Growing market of heat-not-burn devices not subject to the same regulation as other tobacco products
By MARK RAO / Pic By RAZAK GHAZALI
THE absence of consistent laws governing the sale and marketing of alternative tobacco-based products in Malaysia risks saturating the market with brands eager to make a profit, but unconcerned over health standards.
While the Ministry of Health (MoH) works on drafting a new Tobacco Act to regulate both traditional cigarettes and their electronic alternatives under one bill, electronic cigarettes or e-ciggies are gaining popularity among users.
The latest category in the market is heat-not-burn devices after the smokeless IQOS device was launched by Philip Morris (M) Sdn Bhd last year.
Galen Centre for Health and Social Policy CEO Azrul Mohd Khalib said these products escape the definition of traditional cigarettes under the current law and is thus not imposed with high excise duties.
“If (these products) continue to be less regulated, the market will be flooded with e-cigarettes, which will be less concerned about adhering to standards and are a lot cheaper than traditional cigarettes,” he told The Malaysian Reserve (TMR).
He said this will only encourage the smoking habit, especially among younger age groups, which is contrary to Malaysia’s health and social agenda.
“Many of these issues stem from outdated definitions of tobacco products contained within existing legislation, which has not kept up with the tobacco industry.”
Azrul said this allows products like heat-not-burn devices and cigarillos (mini-cigars) to exist with minimal excise duties imposed and without pictorial warnings in the market today.
Tobacco products are currently regulated by the Control of Tobacco Products Regulations 2004, while products containing nicotine like vaping devices fall under the Poisons Act 1952.
Despite falling under the former category, Azrul said cigarillos are not classified as cigarettes by declaring itself as “100% tulen (pure)” or “tobacco inside out” and, consequently, are exempt from heavy excise duties and pictorial warnings.
Meanwhile, heat-not-burn devices are themselves not subject to the same legislation, but only consumer product safety regulations.
The focus should then be on ensuring that the refills or heat sticks for these devices are regulated for smoking control, Azrul said.
With excise duty imposed at 40 sen per stick for traditional ciggies, alternative tobacco-based products represent a nascent, but growing market for tobacco firms in the country.
The lower excise structure also makes this segment a potentially high-margin business for the industry whose flagship brands like Dunhill, Marlboro and Mevius are struggling to compete with the rampant illicit cigarette trade in Malaysia.
Philip Morris is the only of the three leading tobacco players in the country to have entered this new category via the IQOS, while British American Tobacco (M) Bhd (BAT) is still awaiting pricing approval to launch its flagship and propriety Glo product.
The tobacco-heating products have found success in developed markets across Europe and Asia, but the lack of a clear and consistent framework to regulate this category in Malaysia is an ongoing concern for the industry.
BAT MD Erik Stoel (picture) said the company welcomes government regulations, as it is keen on competing in this new category where it sees consumer demand shifting to.
“The challenge with this category is that if regulation is not set properly upfront…then (it) will start becoming an illegal part of the market if we are not careful,” he told TMR.
“It requires proper regulation. We are more than happy to compete, but it needs to be regulated.”
The legal ambiguity surrounding vaping products resulted in numerous raids at vape shops nationwide dating as far back as 2015, and forced several outlets to close shop while putting the industry on the brink.
Tobacco firms are keen on avoiding this, but are at the same time fearful that the new Tobacco Act being drafted by the MoH will impose the same tax structure for traditional cigarettes on tobacco-based alternatives.