E-CIGARETTES industry players are anxious over the new taxation to be imposed on their products, fearing a high tax amount would kill off the industry.

They also want clearer guidelines from the authorities on the sale of vape liquids and devices.

In Budget 2023, the government introduced an excise duty on liquid or gel products containing nicotine, with half the revenue to be allocated to the Health Ministry (MOH).

While Prime Minister Anwar Ibrahim did not quantify the tax amount, the previous government in Budget 2022 had proposed to impose excise taxes at RM1.20 per millilitre on vape liquids with nicotine. However this was not enforced. 

The Malaysian Vape Industry Advocacy (MVIA) group felt the RM1.20 per litre tax – if this amount is retained by the present government – is illogical and would kill the industry in the country. 

MVIA president Rizani Zakaria said Malaysia, as one of the world’s largest producers of vape liquids, should not be imposing high taxation on its own products. 

“We produce these liquids, so just imagine 30ml times RM1.20 and we are selling the liquids at RM35 per bottle. 

“We are killing our own industry. Unlike China, for their own products, the tax is only 10% while imported vape products the tax is 35%,” said Rizani.

However, Rizani agreed with the government’s proposal to allocate half of the revenue to the MOH but urged the government to hold discussions with stakeholders, including industry players, on the regulation of selling e-cigarettes products.

“Talk to us about taxation. At the moment, we import too many foreign products that can generate import tax revenue but we don’t do so. Industry players know the market.

“It is not that we disagree with the guidelines, such as the generational endgame to stop smoking, but the government must differentiate between vape and cigarettes. They are not the same.

“We also want a standard operating procedure for foreign vape products. At the moment we don’t know if the product meets the requirements because there is no regulation. We must also tighten the sale of vape products on minors,” he said.

A recent study by tobacco firm JTI Malaysia, based on projections, showed the government missed the opportunity to collect RM866 million in taxes last year from liquids used for vaping or electronic cigarettes.

Last year, the MOH introduced a smoking ban and the possession of tobacco products, including vape, for those born after 2005.

According to Malaysia’s 2020 report to the WHO Framework Convention on Tobacco Control, one in five (21.3%) people aged 15 years and older in the country are smokers.

Social and health impacts

Meanwhile Malaysian Organisation of Vape Entity lauded the government’s efforts to tax this industry, stressing the importance of social and health impacts. 

Its spokesman Samsul Kamal Ariffin said taxation was necessary for Putrajaya to regulate the industry. 

“We need to regulate many things. How far can a vape shop operate from a school, who can enter the premises, who can buy and many more.” 

“On health, we need to know if a company has a clean room for the products. That is important,” he added.

Smokers, on the other hand, are contemplating a return to cigarettes. 

They said with the increase of prices of goods, plus new taxation on e-cigarette products, they may have to go back to old habits but will look for cheaper alternatives. 

“Illegal contrabands, cheaper cigarettes are easily available. In the last four years I smoked vape when the prices are not expensive. You can buy disposable vape products easily at affordable prices. 

“But with the new tax, the price may be a little higher so I may switch back to smoking cigarettes,” said 27-year-old retailer Hakim.

Agreeing with Hakim is father of four Khatib Othman, who has been mulling a return to cigarette-smoking.

“I still use vape to smoke at the moment, but on several occasions I bought a pack of cheap cigarettes. I may ditch vape for cigarettes, let’s see how the price goes,” he added. 

Both men agreed that at the moment, the prices of vape liquid and disposable vape are affordable.

A female vape smoker who wished to be known as Fatin concurred.

She said she had quit smoking and has been using vape for the past five years. 

“It is cheap and a better alternative than cigarettes. Cigarettes are expensive, those with brands. But you can get a cheap ones easily.

“As for me, I have not been smoking because vape is better. It is not that pricey and can last longer. But with the new tax, I will consider it. Maybe I will reduce my smoking (vape) habit,” she said. – March 23, 2023.