Blowback: Malaysia manufacturers respond to 'soda tax' with price rise (video)

While Singapore considers whether to place a tax or even an outright ban on sugary drinks, Malaysia is taking action. Faced with Asia’s highest rates of diabetes and obesity the Malaysian government will implement a sugar tax on sweet beverages effective April 1, 2019.

The so-called ‘soda tax’, announced as Finance Minister Lim Guan Eng tabled Budget 2019 on November 2, has met with an icy response from Malaysia’s drink manufacturers.

“The duty proposed will be at RM0.40 (US$0.10) per litre for non-alcoholic beverages containing added sugars of more than 5g per 100ml drink; and for fruit or vegetable juice containing added sugars of more than 12g per 1000 ml drink”, Mr Lim said.

In a statement released a week after the announcement, the Federation of Malaysian Manufacturers Malaysia Food Manufacturing Group (FMM MAFMAG) rejected the “selective taxation”, saying it would be ineffective in combating obesity and diseases such as diabetes.

The underlying causes of the health conditions the government is trying to address should be identified first, and any proposed solutions should undergo “rigorous and thorough analysis”, the industry body said

How much sugar is in what you drink

FMM MAFMAG Chairman Nirmalah Thurai said the soda tax was a “very limited solution” that did not effectively promote healthy lifestyles. A collaborative multi-stakeholder approach between the public and private sectors would yield far more effective solutions in combating these public health concerns”, he said.

Do you know how much sugar you consume with every soft drink? Video The BDA

In response, Fraser and Neave (F&N) Holdings Bhd said it will increase the price on 90 per cent of its range of beverages, as most of them fell within the taxable categories.

Examples include 100Plus (6g per 100 ml), Seasons carbonated drinks (11g per 100 ml), Grass Jelly (8.1g per 100 ml) and its range of teas (10g-11g per 100ml).

F&N said it is looking at the potential of its mineral water products to mitigate the impact of the soda tax.

Neither Coca-Cola nor PepsiCo responded to inquiries on their response to Malaysia’s 2019 soda tax.

Singapore’s collaborative approach on sugary drinks

However, in 2017 following pressure from the Singaporean government, seven major soft drink manufacturers including Coca-Cola and PepsiCo agreed to reduce the sugar content of their drinks to 12 per cent or less by 2020. Coca-Cola has also introduced new drinks with lower sugar content or no sugar added.

General Manager of Coca-Cola Singapore, Malaysia, Brunei and Cambodia, Tony Del Rosario, said at the time the company would give people the information they needed to make “truly informed choices”.

“We’re making smaller, more convenient packages available so managing sugar is easier”, he said.

Many industry observers are hopeful that the 2019 soda tax will drive innovation in Malaysia’s drinks manufacturing industry, bringing changes to the range of beverages on offer.

The Malaysian International Chamber of Commerce (ICC) chairman, Chew Phye Keat, said manufacturers had anticipated the introduction of the soda tax and were now striving to find innovative ways to rethink their manufacturing processes.

“Manufacturers have to think of ways to successfully reduce sugar content, without any change in taste that could potentially affect profits”, Mr Chew said.

Asean countries look to ‘sugar tax’ solution

Coca-Cola is one of seven manufacturers in Singapore working with the government to lower sugar content in drinks Coca-Cola Malaysia

“Malaysia has the highest rate of diabetes in Asia“, according to Dr Mustaffa Embong, executive chairman of the National Diabetes Institute (Nadi), adding “there are about 2.5 million people aged 18 and above affected”.

Malaysia is not alone in attempting to battle health issues through effort to fore reduced sugar consumption. Other Asean countries are considering similar tax-based approaches that target high-sugar levels in drinks.

Vietnam is currently mulling whether to implement a 10 per cent tax on sugary drinks from 2019. As in Malaysia, the proposal has been met with a negative response from Vietnam’s drink industry.

The Vietnam Association of Liquor, Beer and Beverage (VBA) protested the move, saying the tax could hurt small and medium businesses by promoting the circulation of fake products.

“The tax proposal would lead to higher production costs, allowing fake and low-quality products to thrive”, the VBA said in a statement.

In September 16, 2017 Thailand implemented its first excise on sugary beverages with a sugar tax law on with a levy ranging from 10 satang to one baht ($0.031) per litre.

On January 1 this year the Philippines also imposed taxes of between PHP6 to PHP12 ($0.11 – $0.23) on sweetened beverages per litre through its new Tax Reform for Acceleration and Inclusion (Train) law.

A tax levy on high-sugar content drinks has also been implemented in Cambodia and Laos PDR. Cambodia charges manufacturers with high sugar content a 20 per cent per litre soda tax, while Laos charges 10 per cent per litre.

Feature photo Coca-Cola Malaysia

Related:

Talk not tax: Will Asian regulators think twice after WHO expert panel stops short of calling for sugar taxes? (FoodNavigator-Asia)
Consider tax on sugar, not just soda (The Star Online)
Sugar tax and the power of big business: How influence trumps evidence in politics (ABC)
‘Not a magic bullet’: Industry concern as Singapore mulls sugar tax and complete ban on higher-sugar drinks (Food-navigator Asia)
Sugar tax sparks product innovation among manufacturers (The Malaysian Reserve)
Singapore considers ban on high-sugar pre-packaged beverages (Foodbev Media)

Blowback: Malaysia manufacturers respond to ‘soda tax’ with price rise (video) added by Sreypov Men on December 7, 2018
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