The Malaysian tax on nicotine E-Liquid
Last year, the Malaysian government decided that vaping needed to become more regulated due to its increasing popularity. Along with the sudden Tobacco and Smoking Control Bill approved July 13, 2022, that bans the sale of vape products to those born after 2005, they are going ahead with their planned tax increase on nicotine-containing products including nicotine-free E-Liquids. Originally the new taxation on E-Liquids was due to take effect on January 1st 2022 but was delayed due to complaints from consumers and the vaping industry.
The plans would see the price of vaping products triple their current prices.
Currently vaping products that contain nicotine are not legally allowed for sale in Malaysia. At first vapers rejoiced at hearing the government’s plans to legalise and regulate vaping, however, the cost may be too great. The current tax rate on nicotine-free products is RM 0.40, but with the tax hike, it will go up to 1.20 RM per millilitre. That’s around an extra $17 on a 60ml bottle of E-Liquid.
How popular is vaping in Malaysia?
Originally, vaping was seen as a niche market in Malaysia however since then there are approximately 1.12 million vapers in Malaysia and is touted to continue to grow. 94% of these were previous smokers, a number that should be celebrated considering the reduction in harm by swapping to vaping. Not only this but there are more than 3,300 businesses related to the vaping industry, and so feeding the growth is likely to grow the economy and potentially invite foreign direct investment (FDI). Data collected in 2021 suggested that 80% of Malaysian people are in favour of regulations being introduced for vape products.
However, all of these great things can be hindered by the wrong sort of regulations.
Problems with the proposed vape tax going forward
One of the problems with this tax hike on vaping products means that incredibly, E-Liquids will become more expensive than cigarettes. Considering that vaping is generally agreed on being much less harmful than smoking, the fact that vaping products will be taxed harsher than cigarettes has many rightly concerned.
Similarly, there are worries that because of the sharp increase in price that manufacturers and retailers will have to make decisions on, put these legal products at odds with the much cheaper, black market products. Due to the legal state of nicotine-containing products in Malaysia, a black market has arisen to cater for the needs of vapers who want these products. With the increase in prices of vaping products which will see them become more of a luxury item, those using vaping to quit smoking could possibly quit vaping and re-take up smoking or purchase the much cheaper black market options. Neither are ideal.
This is not to say that regulations are a bad thing, on the contrary, we’ve seen that regulations can be beneficial. They help to establish a safe vaping market with products that are intended to help reduce harm. As seen by us here in the UK, our vaping regulations are some of the strictest in the world and yet it has allowed the vaping industry here to flourish.
In the case of the Malaysian government, an open conversation needs to be had between the governing bodies and representatives from the industry. Establishing regulations is ideal but ensuring that those regulations are fair and just, is a must to avoid creating more harm than good.
What do you think, should Malaysia opt for similar regulations to that in the UK?