Indonesia, the Environment & Health: Sugar Tax, Plastic Tax & Carbon Tax?

#Indonesia #sugartax #plastictax #carbontax? "Indonesia plans to impose excise duty on plastic bags, sugary drinks and vehicle emissions with the new levies expected to net the government about $1.7 billion in additional revenue annually." There are likely fewer to challenge sugar and plastic duty/taxes, but a move on vehicle emissions could become challenging for diesel usage, which has become a rising policy for the #palmoil sector.

Indonesian Finance Minister Sri Mulyani Indrawati. Photo credit: Antara/Sigid Kurniawan.

Indonesian Finance Minister Sri Mulyani Indrawati. Photo credit: Antara/Sigid Kurniawan.

#KhorReports contacts in Jakarta finance see a high possibility of implementation, with a senior economic advisor also explaining that “it could happen, considering the big short fall in [fiscal] revenue.” But naysayers see it as “desperate, with a 0% chance of implementation. It’s a last gasp for Sri Mulyani, who has to go.”

Khor Reports coverage of the sugar in popular local drinks, sweetened beverages, bubble tea and juices is here: Boba Boom: The Rise of Boba and the Sugar Strikes Back. The issue of waste plastic (especially on Malaysia) is covered here: Out of Sight, Out of Mind: Waste Plastic Imports to Malaysia.

Vegan Watch: Plants Galore!

Recent anecdotes and news on the vegan front suggests that plant-based diets may be more than just trendy.

On the anecdote front, a number of senior experts in our network (out here in Southeast Asia) doubt they can cut meat, but some muse that they could trim meat to a meal a day. We have been regularly showing our ‘Vegan Map of ASEAN’ and asking about diets during lulls in meetings and at meal gatherings. We are hearing more about a spouse, a child or a grandchild going plant-based; with some knock-on effects. There is also awareness that such diets have to be carefully researched (so as not to be deficient key amino acids and such), and we just heard a grandparent assure that his 12-year old grand daughter has done this thoroughly (and convince her siblings too).

In fact, it is my parent’s (the war) generation who told us stories that having chicken was a treat; and they sometimes used to carry around a (raw) fresh egg in their pockets rather than pay more for an egg to the street food vendor frying up their ‘char kway teow’ (friend rice noodles). Now, the ‘haves’ in Southeast Asia, can afford to eat chicken three times a day - at breakfast (with a nasi lemak, porridge, noodle, sandwich; depending which ASEAN food culture you are tapping), at lunch and at dinner.

On the news front, there are plenty of things to read. This year, 400,000 people around the world signed up for Veganuary, pledging to practice a vegan diet for the whole month of January—in comparison, only 250,000 signed up in 2019, and 170,000 in 2018. The growth in the number of vegan practitioners is eliciting response from the market, with various food chains, including KFC and Burger King, now offering plant-based products and menu items. There is even an app called Pay-a-Vegan that credits users for every vegan meal consumed in effort to encourage restaurants to offer more vegan options and connect vegans to eateries that cater to their dietary lifestyle.

Several celebrities and prominent businessmen have also lent their support in the vegan way of life. Joaquin Phoenix recently led an animal equality protest in London urging people to switch to a vegan lifestyle, and successfully convinced the Hollywood Foreign Press Association to serve its first all-vegan menu at the Golden Globes in January 2020.

In ASEAN, Malaysian tycoon, Tan Sri Vincent Tan (who turned vegan four years ago), shared his strong beliefs about the health benefits of eating greens during the 9th Malaysian International Conference on Holistic Healing in Cancer in August 2019.

All in all, it is clear that plant-based diet habits are getting a lot of mind share (and possibly taking root), especially among the younger generations. This is consistent with the findings from our survey on diet habits among the Khor Reports network and friends: “Knives Out? A Nibble on Food and Diet Habits”. With new relevant terms such as flexitarians, i.e. a person that has a primarily vegetarian diet but still occasionally consumes meat, cropping up, it would be interesting to see how this vegan movement will develop in future.

But let’s not forget there are also negative social media conversations on vegans. There is also research suggesting that plant-based diets may not be as environmentally beneficial or health friendly as it may seem—meat-alternatives, for example, have been criticised to be heavily processed and containing high levels of salts, while nutritionist Dr Graeme Coles alleges that a plant-based diet emits the same amount of nitrogen as a meat-based diet. Moreover, in the UK, vegan activists are among the groups included on the UK’s counter-terror list (which seems surprising to many). Does this portend more contestation to come as farmer segments really start to worry? Does this indicate that some important folk reckon that plant-based is getting more than just flash-in-the-pan trendy?

(20 Feb 2020) Edited to include article from the Food Navigator on research suggesting that plant-based diets may not be as environmentally and health friendly.

The China-Malaysia Trade Relationship in 2019

So here’s a quite take on the China-Malaysia bilateral trade relationship in 2019. Official data was readily at hand for information 11 months of 2019.

The trade picture shows:

1) Malaysia closely involved with China’s supply-chain (high export and imports) for electrical machinery, optical & other equipment, machinery and appliances.

2) Mineral fuel & oils and plastics & articles are top import and export items.

3) Malaysia homegrown export items are palm oil (fats & oils; and also as soap-detergent intermediate products), rubber & articles (think of rubber gloves, rather important in the coronavirus outbreak), fish & crustacean; as well as various minerals like bauxite (including from Pahang).

4) 12% of Malaysia palm oil to China. 33% of fish & crustaceans and also 33% of the fruit segment (including durians) went to China.

5) As for Malaysia’s food imports from China, this amounted to USD1.45b or 12% of the total food import bill. The top 10 food & beverage related products from China were: vegetables, roots & tubers; fish & crustaceans; coffee, tea; fruit & nuts; fats & oils; misc. food preparations; veg, fruit & nut preparations; oil seeds; sugar & confectionery; and meat & fish preparations.

6) Broadly, Malaysia has higher reliance on China for more import items than it relies on China as an export market; the red line for % reliance on China on the upper exports chart is mostly lower than it is in the lower imports chart.

Correction: Bottom graphic updated for text on ratio of exports

Khor Reports Malaysia exports to China 2020-02-11.jpg
Khor Reports Malaysia imports from China 2020-02-11.jpg

A Thorny Conundrum: A Case of the Coronovirus and the Durian Economy

The coronavirus outbreak has stymied the durian economy. Demand for the king of fruits has dipped dramatically amidst widespread city lock-downs and logistics disruptions in China, resulting in durian prices falling by as much as 50%—traders in Raub reported that prices for the Musang King has reduced from RM60 to RM30 per kg. The durian tourism industry has also been hit hard, especially following Malaysia’s temporary travel ban on Chinese nationals from all provinces currently under lock-down.

Unsurprisingly, farmers are becoming wary about processing their durian crops to China, and are beginning to look for alternatives locally and in Singapore. Their hesitance is justifiable—as explained in our previous post on the durian economy (see image below), China is expected to import from Malaysia USD120 million worth of durians annually, with approximately 23% of Malaysia premium-grade output exported, amounting to 75,000 tonnes to China in 2018. Overall, Malaysia reports RM173.3 million (about USD41.9 million) worth of durians in 3Q2019 exported around the globe, the highest quarter of recorded since 2015.

The drastic slowdown in durian imports from China would mean a lot of unwanted durians left in the traders’ storage. Overall trade with China in containers is down 20% or more in recent weeks and some may be affected by about 50% of airfreight volume supply cancelled (and expectations of elevated air freight rising significantly*).

There is some sliver of hope, however. CNA pointed out that the decreased demand in China was due to the outbreak itself—interest in the prickly fruit is still there, albeit just not the right time for a hearty durian meal. The Pahang Fruit Farmers’ Association has expressed optimism that the outbreak could be contained by the time the durian peak season (April to August 2020) comes around.

Until then, the Malaysian durian farmers (together with other fruits farmers in Myanmar, Thailand and Vietnam and beyond) will have to continue to keep calm and carry on, at least until the storm of the coronavirus blows over.

Check out Khor Reports’ Durians for China: A Preliminary View and Dashboard.

*Loadstar.com in its article ”The calm before the 'supply chain storm' when China's air freight rates soar,” points to 300-400% rise in airfreight rates once production is back on full and “before belly traffic returns to the country.”

Screenshot from Khor Reports’ Durian Economy map

Screenshot from Khor Reports’ Durian Economy map

Harder and Harder to Breathe: Burning Landfills and Week-Long Fires

Remember our post on the air pollution problem in Kedah? Unfortunately, there are more news of smokey conundrums in Malaysia’s rice bowl state: a fire broke out at a rubbish dump in Jitra on 1st February 2020.

This wasn’t the first rubbish dump to go up in blazes in Kedah—a landfill in Bedong, Sungai Petani was similarly caught on fire on 20 January 2020, with firefighters struggling for more 18 hours to put out most of the flames, a task made more difficult since most of the burning waste was plastic. A week later, the fire brigade was still working to control the damage caused by the smouldering waste.

It’s disheartening to continue receiving such updates; late last year, we published a post on the air pollution issue at Cinta Sayang, Kedah, a problem that appears to be primarily due to open burning of waste plastic at processing sites, which in turn adversely affects the quality of life for residents in the area, especially health-wise. While merely a preliminary view, do give the post a read—it provides an insight as to how serious the situation has gotten and how important it is to solve it (although nobody should need any further convincing at this rate, to be perfectly honest).

#KhorReports #airpollution #wasteplastic #wasteplasticburning

Bloomberg: $1.4 Billion of Palm Oil Is in the Crossfire as Mahathir Angers India

About a week ago, Khor Reports was again asked to give its comments on the hot issue of the India-Malaysia trade spat, this time to Bloomberg. Tensions had been escalating since Malaysian Prime Minister Mahathir Mohamad’s comment on Kashmir at the United Nations General Assembly in September 2019, which impacted palm trade between the two countries.

If India’s refined imports from the nation drops from about 2.6 million tons a year to reach to 2018 levels, about 2 million tons of Malaysian processed products worth RM5.71 billion may need new buyers, said Khor Yu Leng, an independent economist with Segi Enam Advisors, who has published papers on Malaysia’s political economy.

Click here to read the whole news article.

To read about the background behind the trade kerfuffle between India and Malaysia, click here.

SCMP: The India-Malaysia Palm Tiff and the Return to Agriculture

It’s been a bit of a busy month for Khor Reports. One of the several things lined up include contributing comments to the South China Morning Post (SCMP) on a couple of issues that cropped up recently.

The first concerned the trade tensions between Malaysia and India, which significantly impacted palm oil trade between the two countries:

“Last year, Indians and Malaysians waged rival boycott campaigns on social media and although it is unclear how much traction these movements garnered, Khor, the economist, said it was unusual to see such discussions about the palm oil online “as it doesn't involve end consumers”. “But having tens of thousands of mentions of Malaysian palm oil online is a clear sign of issues, meaning that after that episode the level of mentions was 80 per cent higher than previously which gives us some insight into domestic angst,” Khor said.

The second was about policy suggestions for Malaysia to return to agriculture, following a RM50 billion (USD12.3 billion) food import bill in 2019.

“The good agricultural practices of Malaysian farmers should be well established, and be held in high regard, to establish a loyal domestic market,” Khor said. “Pro-farmer and food-security efforts may be needed. Imports can flood the market in an unpredictable way and that has to be considered.”

Click on the links above to read the full SCMP articles.

BFM: India Asks Refiners to Stop Buying Malaysian Palm Oil

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Earlier this month, BFM invited Segi Enam Advisors principal, Khor Yu Leng, to give her views regarding India’s more recent trade move on Malaysian palm oil. Click here to listen to the podcast.

“The latest move comes after Malaysia's criticism of India's actions in the Kashmir region and its new citizenship law. We look at how this affects Malaysian palm oil producers, and what it means for our trade relationship with India.

Produced by: Loo Juosie Presented by: Lee Chwi Lynn, Aiman Rashad.”

Sugar, Sugar: A Quick Revisit

Some good news on the healthy living front: a recent study from Oxford University has found that between 2015 and 2018, the total amount of sugar sold from soft drinks per capita per day in the United Kingdom has declined by 30%, with the average sugar content of soft drinks dropping from 4.4g of sugar per 100 ml in 2015 to 2.9g/100ml in 2018. Following the introduction of the Soft Drinks Industry Levy (SDIL) in April 2018, which affects soft drinks with a sugar content of 5g or more per 100ml, sales volume of soft drinks subjected by the tax has halved while that of low- and zero-sugar drinks collectively jumped by 40%.

While the research cautioned against using its results as an assessment of the SDIL, it did give it credit for helping accelerate the shift in soft drink sugar content, especially since it observed no changes to the sugar content of soft drinks excluded from SDIL; anything beyond that is attributed to changes in consumer preference and purchasing behaviour.

Observers note the SDIL or “sugar tax” impact was 73% of total sugar reduction was due to reformulation and new lower-sugar drinks and 27% was due to changes in consumer behaviour!

Reading this article (find it here) takes us back to our piece on bubble tea, where we found that drinking a 500ml drink of bubble tea at 100% sugar level was pretty much the same as drinking three cans of Coca Cola. With the average Malaysian apparently consuming a whopping 3kg of sugar from sugary drinks annually, fingers crossed that the introduction of our own sugar tax in July 2019 will bring Malaysia a sweet victory too (pun intended).