The Global Burden of Disease (GBD) Study in 2019 reported that diabetes ranked as the third leading cause of death in Indonesia. It has risen three levels from its previous ranking of sixth in 2009. Studies have shown that poor dietary habits, such as excessive consumption of sugary drinks are associated with weight gain and type 2 diabetes.

Based on The National Socioeconomic Survey (SUSENAS) 1996-2014, Indonesia’s consumption of sugary drinks has increased significantly, from around 51 million liters (1996) to 780 million liters (2014), an increase of 15 times. As a result of this drastic growth, Indonesia ranked third, with the highest sugar-sweetened beverages (SSBs) consumption in Southeast Asia in 2020.

We are left wondering what is happening to our public health programs after seeing those statistics. The Health Ministry has the Gerakan Masyarakat Hidup Sehat (GERMAS) campaign, a movement to encourage healthy lifestyles for Indonesians. Although the health promotion message is addressed to individuals, it lacks emphasis on the environment and infrastructure that may enable behavior change. Is it good enough to support Indonesians living healthy lifestyles as mentioned in GERMAS? Well, the answer is it is not enough.

We are in dire need of more comprehensive strategies not just limited to preventive and promotional aspects but also fiscal measures; with SSB taxation as one of its effective strategies. The discourse of taxing SSBs in Indonesia has been around since 2016 but no concrete action has been taken. However, this conversation reemerged in 2020, when Finance Minister Sri Mulyani Indrawati proposed an SSB excise tax to the House of Representatives. The latest news mentioned that the Fiscal Policy Agency (BKF) and the Directorate General of Customs and Excise (DJBC) are positive that a SSB tax will be implemented in 2023. Nonetheless, they continue to seek more evidence to strengthen the draft regulations and provide solid reasoning for the public and the industry.

A possible SSB tax unsurprisingly has sparked debate. Many businesses argue that it will impact their profits and potentially cause layoffs. They worry the increase in price will have an adverse effect on their business, create inflation and hurt small and medium enterprises.

While this fear is understandable, there is no evidence that the SSB industry has collapsed in other countries where SSB taxes have been implemented. An SSB tax does not inherently cause inflation, it increases the price of SSBs, which is passed on to the consumer and not the industry.

Other studies have shown that SSB taxes have not led to job losses. An analysis of the impact of the 1 peso (5 US cents) per liter SSB tax and 8 percent non-essential food tax in Mexico found no decrease in total employment, employment in commercial stores or national employment after the implementation of the taxes.

To make this tax effective and successful we need to learn from our neighboring countries. Thailand, the Philippines, Brunei and Malaysia are four countries in Southeast Asia that have successfully passed SSB taxes, among 46 other countries worldwide. Thailand was the first country in Southeast Asia to make an SSB tax official in September 2017. The tax applies to a wide range of products, including carbonated drinks, energy drinks and sweetened milk-based drinks, and is levied at a rate of 10 to 20 percent depending on the sugar content of the product.

The tax significantly reduced the consumption of carbonated drinks by 17 percent and daily SSBs by 2.5 percent in the first year of its implementation. During the first two years of SSB tax implementation, Thailand provided a grace period for the industry to adjust their SSB products to the tax regulations.

This strategy is similar to the United Kingdom when the government passed the sugar levy tax in 2016 and gave the industry a two-year deadline before the official implementation date. During this time, many brands chose to voluntarily reduce their sugar content thus making this reform successful in reducing sugar consumption and raising funds for public health initiatives.

Meanwhile in Indonesia, a recent modeling study from the Center for Indonesia’s Strategic Development Initiatives (CISDI) projected that a 20 percent increase in SSB price would reduce SSB consumption by 17.5 percent on average. This implies that an SSB tax is effective in preventing further catastrophic health effects and expenditure caused by high SSB consumption, which leads to obesity and diabetes.

An SSB tax is a win-win situation for both industry and consumers. It was and will never be meant as a way to make the beverages industry go bankrupt. Instead, it is a push for the industry to reformulate and innovate their products to be less sugary and provide consumers with more varied and healthier choices of lower-sugar beverages in the market, which in the long run will be beneficial for public health.

For these reasons, implementing the SSB tax in Indonesia is a crucial step toward addressing the country's growing health challenges. An SSB tax is a cost-effective instrument, not only to encourage behavioral change in public consumption but as a form of education too as people will be more aware that sugar content is an issue that requires attention.

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The writer is research project officer for food policy at the Center for Indonesia’s Strategic Development Initiatives (CISDI). The views in this article are their own.

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