THE IMPLEMENTION OF TAXATION ON SUGAR-SWEETENED BEVERAGES (SSBs) IN MALAYSIA

INTRODUCTION
  1. The problem of obesity and non-communicable diseases are rising in Malaysia and it is currently in a worrying level. The National Health and Morbidity Survey (NHMS) conducted by the Ministry of Health, Malaysia shows that the prevalence of overweight and obesity among adults have increased from 21% in 1996 to 43.5% in 2006, 44.5% in 2011 and 47.7% in 2015. Also, the prevalence of diabetes have increased from 11.6% in 2006 to 15.2% in 2011 and 17.5% in 2015. Meanwhile, the prevalence of hypertension have increased from 32.2% in 2006 to 32.7% in 2011 and have slightly decreased to 30.3% in 2015.
  2. Besides foods high in energy and fat such as fried foods, frequent and excessive intake of sweetened beverages including carbonated drinks can increase the risk of an individual getting obesity and non-communicable diseases related to nutrition. This is due to the fact that sugar is a simple carbohydrate that is easily digested and converted into energy and will be further converted into fat if it is not utilized.
  3. The Malaysian Adults Nutrition Survey, MANS (2014) also found that 55.9% of adults in Malaysia consumed sugar every day. The average consumption is 4 teaspoons of sugar per day, in the form of added sugar in drinks such as tea, coffee and chocolate-based milk. On the other hand, the average consumption of sweetened condensed milk is 3 teaspoons per day. Therefore, it is estimated that Malaysian adults consume 7 teaspoons of sugar or 6.32% of daily energy requirement, excluding the hidden sugars in foods. The recommended sugar intake by the World Health Organization (WHO) and Ministry of Health is not more than 10% of energy requirement or 50 grams (10 teaspoons) per day for individuals with 2000 kcal energy requirement, including hidden sugars in foods or drinks. For individuals with lower energy requirement such as 1800 kcal or 1500 kcal per day, the sugar intake should not exceed 45 grams (9 teaspoons) or 37.5 grams (7 ½ teaspoons) per day respectively.
MINISTRY OF HEALTH’S INITIATIVES AND APPROACHES
  1. Various educational activities and nutrition promotion have been conducted by the Ministry of Health in addition to many other healthy lifestyle promotion activities such as encouraging the community to move actively. Among the activities conducted are education and promotion sessions in health facilities, non-governmental organizations (NGO), government and non-governmental agencies, schools, National Service Centres as well as through mass and social media. Educational and nutrition promotion activities were also conducted through initiatives such as Healthy Cafeteria, Nutrition Information Centre, Healthy Community Kitchen, Healthy School Canteens and Healthy Supermarket. To encourage healthy eating practice in the workplace, the initiative called Healthy Meal Provisions during Meetings were also conducted. Caterers and food handlers are trained for Healthy Cafeteria to increase their knowledge and skills in healthy food preparation for their customers.
  2. In order to encourage the public to reduce their sugar intake, various campaigns were conducted. This includes the Healthy Lifestyle Campaign launched in 1991 whereby in 1996, the campaign was focused on promoting healthy eating practice including reducing sugar intake. Meanwhile, in 1998, a specific campaign to encourage the public to reduce their sugar intake in food stalls were launched with the theme “1 is enough, less is better!” In 2007, “Reducing sugar” was made as one of the messages in the 5M media campaign. Latest, the campaign in reducing sugar with the tagline #reducesugar,preventobesity will be launched on 16th March, 2019 to support the government policy on the implementation of taxation on sugar-sweetened beverages (SSBs) in Malaysia. In the meantime, dialogues with the food and beverage industry is continued to encourage them to produce more food and beverage products with lower or less sugar content. The cooperation with companies producing instant foods are also continued to introduce foods and beverages with less sugar and smaller portion sizes.
  3. However, the soft policy approach alone was found to be less effective in combatting obesity and diet-related non-communicable diseases. This has been proven through the data of continuous increment of obesity and diet-related non-communicable diseases. Therefore, a hard policy approach to complement the educational and promotional activities is required to prevent the problem from worsening.
IMPLEMENTATION OF TAXATION ON SSBs
  1. The proposal to imposed tax on sugar-sweetened beverages (SSBs) was started in June 2014. Along the year of 2014 to 2017, there were engagement and series of meeting held with relevant stakeholders such as Royal Customs Department, Ministry of Finance (MOF), Ministry of International Trade and Industry (MITI), academicians and industries to discuss further about the implementation of taxation on SSBs in Malaysia.
  2. On May 2018, Malaysia was appointed to be the lead country for Workshop on the Establishment of Framework for the Fiscal Measure for Sugar-Sweetened Beverages (SSBs) held at Pullman Putrajaya Lakeside Hotel, Putrajaya. This workshop was involved by 9 ASEAN countries, ASEAN secretariat, UNICEF representatives, WHO representatives and consultant from Malaysia and Australia. Purpose of this workshop is to develop and establish a draft framework of the fiscal measures for SSBs as a reference for Asean Member State and also for implementation in Malaysia to apply at their respective countries.
  3. On 2nd November 2018, Ministry of Finance has announced in 2019 budget speech to introduce an excise duty starting July 2019 at RM0.40 per litre for two categories of sweetened beverages, manufactured in the form of ready to drink with sugar content as follows:
  4. Beverages (customs tariff code: 22.02) including carbonated drinks containing added sugar or flavoured and other sweetening matter which contains sugars exceeding 5g per 100 ml; and
  5. Fruit juices and vegetable juices (customs tariff code: 20.09) which contains sugar exceeding 12g per 100ml.
CONCLUSION
  1. Economists have determined that for every 10% price increment of sugar-sweetened beverages, consumption will reduce by 10 to 12%. Therefore, taxing sugar-sweetened beverages can reduce sugar intake of the public.
  2. Taxing sugar-sweetened beverages will reduce sales of sugar-sweetened beverages and increase demand for healthier beverage options. This will indirectly encourage the industry to produce more of healthier products.
  3. The revenue generated from the tax can be used for the implementation of obesity prevention program such as nutrition promotion activities in schools and in the community as well building recreational facilities such as playgrounds.
  4. The implementation of the tax is delivering a message to the public that the government is concerned about their health especially in reducing the prevalence of obesity and non-communicable diseases related to nutrition in the community.
  5. Hopefully, the implementation of excise duty on SSBs in this country may create awareness among Malaysian to reduce the consumption of sugar as well as sweet drinks. Excise duty will also be expand towards high sugar content of foods and other subgroup of drinks such as premix and ice cream etc in future. Along this way, the threshold value will be reviewed from time to time.