Sales of beer and stout in Malaysia are expected to fall following the government's changes to the tax system, announced Friday, according to an industry body.

The Malaysian government has cut sales tax by 5% but increased excise duty by 23%. The authorities have also introduced a new Ad Valorem tax.

The Confederation of Malaysian Brewers (CMBB) said that the end result of these changes is a tax increase close to 9%. This rise "will inevitably be passed on to the consumers," a statement from the CMBB said.

The CMBB said it believes sales in the sector will crash 12 to 15% year-on-year, as a result of the tax increase.

The statement said this was the third consecutive year that the government had increased the excise duty on beer and stout and that the increasing price difference of beer and stout in Malaysia compared to its neighbours will benefit the black market.

"The duty increase will continue to widen the price difference of beer and stout with other markets in the region. This will ultimately make smuggling of beer and stout far more lucrative and, therefore, more widespread and difficult for authorities to curb," the CMBB said.