Malaysia to introduce tax on sugary soft drinks and juices

Malaysia will introduce a tax on high-sugar drinks and juices in a move to reduce levels of obesity.

As of 1 April 2019, an excise duty of MYR 0.40 ($0.10) will apply to beverages containing more than 5g of sugar per 100ml and juices that contain more than 12g of sugar per 100ml. Malaysian finance minister Lim Guan Eng made the announcement when unveiling the country’s Budget 2019.

In August, Malaysian prime minister Tun Dr Mahathir Mohamad hinted that the country was considering a tax on sugary soft drinks due to high levels of sugar consumption in the country. It is estimated that nearly half of adults in Malaysia are overweight or obese.

The move will be welcomed by the World Health Organization (WHO), which has said that a tax on sugary drinks is “a solution that provides both fiscal and health benefits”.

In a news article published last month, the WHO said: “A tax on sugary drinks is not a silver bullet, and it is certainly not the only measure needed to address the obesity crisis. However, it would have a direct impact on consumption of sugary drinks.

“When implemented in combination with other measures – such as education, subsidies on healthy foods, nutrition labelling, and food marketing regulations – the cumulative impact on obesity would be strong.

However, Kuala Lumpur-based think tank The Galen Centre for Health and Social Policy has advised the Malaysian government to impose the sugar tax on manufacturers instead of at the point of retail.

The think tank’s chief executive Azrul Mohd Khalib said: “The effectiveness of this tax in actually reducing obesity is mixed. Studies from the United Kingdom, Chile and Mexico which have implemented this measure have shown that in the short term, young consumers (between 13-30 years) who are price-sensitive will very likely reduce their sugar consumption by up to 80%.

“Older individuals and those who already have high-sugar diets for decades are unlikely to change habits and are relatively insensitive to price increases. In the long term, consumers will very likely be desensitised to the price difference, requiring additional tax increases in the future.

“As previously recommended, to increase its effectiveness, the tax should be applied to manufacturers and not at the point of retail, which is similar to how it is currently being done in the UK. This will incentivise manufacturers to reduce the sugar content in their products to avoid being taxed. The truth is that we cannot depend on Malaysian consumers to change and adopt healthy choices and habits.”

The WHO said that 36 countries around the world are implementing some form of tax on sugary drinks, including Brunei, France, Mexico, Saudi Arabia, Thailand and UK.