Striking Regulation Biz Sustainability Balance As Retailers Brace For Revenue Drop From Tobacco Display Ban

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AS Malaysian businesses, particularly small and medium enterprises (SMEs) navigate 2025, they are confronted with significant challenges from economic fluctuations to inflationary pressures, labour shortages and the evolving regulatory landscape.
Of late, policies such as fuel subsidy adjustments and the adoption of e-invoicing have added further complexity to an already demanding business environment.
The rising cost of goods and operations remains a major concern with businesses striving to manage expenses while maintaining profitability.
Although the government has rolled out various initiatives to support SMEs, some policies appear disconnected from the realities faced by entrepreneurs.
One such issue is the Health Ministry’s (MOH) intensified regulatory efforts which some perceive as overly aggressive for they are implemented without sufficient industry consultation.
Even as critical issues such as shortages of healthcare professionals and strained hospital resources persist, MOH has prioritised enforcing the Control of Smoking Products for Public Health Act 2024 (Act 852) which sparked concern among business owners and retailers who feel that their business interest has been overlooked.

Concerns raised by retailers
From April 1, tobacco products will no longer be allowed to be visibly displayed in retail outlets across multiple states. This measure is part of the Act 852 which restricts the point-of-sale display of smoking-related products in restaurants and convenience stores.
Very broadly, Act 852 which has been implemented since Oct 1 last year encompasses various regulations governing the registration, sale, packaging, labelling and consumption of smoking products in public areas.
One of its key provisions mandates the complete removal of visible tobacco and vape product displays in retail stores.
While the intent behind these regulations is to reduce smoking prevalence, the broader economic repercussions on retail businesses cannot be ignored.
The Federation of Sundry Goods Merchants Associations of Malaysia (FSGMAM) has voiced strong opposition to the display ban while estimating the compliance costs to reach RM200 mil nationwide.
A recent survey among its members revealed that 96.9% oppose the restriction by citing the financial burden it imposes. Retailers estimate that adapting their stores to comply with the ban could cost up to RM5,000 per outlet.
With approximately 40,000 retailers involved in the sale of tobacco and vape products across Malaysia, the economic strain is considerable.
Towards this end, FSGMAM’s president Hong Chee Meng highlighted the financial difficulties retailers are already facing due to inflation and reduced consumer spending power.
Hong Chee Meng“Retailers are already under immense pressure from rising costs and shifting consumer behaviours,” he justified.
“Imposing additional restrictions, particularly with financial implications, will only add to their struggles. A decline in revenue could severely impact the livelihoods of many in the retail sector.”
Economic consequences
Senior financial lecturer of Universiti Teknologi MARA (UiTM) Wan Mohd Farid Wan Zakaria pointed out that Act 852 has been met with strong resistance from retailers and convenience store owners.
“Many small business operators, including kiosk owners and independent retailers, are already working with slim profit margins. This regulation could push them closer to financial distress or even force closures,” projected the academician.
“Many small retailers rely on cigarette sales to attract foot traffic,” observed Wan Farid.
Some restaurants have emptied their cigarette shelves as such public displays are not allowed from April 1, 2025 (Image credit: The Star)“When customers can no longer see these products, impulse purchases are likely to decline which could lead to reduced overall sales across various product categories.”
He further questioned the consistency in public health policies, highlighting that while smoking is being heavily restricted, other activities with known health risks such as alcohol consumption and gambling remain permitted.
“If the government is truly committed to protecting public health, why are similar restrictions not imposed on other harmful products? A more holistic approach to health policies would be more credible and effective,” opined Wan Farid.
“Rather than introducing restrictive regulations that burden small businesses, the government should focus on improving healthcare infrastructure and addressing pressing issues like medical staff shortages.”
As Malaysia moves forward with Act 852, policymakers must consider the potential economic fallout on SMEs and retail businesses.
While public health initiatives are important, they should be implemented in a manner that does not disproportionately impact small business owners.
A more collaborative approach that involve dialogue with industry stakeholders is likely to lead to more balanced and effective policies that serve both economic and public health interests. – Focus Malaysia

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