KUALA LUMPUR, Aug 2 — Malaysia finally introduced a so-called “sugar tax” of 40 sen per litre on drinks with sugar content beyond set levels last month, following the footsteps of several Asean neighbours.

If you love sweet drinks, check out the list of ready-to-drink sweetened drinks that attract the new duty.

1. Drinks such as carbonated drinks with added sugar or other sweeteners or flavours, non-alcoholic carbonated drinks except for flavoured milk

Examples: Cola, energy drinks, carbonated drinks in cans, chrysanthemum tea in packets, isotonic drinks, coffee in cans

Advertisement

Taxed if total sugars exceed 5g per 100ml

2. Flavoured milk (such as chocolate-flavoured milk)

Taxed if total sugars exceed 7g per 100ml

Advertisement

3. Fruit or vegetable juices with or without added sugar or other sweeteners

Taxed if total sugars exceed 12g per 100ml

In a frequently-asked-questions (FAQ) guide of the new duty prepared by the Finance Ministry together with the Health Ministry, further explanation was provided on the type of drinks that would be taxed.

Sugar-sweetened drinks are drinks containing sugar, regardless of whether the sugar was added or naturally existing.

These drinks will only be taxed if they exceed sugar content limits and are “ready-to-drink”, meaning they do not require any further processing such as brewing or mixing with water or other ingredients.

In other words, premixed tea and coffee drinks —  better known as 3-in-1 varieties — that require consumers to add water would not be taxed, with authorities that consumers could still regulate their sugar concentration manually.

The government expressed the hope that such price increases would motivate Malaysian consumers to change their habits and choose drinks with lower sugar content. ― Bernama pic
The government expressed the hope that such price increases would motivate Malaysian consumers to change their habits and choose drinks with lower sugar content. ― Bernama pic

Who pays the ‘sugar tax’?

Officially a duty, the “sugar tax” is levied on importers and local factories producing sweetened drinks who must pay it directly to the Customs Department.

However, the government acknowledged that this may be passed on to consumers through increased prices on the sweetened drinks.

Based on the 40 sen per litre rate, the FAQ provided hypothetical examples of the prices rising up by 10 sen for a 250ml drink or up to 40 sen for a 1 litre drink.

The government expressed the hope that such price increases would motivate Malaysian consumers to change their habits and choose drinks with lower sugar content.

The FAQ also said the sugar tax may indirectly encourage the drinks industry to produce and promote more of healthy drinks.

Why a ‘sugar tax’?

The FAQ noted that Malaysia is not the first country to introduce such a duty, which has been implemented in 38 other countries including Brunei and with studies showing that lowered demand for sugary drinks as a result.

The “sugar tax” is aimed at encouraging Malaysians to choose drinks that are less sweet or sweetened with natural sweeteners such as honey, agave or stevia, with the FAQ saying that most drinks sweetened with sugar only provide calories without additional nutritional value.

The FAQ highlighted that excessive intake of sugar would lead to various problems such as obesity that would in turn lead to non-communicable diseases such as diabetes, high blood pressure, cardiovascular diseases and certain types of cancer.

Malaysia was also cited as the top in Southeast Asia with 44.2 per cent  of the country being overweight or obese according to the World Health Organisation's Non-Communicable Diseases Country Profile 2011.

Malaysia's National Health and Morbidity Survey 2015 also found 30 per cent of Malaysian adults to be overweight and 17.7 per cent, obese.

The same survey discovered 3.5 million or 17.5 per cent of Malaysians aged 18 and above to be suffering from diabetes, an increase from 11.6 per cent in 2006.

The FAQ pointed out the high costs involved in lab tests, medicine and treatment for illnesses caused by obesity such as diabetes, noting that the Malaysian government allocated a record high RM4 billion to RM8 billion to treat obesity and NCDs.

“Various policies have been carried out to reduce the intake of sugar among citizens but were not successful, and the statistics for diabetes has been increasing. With this approach, the industry will hopefully reduce the sugar content in drinks produced,” the FAQ said, expecting increased prices to cut down consumers' intake and demand of sugar-sweetened drinks.