2-10-2023 (KUALA LUMPUR) The Malaysian vape industry is in turmoil as the government delays regulating the sector, raising concerns that these businesses could face closure by year-end, jeopardizing 31,500 jobs and a significant dip in tax revenues.
Industry insiders and experts are questioning the merits of the Generational Endgame (GEG) policy and urging the government to re-evaluate its stance, emphasizing the adverse impact on national tax revenue and the potential economic repercussions.
Ridhwan Rosli, secretary general of the Malaysian Vape Chamber of Commerce (MVCC), expressed concern over the impending closure of vape businesses, the loss of tax revenues, and the deterrence of foreign and domestic investments across various sectors related to the industry. He highlighted the industry’s substantial contribution to the nation’s economy, its role in assisting smokers to quit traditional cigarettes, and its support for local entrepreneurs, creating job opportunities along the supply chain.
According to MVCC’s latest data, there has been a steady increase in the number of vape importers, which reached 100 in 2022, compared to 30 in 2019. Additionally, vape products are now available in general stores. The industry has been instrumental in creating business and job opportunities for the Bumiputera community.
Rosli believes the ban on vape products will be ineffective, as historical trends show consistent consumer demand for these products. A ban could lead to consumers seeking unregulated products, creating a market with questionable product quality and safety.
The Ministry of Health has engaged with the Health Parliamentary Special Select Committee to discuss necessary adaptations to the Control of Smoking Products for Public Health Bill 2023. The bill is expected to be tabled in the Dewan Rakyat during the upcoming meeting, beginning on October 9.
Datuk Adzwan Ab Manas, president of the Malaysia Retail Electronic Cigarette Association, valued the domestic vape industry at RM3.48 billion based on 2023 data. The number of retailers has grown exponentially, with about 7,500 general retail shops and 2,500 specialty stores selling vape products. The workforce has increased from 15,000 in 2019 to 31,500 in 2022. Adzwan emphasized the importance of a balanced approach, including the introduction of a vape tax and a regulatory framework to address the concerns.
Adzwan and other industry players call for a sensible regulatory framework that meets the needs of adult consumers while ensuring safety standards and preventing underage access. They see the industry as a source of less harmful alternatives to traditional smoking, job creation, and support for the Bumiputera community.
Pankaj Kumar, managing director of Datametrics Research and Information Sdn Bhd, warned that a prohibitive stance in the Control of Smoking Products for Public Health Bill 2023 could lead to business shutdowns, loss of tax revenue, and unemployment of Bumiputera entrepreneurs within the industry’s supply chain. He emphasized the ineffectiveness of bans, as consumers often turn to illegal products, increasing health risks and causing losses to the government.
Regulations are deemed necessary to enforce educational efforts and ensure that the vape industry adheres to guidelines that position vaping as a smoking cessation tool while safeguarding minors’ health.
