PETALING JAYA: While providing financial incentives may help sugar producers in the country stay afloat, health advocates are concerned that it does not address the health problems that come with it.

This is because of opposing policies within the government of hiking the tax on sugary drinks on Jan 1 this year while at the same time having an incentive to help prop up the ailing sugar industry.

Prof Dr Sharifa Ezat Wan Puteh of Universiti Kebangsaan Malaysia said the sugar incentive should be limited or minimal if it is meant to keep the industry afloat.

“This could be done, although it may see an increase in the cost of sugar, which would indirectly also see an increase in food costs as a whole.

“A better approach could be achieved through a tiered tariff (tiered tax) for food or drinks that have a higher sugar content,” she said when contacted.

The health economics and public health specialist also noted that the recent hike in the sugary drink tax would generally have little impact on the reduction of sugar consumption among people.

“The current hike is too low and does not cause any negative buying behaviour among the masses,” she said.

She added the sugar incentive could have been put to better use by promoting a healthier lifestyle among Malaysians.

Public health medicine specialist Datuk Dr Zainal Ariffin Omar said the decision to provide the sugar incentive should be withdrawn, with the money channelled instead towards healthier causes.

“The incentive could be used to reduce sugar consumption among Malaysians by increasing health campaigns such as weight loss programmes, insurance and access to exercise equipment,” he said.

The government, he added, could show more seriousness in tackling the issue by increasing or broadening the tax on sugary drinks instead of providing sugar incentive.

“There should be an increase in sugar tax and a number of taxable sugar products if the government is serious about tackling non-communicable diseases before it reaches a worrying level,” he said.

On Feb 20, Finance Minister II Datuk Seri Amir Hamzah Azizan told Parliament that the government had provided “incentives” to a sugar producer despite having stopped subsidising sugar since October 2013.

He said it was a temporary measure to assist sugar producers, who suffered huge losses due to global sugar prices, to ensure continued supply for consumers here.

Last September, Parliament was told that the nation’s sugar industry would “crash” if its current price structure was not reviewed because the country’s two largest sugar producers – MSM Malaysia Holdings Bhd and Central Sugars Refinery Sdn Bhd (CSR) – had to import 100% of raw sugar.

The clarification came after the issue was raised in Dewan Rakyat by Ayer Hitam MP Datuk Seri Dr Wee Ka Siong, who wanted to know what sort of aid the government was providing to sugar-producing companies.

In Parliament earlier this month, Dr Wee also questioned the flip-flop policies of the government with regard to sugar.

The MCA president expressed disappointment over the inconsistency in policies by introducing a tax on sugary drinks while at the same time providing an incentive to sugar producer MSM Malaysia Holdings Bhd two months prior to that.

Based on an estimated subsidy of RM1 per kg of sugar or RM1,000 per tonne of sugar, he estimated that the government would have to fork out between RM500mil and RM600mil annually for the incentive.

Under Budget 2024, the government announced the introduction of a tax on sugary drinks from 40sen to 50sen per litre starting Jan 1 this year.

When contacted, MSM Malaysia Holdings Bhd group chief executive officer Syed Feizal Syed Mohammad declined to comment on the sugar incentive, but addressed the sugary drink tax.

He said the sugary drink tax had no impact on the company or the domestic sugar industry as the tax is only applicable to ready-to-drink beverages, which have been equated via price adjustments.

“The sugar tax was introduced on the pretext that it would reduce health-related problems.

“The new tax will also benefit the government’s coffers, but ultimately, the additional tax burden will be passed on to consumers,” he said.

Syed Feizal said there was no conclusive evidence that a sugary drink tax would have the desired effect or prompt a change in consumer behaviour.

According to the financial report for the year ended Dec 31, 2023, MSM Malaysia Holdings Bhd received RM48mil as part of the incentives.

https://www.thestar.com.my/news/nation/2024/03/25/sugar-incentives-not-the-answer