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Waiting for implementation of sugar sweetened beverages excise policy
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Stock illustration of sugary drinks (Shutterstock/monticello)
T
he government and the House of Representatives have approved the plan to impose an excise duty on packaged sugar-sweetened beverages (MBDK) in the 2023 State Budget although the implementation will still be dependent on the development of Indonesia's economic conditions next year.
On the one hand, this is good news for MBDK manufacturers to better prepare business plans and strategies in carrying out these policies in the future. On the other hand, this could also be a time bomb because there is no certainty when the policy will be implemented.
Moreover, the plan to impose an excise duty on MBDK has raised questions among various stakeholders, even though this discourse has been going on for the past few years.
We understand the concerns of MBDK producers that the imposition of excise duty will increase the price of MBDK products, so it could potentially reduce sales, especially when MBDK market conditions have not fully recovered after the COVID-19 pandemic. As we know, MBDK consumption is strongly influenced by people's mobility.
However, we support the government's efforts to improve public health through the MBDK excise tax policy. We realize that the benefits of the policy will be present in the long term, especially in the form of health impacts, so many people may think that it is not yet time for it to be implemented.
In our opinion, what is more important is how to make this policy transition better so that industry players are better prepared in formulating future business strategies while waiting for the government to implement this policy.
Indonesia has a large and rapidly growing market for MBDK. According to Ferretti & Mariani (2019), the consumption of sugar-sweetened beverages in Indonesia was 20.23 liters per capita per year in 2015. It was the third-highest in ASEAN, after Singapore (76.32 liters per person) and Thailand (59.81 liters per person).
