Wednesday 28 Feb 2024
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This article first appeared in The Edge Malaysia Weekly on August 1, 2022 - August 7, 2022

MALAYSIA is in line to become the first country in the world to ban the future generation from smoking and vaping as lawmakers gather in parliament this week to debate and vote on the Control of Tobacco Product and Smoking Bill 2022.

The bill was tabled for first reading in parliament by Health Minister Khairy Jamaluddin last Wednesday. If passed, it will mean any Malaysian who turns 15 this year, and those younger than that, will never be able to purchase cigarettes and other tobacco and vaping products. Currently, anyone who turns 18 can buy tobacco products.

The bill needs two-thirds majority support to be approved.

Also set to introduce similar legislation, touted as the “generational endgame” (GEG), is New Zealand, which had last Tuesday put forth its Smokefree Environment and Regulated Products (Smoked Tobacco) Amendment Bill in parliament. It was reported that the bill will now go to the Health Select Committee for submissions and review, and return to the House in late 2022 to be passed into law.

In January, Khairy had made known Malaysia’s intention of following New Zealand’s lead in introducing the law during his address at the World Health Organization meeting in Geneva. However, the bill has been 10 years in the making.

The bill has garnered much industry concern and comment due to the inclusion of the proposed generational ban provision and the fact that it, unlike New Zealand’s, also proposes to prohibit the sale of reduced-risk products (RRPs) such as vapour and tobacco heating products to future generations.

Tobacco companies such as British American Tobacco (Malaysia) Bhd (BAT Malaysia) and JT International Bhd (JTI Malaysia) say that is unnecessary, noting that the proposed GEG is effectively prohibitive and that it will further fuel the illicit tobacco market.

“It (GEG) will definitely exacerbate the illicit [tobacco] problem if the enforcement is weak or [if there is] no enforcement, which is the situation today. This GEG basically takes away the right of an adult consumer to make his own choices solely based on the year of his birth. Prohibition of a legal product always has a dangerous side effect because it opens the door for criminals to start selling illicit [cigarettes], [the sale of] which is already very high today. Prohibition is never the answer,” said JTI Malaysia managing director Khoo Bee Leng during a press briefing last week.

“What is worrying about the tobacco GEG is that it also sets a precedent for [the banning of] new product categories. What’s next? Is it going to be alcohol and gambling? Diabetes is a huge problem in Malaysia, are we going to start banning sugary drinks and sweets for the future generations? It cannot be guaranteed that the government won’t extend [this] to other product categories [after the tobacco GEG],” she added.

JT International Trading Sdn Bhd legal director for Malaysia and Singapore Rohizwan Ahmad concurs, saying there are adequate regulations governing the industry. “We already have existing laws that are good — but the enforcement is lacking. So if we can just [ramp up] enforcement first and see how it goes from there, probably then we can look into the bill in the near future, but not now. If we can get [the illegal cigarette incidence] back to the 30% levels [in 2015], then we can look back at this situation and see whether we can throw our support [behind] the bill. At the moment, we don’t support the bill,” he says.

Malaysia remains the world’s largest market for illicit cigarettes. According to Nielsen’s latest study on illegal cigarettes, as at May, 57.7% of cigarette consumption in the country was illicit.

Vape players hail legislation, but not ban

Tobacco companies have often pointed out that at least RM5 billion in current tax revenues is lost each year by the government to the illicit cigarette trade. And that figure is higher if it includes the excise tax lost on nicotine vaping liquids.

Under Budget 2022, an excise duty of RM1.20 per ml was to be imposed on nicotine-based gel or liquid products for vapes and electronic cigarettes from Jan 1, 2022. However, this is awaiting imposition of the proposed tobacco product and smoking control act as nicotine vape liquids are currently regulated under the Poisons Act 1952.

JTI Malaysia estimates that the government loses about RM750 million per year from uncollected vape excise duties based on the 2020 volume of 626 million ml of vape liquids consumed, which cost between 50 sen and RM4.80 per ml.

“There is a huge segment of vape users out there. The volume of nicotine liquids currently sold in Malaysia is equivalent to 12.5 billion sticks of cigarettes — almost double the volume of legal cigarettes at 6.3 billion sticks in 2020. This is based on the conversion that 1ml of vape liquid is equivalent to 20 sticks of cigarettes,” says Khoo.

Thus, the tabling of the tobacco product and smoking bill would have brought much cheer to vape players, which have for years been calling for the government to regulate their industry — if not for the GEG.

“It (regulating the vape industry) is a good thing. It is time to regulate, to make sure that consumers get vape products that are safe, compliant with the law and the Ministry of Finance (MoF) can also collect tax revenue,” says Khoo.

Asked if JTI Malaysia still plans to introduce its RRPs such as Ploom and Logic in the country, she says: “We cannot share [our plans] because this is part of our strategy. But once the proposed law is in place, we can introduce them to the market.”

“The proposed generational tobacco ban [if passed] will come into effect from 2025 [when those born in 2007 turn 18]. It is not an immediate provision where you cannot bring anything in. You can still sell [tobacco and vape products] because there are still smokers out there who were born before 2007 and this market is big. That’s why we are planning to bring in [our RRPs] even if the bill is passed,” says Rohizwan.

However, Malaysian Vapers Alliance president Khairil Azizi Khairuddin says outlawing vape for the new generation would be “disastrous”.

“People would still vape, but now, we would find a whole range of ‘collateral consequences’ that come along with prohibition. Working adults will have to hide their habit and use vape in alleys and dark corners, afraid of being caught using illegal substances. It might lead to absurd situations in which one day, a 50-year-old would be forced to ask their 51-year-old friend to purchase a vape on their behalf,” he adds.

Malaysia Retail Electronic Cigarette Association president Datuk Adzwan Ab Manas urges the government and Members of Parliament (MPs) to review the bill as it equates vaping with cigarettes, although countries such as the UK, Japan and New Zealand treat vape products as a harm reduction approach to tobacco smoking.

“Smoking is not the same as vape, but in the bill, vape is equated with smoking in its interpretation. This gives a very wrong message to vape users and the public. In fact, the contents of vape products should not be interpreted as smoking substances because vape products or their contents are not directly related to cigarettes,” he says.

Harsher fine and prison time for GEG offenders: aye or nay?

If the proposed tobacco GEG comes into effect, anyone born after Jan 1, 2007, could face a fine of up to RM5,000 if caught buying tobacco and vape products. Currently, underage smokers caught smoking can be fined up to RM1,000.

The punishment for a person caught selling tobacco and vape products to anyone born after Jan 1, 2007, can involve a fine not exceeding RM20,000 and include imprisonment of up to one year if he or she is a first-time offender. The sentence is a fine not exceeding RM30,000 and/or up to two years’ imprisonment for repeat offenders.

For corporations, they are liable to pay a fine of RM20,000 to RM100,000 and/or face up to two years in jail if found guilty of selling tobacco and vape products to anyone born after Jan 1, 2007, for the first time. For subsequent violations, the punishment is a fine of RM50,000 to RM300,000 and/or up to three years in prison.

Currently, those caught selling tobacco products to a minor can be fined up to RM10,000 or face imprisonment for a term of up to two years.

Subang MP Wong Chen is one of the supporters of the bill. He believes that the proposed RM5,000 fine will serve as a deterrent for those above 18 born after 2007, noting that the average starting salary in the country ranges from RM2,000 to RM3,000 a month.

“You are looking at about half a million people yearly reaching the smoking age; thus a fine that is above a month’s pay will be harsh, but it is that very same harshness that will make it an effective deterrent [against smoking or vaping],” he tells The Edge.

Wong says the government’s plan to impose stricter penalties for GEG offenders may be reflective of the poor enforcement records in Malaysia. “If you have good enforcement, you can keep the fines as low as a few hundred ringgit. But if you have poor enforcement, the government will try to overcompensate for this weakness by pushing up the quantum of fines. Still, while the limit of the fines is — on paper — high, in reality the prosecutors and courts will impose much lower fines for young offenders.”

Wong is of the view that Malaysia must get itself ready for GEG. “No country is ready for GEG. GEG is essential because the fiscal income from tobacco excise duties is insufficient to cover the direct cost to public healthcare. I don’t think there has ever been a government in the world that has collected more tax than health expenses related to tobacco.”

“The Malaysian government’s fiscal situation is not good and [it] will soon be facing global inflation. According to my calculations, within five years of implementing the GEG, we will save about RM1 billion a year of the health budget that would otherwise have been spent for the treatment of tobacco use,” he says.

MoF data shows that total excise duties collected from imported cigarettes and tobacco products totalled RM2.7 billion in 2018, while former deputy health minister Dr Lee Boon Chye had reportedly said that the government and the private sector each spends RM7 billion to RM8 billion a year to treat smoking-related illnesses.

“Everyone knows that the government is fiscally worse off due to tobacco use. And we haven’t even looked into the annual economic productivity losses and reduced employment caused by smoking and second-hand smoke. My office calculated an estimated productivity and employment loss of RM35 billion caused by smoking. These losses will further reduce government tax revenue,” says Wong.

The GEG also gets a vote from Dr Yeah Kim Leng, professor of economics at Sunway University Business School, who says emerging evidence from early adopters of the GEG approach shows a substantial decline in smoking prevalence among the youth.

He says given the prevalence of smoking among today’s youth, the GEG policy is a bold and innovative approach in applying a supply-side measure to curb smoking prevalence by creating a tobacco-free generation.

Yeah believes that the smoking prevalence is likely to decline given that smoking habits are found to be formed during the early teen years.

“[However,] much more education and advocacy are needed to prepare the public on both the supply and demand sides to ensure implementation effectiveness and reduce social disruptions arising from overzealous enforcement. A grace period in enforcement such as targeting repeat offenders is proposed to educate and promote the tobacco-free generation vision and benefits,” he tells The Edge.

Petaling Jaya MP Maria Chin Abdullah says while she is opposed to smoking, she is against imposing fines or even jail terms to discourage smoking. “This approach appears populist and it is a quick fix to a problem where there can be alternatives.”

Still, one thing both opponents and critics of the bill agree on is that Malaysia’s ability to enforce the GEG will be the key to its success.

“The generational smoking ban is a step in the right direction, but it ignores the elephant in the room. There are still many Malaysians who smoke and use illegal cigarettes and tobacco. In order for smokers or potential smokers to accept the government’s mandate, enforcers must rethink their monitoring and implementation processes. If they are weak, prohibiting and banning them will not help. I don’t see how the youth or the next generation will quit smoking if entry of illegal cigarettes and tobacco is not quelled,” says Maria.

“If the government continues to turn a blind eye to illegal cigarettes, the problem would remain with youth born after 2007 as they will continue to have access to illicit cigarettes. Even with banning, there must be awareness campaigns to deter Malaysians from smoking. This includes persuasion methods, which, while time and effort are required, will bear fruit in the long run,” she adds.

“As a legislation aimed at changing human behaviour to reduce one’s health risk, the penalties appear to be harsher than the punishment for minor crimes. It is likely to inflict a high financial burden and possibly lasting disruption to low-income families and small retail businesses if close to, or the maximum penalties are meted out,” says Sunway University’s Yeah.

Thus, he sees the affected youth resorting to procuring tobacco and vape products through other means, including the black market and purchasing through those not covered by the GEG policy.”

 

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