2FIRSTS Interview with MVCC: License System Analysis, Recommend Building Business in Malaysia

Malaysia, with a population of 33.94 million, is not only a populous country in Southeast Asia but also a major consumer of e-cigarettes. China has a huge export quantity of e-cigarettes to Malaysia, with exports reaching approximately 21.72 million US dollars in February 2024. Whether it's vape, heated e-cigarettes, nicotine pouches, or other novel tobacco products, the Malaysian market shows considerable potential.

Recently, there has been a viral rumor that Malaysia is planning to introduce a licensing system for e-cigarettes, where holding a local Electronic Vape Liquid/Gel Production License will become the standard for operating in the market. Some companies have already obtained these licenses, but is this true? As Malaysia prepares for a period of intensive regulatory implementation in 2023, which direction will the recent compliance regulations take? For Chinese companies looking to enter the Malaysian market and achieve success locally, what can they do? To answer these questions, 2FIRSTS conducted an interview with Ridhwan Rosli, the Secretary-General of the Malaysian Vape Chamber of Commerce.

Malaysia will implement a "license system," where an e-cigarette license (Electronic Vape Liquid/Gel Production License) will become the standard for regulating the market.

Secretary-General Ridhwan Rosli stated that currently, overall, any single license/permit cannot guarantee that a company is fully legal and compliant with e-cigarette-related laws in Malaysia.

In general, Malaysia's regulation of e-cigarettes is similar to that of other food and drug consumer products, divided into three levels: federal, state, and local. These three levels are relatively independent of each other, with their own legislative proposals and mechanisms for approval, and enforcement is also largely separate. Therefore, in order to comply with regulations in Malaysia, companies need to ensure compliance at all three levels.

How credible is the article about "INGOO" published on "The Page"?

Based on the above reasons, the article mentioned that "INGOO International team has become the first company in Malaysia to obtain a license for the full production and sale of e-cigarettes," but Ridhwan Rosli expressed skepticism about this claim. The concept of a "full production and sale license for e-cigarettes" is merely a vague idea. To his knowledge, no formal proposals have been submitted in writing from any party.

During the year 2024, the topic of discussion was the e-cigarette shop licensing system. This idea was proposed by Malaysia's former Health Minister Khairy Jamaluddin. Current Health Minister Dzulkefly Ahmad announced that he will be submitting a memorandum to the cabinet regarding regulatory suggestions based on the Public Health (Control of Smoking Product) Act 2024, proposed under the 852nd act. In the memorandum, former minister Khairy Jamaluddin suggested that the government should introduce a licensing system to restrict the sale of e-cigarettes to licensed specialty stores.

Ridhwan Rosli stated that it is possible for the companies mentioned in the article to have or be similar to traditional tobacco manufacturers with a "nicotine product license".

In which direction will Malaysia's compliance regulations develop in the near future?

In January 2023, the Malaysian Ministry of Health announced during a meeting with the Malaysian e-cigarette association that they are considering implementing a product-based approval system. Reidwan Rosli explained to 2FIRSTS that this approval system will be similar to the Pre-Market Tobacco Application (PMTA) introduced by the US Food and Drug Administration (FDA).

The product approval system is still under review. Reedwan-Rosli emphasized that even though domestic transactions in Malaysia are high and the black market is extensive, implementing the system and enforcing it will be a long process. However, the Malaysian e-cigarette association is working to establish a traceability mechanism for individual products to protect consumer rights.

What advice do you have for Chinese companies looking to enter the Malaysian market?

Ridhwan Rosli told 2FIRSTS that the chamber welcomes Chinese e-cigarette companies to develop and expand their market in Malaysia, a densely populated and potential-rich market. However, he also feels that the Chinese companies he has come across lack professionalism. He cited examples such as British American Tobacco (BAT), Philip Morris International (PMI), and Japan Tobacco International (JTI), which have been able to quickly establish distribution channels and dominate shelves in Malaysia, a "non-core" market, because they have built a professional team familiar with the local situation, market, and regulations. On the other hand, Chinese e-cigarette companies in Malaysia are mainly focused on "exporting to Malaysia" and have a sales-oriented approach, which Warren-Rossley believes lacks professionalism.

Ridhwan Rosli reminded that the lack of a professional team can result in significant hidden costs. For example, when applying for licenses, considerations such as the order of applying for multiple licenses and which state may have easier regulations for a certain type of license all require prior research and investment, or else companies may face various regulatory hurdles. Van-Rossley cited a real-life example where he encountered several Chinese e-cigarette companies wanting to host e-cigarette events, only to be temporarily shut down due to local regulations that did not allow it. These situations were all caused by a lack of understanding of local information.

During an interview with 2FIRSTS, he suggested that Chinese companies looking to enter the Malaysian market should consider establishing a local company in Malaysia. This would not only reduce the need for multiple licenses but also allow them to operate as a local business, streamline their sales channels, build their brand reputation, and establish good relationships with local regulatory authorities. He pointed out that this is also the approach taken by big companies like BAT and JTI. "Just by having an office," he mentioned, these e-cigarette companies can take control of their operations, reduce friction costs, and move forward smoothly.

Regarding Ridhwan Rosli

Ridhwan Rosli is a Malaysian entrepreneur with a strong interest in academia and civil society, holding both a bachelor's and master's degree. His academic contributions include co-authoring two books and publishing multiple articles in journals. Currently, he holds strategic positions as a shareholder and director in several public limited companies and private companies, spanning various industries. These companies include the Malaysian E-cigarette Association and Permodalan Tanah Melayu Berhad (TMCB), which was established in 2017.