What Smokers Should Know About Budget 2021: The End of Duty Free Ciggies & The Rise of Vape

By Karissa Lund  •  09 Nov 2020 in Features

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Health ministries across the world are caught up in the pursuit of reducing the number of smokers through non-smoking campaigns, educational programmes, regulations, governmental policies and mostly, heavily imposed taxes. While some of these initiatives work more than others, it’s likely that more cigarettes-smokers will be turning into vape or electronic cigarettes users adding to the number of first-time smokers who will be initiating themselves with these new methods of smoking.

On the other hand, as cigarette prices skyrocket due to tax, more smokers have turned to illegal tobacco which roughly cost less than RM7 per pack (sometimes, only RM4) for their daily fix as compared to legal ciggies which can reach up to RM20 per pack (with RM11.90 being the cheapest).

Recently, the government’s Budget 2021 was tabled and it was announced that they planned on tightening the licence renewal for importing cigarettes by revising the licence terms including introducing an import quota which will help curb the illegal cigarette syndicates, according to Malay Mail.

Another surprising revelation is that cigarettes and tobacco products will be selling full-price at duty-free islands such as Labuan, Langkawi, Tioman, and Pangkor, and any free zones that have been permitted the retail sale of duty-free cigarettes. Basically, there will be no such thing as duty-free ciggies starting 2021 in what is seen as a move to curb illegal cigarettes from leaving these ports.

As for vape users, the government will impose an excise duty on electronic, non-electronic cigarette devices (which includes shisha and pipes) and vape liquids beginning January 2021.

“The government will also impose excise duty at a rate of 10% ad valorem [according to value] on all types of electronic and non-electronic cigarette devices including vape effective January 1, 2021. E-cigarette liquids will also be subjected to excise duty at the rate of RM0.40 per ml,” Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz said in his speech.

You’re probably wondering now… Does this mean vape and e-cigarettes are legal now? And if they were illegal before this, then why are there so many vape bros around town. The simple answer is yes, vapes and e-cigarettes are illegal but the rule was never enforced.

 

So, what does this mean?

Right now, all nicotine products fall under the purview of the Poisons Act 1952, and no licence has been issued by the health ministry for vaping products in the country – but with the new tax, vape and e-cigs will probably be legal.

For smokers on a budget – you might take this news hard, but keep in mind that this tax will help regulate products and help Malaysians avoid harmful fake ciggies which have seen a spike in illegal sales and distribution over the past few years to the point it is estimated to make up more than half of all cigarette sales in Malaysia.

In 2019 alone, the Illicit Cigarettes Study by Japan Tobacco International (JTI Malaysia) reportedly estimated that the sale of unregulated vape products and illicit cigarettes could cost the government about RM6 billion in lost taxes.

 

Vape & E-Cigarette Producers Support Gov’t Call for Tax

The Malaysia E-Vaporisers and Tobacco Alternative Association (MEVTA) secretary-general Zain Azrul noted that they fully support the government’s proposal to tax vape products as a way to help the government.

“The only thing we need to do now is to make sure we and the other vape associations like MRECA (Malaysia Retail Electronic Cigarette Association) & MEBA (Malaysia e-Liquid Brewers Association) need to discuss in detail with the other ministries on how to make sure our industry is prepared for this transition,” he said.

Zain added that, in the past, there was a lack of guidelines from government agencies which gave the industry a bad name and they hope the law would evolve over time to make sure the vape industry in Malaysia maintains its competitiveness.

 

The Future of Smoking

Okay, enough of talk of tax and contraband… What’s in store for the smoker and vaper in 2021 and beyond?

Will big tobacco finally be able to dive into the world of vape and e-cigarettes?

Currently, there are IQOS and GLO – two major products that aren’t traditional cigarettes by big tobacco players – being sold in Malaysia, but they are considered “heat sticks” or “heated tobacco” – which bypasses the previous illegality of vape and e-cigarettes. Maybe now we’ll be seeing a Marlboro or Dunhill vape juice soon? Altria, the world’s largest tobacco company and owner of Philip Morris and Marlboro cigarettes, has already invested USD1.8 billion in Canadian cannabis producer Cronos – a sign they have no problem jumping in bed with former adversaries of their industry, once the product is deemed legal.

All of this points to the evolution of smoking – from pipes to cigarettes and now, vapes and e-ciggies which are bound to grow in popularity.

Will the next generation of smokers resemble the high-tech future-hipster, Technical Boy from American Gods? Yes, some of them already do.

Will our descendants one day look at pictures of us smoking traditional tobacco in museums and laugh? Also, probably yes.

And when will traditional cigarettes go up in smoke? Maybe right after this stick.