steady growth trend in the tobacco products’ market.
Future trends to watch for include the impact of regulatory changes on the industry, potential shifts in consumer preferences towards alternative nicotine products, and the influence of broader economic conditions on disposable income and spending habits. Monitoring these factors will be crucial for understanding the trajectory of the tobacco market in Malaysia.
Looking ahead, factors to watch include changes in consumer behaviour, potential regulatory adjustments, and global trade dynamics. Shifts towards health consciousness, increased taxation, and international trade agreements could significantly impact future import levels. Monitoring these trends will be crucial for stakeholders in the tobacco industry.
