As Singapore and Malaysia consider ways to reduce rocketing levels of diabetes, the introduction of a sugar tax may not be the answer, says Errol Oh
This article was first published in the October 2017 Malaysia edition of Accounting and Business magazine.
In speeches delivered almost four years apart, Malaysia’s Prime Minister Datuk Seri Najib Tun Razak and his Singapore counterpart, Lee Hsien Loong, had some ‘sugary’ thoughts that were strikingly similar. They both spoke about the threat of diabetes and how their governments were handling the problem.
When tabling the Budget 2014 in parliament in October 2013, Najib brought up a troubling statistic: 2.6 million Malaysians under 30 were diabetic. He warned that diabetes causes various health complications if untreated and announced the government’s abolition of the sugar subsidy.
A third of Lee’s speech at his country’s National Day Rally in August this year was devoted to diabetes. Lee said that while soft drink producers had agreed to reduce the sugar in their products sold in Singapore, the government was scouting around for other solutions. He mentioned measures such as a sugar tax (which usually targets sugar-sweetened beverages, or SSB), warning labels on drinks and limiting size.
However, Lee conceded that there was no ideal solution yet. That is indeed a key point; the jury is still out on whether such moves are fair and effective. There is, for example, some debate on the sugar tax, which more and more countries have either introduced or are considering.
Malaysia is in the latter group, which suggests that the removal of the sugar subsidy in 2013 has not made much of a dent in intake. The Health Ministry’s National Plan of Action for Nutrition of Malaysia III (2016-2025) calls for the imposition of tax on unhealthy foods and drinks by 2020. Examples include SSB, sweetened creamer and condensed milk. The government has said little about this proposal in over a year. And given that the general election has to be held by next August, it is unlikely that there will be a new tax any time soon. Taking more time to decide if Malaysia ought to have the sugar tax is a good idea. Such a measure should be preceded by thorough research and robust consultation.
There is no doubt that sugary drinks will have less appeal if a tax pushes up their prices. In May 2015, the World Health Organization concluded that ‘appropriately designed taxes on SSB’ can proportionately reduce consumption, especially where retail prices are raised by over 20%.
However, there is room to argue that the sugar tax is neither a cure-all nor a one-size-fits-all remedy. A recent working paper by the Asian Development Bank Institute cautions that taxes alone may not be enough in countering the obesity problem.
There is also the possibility that other countries’ experience may not be easily replicated in Malaysia. A recent Economist Intelligence Unit report points out that cultural and behavioural factors complicate the fight against obesity in South-East Asia.
If Malaysia truly needs the sugar tax, the government must convince the people that its long-term impact will outweigh the short-term pain.
Errol Oh is executive editor of The Star
"A recent Economist Intelligence Unit report points out that cultural and behavioural factors complicate the fight against obesity in South-East Asia"