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).

In Indonesia, sugar-sweetened beverages are consumed at least once a week by 62 percent of children, 72 percent of adolescents and 61 percent of adults, with ready-to-drink tea being the most frequently consumed sugary drink (Laksmi et al., 2018).

Meanwhile, based on the Riset Kesehatan Dasar 2018, as many as 61.27 percent of the population aged three years and over consume sugary drinks more than once per day, 30.22 percent of people consume sweet drinks one-to-six times per week and only 8.51 percent of people consume sugary drinks fewer than three times per month.

The imposition of excise on MBDK is aimed at limiting or controlling people's excessive sugar consumption which in the long run will have a negative impact on health, including obesity and diabetes. Uncontrolled diabetes can cause damage to many organs such as the heart attack, blood vessels, eyes, the nervous system and kidneys.

The International Diabetes Federation (IDF) observed that the number of diabetic people in Indonesia has increased rapidly in the last decade. There were 19.47 million people with diabetes in 2021, up by 167 percent when compared with 2011, which was 7.29 million.

The IDF estimates that the number of people with diabetes in Indonesia could reach 28.57 million by 2045.

Furthermore, the rapidly increasing number of diabetics has the potential to increase health insurance costs and affect the sustainability of the National Health Insurance program. In addition, catastrophic diseases such as heart disease, stroke and kidney failure make a significant contribution, which was around 25 percent of the health insurance burden in 2021.

In our opinion, there are several efforts that the government can make simultaneously so that the MBDK excise tax policy can finally be implemented properly and be more acceptable to all parties.

First, educate the public from an early age on the dangers of consuming excessive sugar, intensively and effectively. In our view, raising people’s awareness about health is a key factor in the success of the MBDK excise policy objectives. Without this awareness, people who can afford it will continue to consume MBDK even though the product price has been significantly increased.

Second, carry out comprehensive and transparent policy dissemination by involving producers as the main industry players. This is important for them to get certainty about their business expansion plans. The MBDK excise policy discourse has emerged since the last 10 years, starting with the discourse on the imposition of excise duty on carbonated beverages. However, there is no clarity regarding the specific products and mechanisms used by the government.

Third, phasing the implementation of the MBDK excise policy and using different layers of tariffs according to the sugar content. For phasing, the government can make a roadmap or set a maximum time limit for the implementation of the MBDK excise policy. For example, the excise tax on MBDK could be implemented maximally in 2024 with the initial target being on certain types of MBDK that have been proven to have excess sugar content (above the recommended serving threshold) compared with other types of sugary drinks.

With a timeline, producers will get certainty and have enough time to make product adjustments or product mixes. As for the excise tariff layer, the government can create several tariff groups (low, medium, high) with the higher the portion of sugar content in MBDK, the higher the tariff charged.

As a reference, according to the World Health Organization, based on the experience of countries that have implemented taxes or excise on sugar-sweetened drinks, this policy would be effective in reducing consumption when the tax or excise rate is 20 percent.

For producers, the different MBDK tariff layers will encourage them to repack, reformulate and rebrand beverage products with a lower portion of sugar content or create new low or zero calorie alternatives. Thus, product diversification and product mix will be important for producers.

Fourth, if this excise policy is already running well, the government can implement supporting policies to make it more effective, for example the use of warning labels for excessive sugar consumption on packaging, restrictions on MBDK advertisements on TV, especially during children's viewing hours, prohibition of selling happy meal packages containing MBDK and others.

In sum, we all hope that public awareness of health will increase in the future along with the implementation of the MBDK excise policy. Thus, consumers can choose their own food and drinks wisely. In the end, producers will also adjust their production according to consumer preferences.

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The writer is senior industry analyst at Bank Mandiri