Punitive Generation Endgame Bill Brings Severe Economic Impact

KUALA LUMPUR, 7 October 2023 –  The Control of Smoking Products for Public Health Bill 2023, which also included the Generation Endgame (GEG) bill, a watered-down version of the original bill that was tabled last year, is still expected to cause job losses, business closures, severe social impact to the lower income group and potentially impacting the nation’s attractiveness as an investment destination due to restrictions imposed by the bill. While some changes to the bill are welcome, the damage to the tobacco ecosystem will be permanent. 

Pankaj Kumar, Managing Director of DARE, said, “The GEG bill introduced by Malaysia is punitive and punishing to all, despite the watered-down version. Businesses may find it tough to implement certain provisions of the law and in some cases, it will increase compliance costs.”

Pankaj added, “With higher compliance costs associated with the bill, businesses may find it tough to remain profitable in already tough economic conditions. Some may have to resort to shutting down their business, leaving thousands of workers jobless, or in other cases, businesses may have to resort to cost-cutting measures to ensure overall cost is contained.”

Generation Endgame: Vape Wiped-Out?

As the revised bill will maintain the ban on e-cigarettes and vape products, vape and vaping products are the biggest casualty. As the government has removed liquid nicotine from the Poisons Act 1952 on March 31, 2023, which has enabled tax to be imposed on e-liquids with nicotine with effect from April 1, 2023, there remains a concern on the regulatory framework. 

Pankaj added, “As the industry is growing strongly, employing more than 31,500 workers and close to 10,000 businesses, the bill will see the growth of the vaping industry curtailed as it does not recognize vaping as a Tobacco Harm Reduction (THR) tool. The industry, which has a business volume of more than RM3.48 billion and employs mostly ethnic Bumiputras, risks being wiped out if the tobacco bill presented in Parliament is passed.”

Recognizing Harm Reduction Strategies Crucial

“While Malaysia is adamant in introducing the GEG bill and following the footsteps of countries like New Zealand, we have certainly not taken the right steps in addressing tobacco addiction with cleverly structured programs that will enable smokers to quit the habit for good,” Pankaj added. 

According to Pankaj, THR are well-accepted strategies deployed and this includes the use of “Studies conducted in the United Kingdom have shown that it is not nicotine in itself that is harmful to human health, but rather its consumption in the form of traditional, combusted cigarette smoking”. Hence, Malaysia must move towards not only adopting THR strategies to combat the prevalence of smoking but also introducing legislation to govern the sale and scope of what is sold to the public.”

Rise in Illicit Trade

Pankaj also viewed that the outright ban on the sale of tobacco products for those born after 2007 will result in the incidence of illicit trade rising by 3.3 percentage points, i.e. from 56.6% as at end of 2022 to as high as 60%, fuelling the size of the illicit market to jump to RM5.9 billion, based on latest data, resulting in losses of RM283 million to the government in the form of uncollected taxes. 

Regulation Can Reduce Healthcare Cost

Based on the study conducted in the United Kingdom and if we are able to achieve the same success rate, Malaysia also stands to benefit in the form of lower healthcare costs due to lower smoking prevalence. Malaysia’s healthcare cost related to smoking can be reduced by up to 18% or RM1.33 billion by 2025 on the assumption that there is between 2.9% and 4.5% reduction in smoking prevalence if Malaysia adopts a THR strategy. 

“Overall, the GEG bill has dire consequences to society and businesses. The watered-down bill ought to address Malaysia’s approach towards adopting THR strategies with clear regulations and legislation that will govern the sale of e-cigarettes. In addition, enforcement will be a key element in implementing the proposed bill – an area that Malaysia finds it difficult to measure up as evidenced by almost 60% illicit trade in the country while promoting vape and vaping activities should be continued and not curtailed. We must recognize that vaping is a tool for smoking cessation, as proven in countries like the UK and New Zealand,” Pankaj concluded.