Abstract —- Contracts are essential in today’s globalised business

Abstract —- Contracts are essential in
today’s globalised business environment where transactions are often across
national boundaries. In the process of these transactions, international
businesses whether importing or exporting are expected to be faced with hurdles
that may lead to legal risks. Dealing with Malaysia, importers would also be
met with obstacles that they must overcome. This paper seeks to explore and
investigate some of the issues in Malaysia that would present legal risks to
importers in the country while also providing real life examples of cases where
the issues discussed did lead to legal risks for businesses.

Alcoholic beverages are made up of combinations
of components which would lead to the production of scent and flavour.  They can cause changes in various facets of
psychology, such as in terms of consciousness, behaviour and thoughts. Alcoholic
beverages include beer, wine and champagne.

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The government of Malaysia has set up barriers
on the importation of alcohol into the Malaysia. Moreover, Malaysia also
presents barriers to importers in the form of its many religious and cultural
sensitivities that are ever more prevalent in the country. All these barriers
represent major and extensive hurdles or obstacles that any importer would no
doubt have to overcome in order to ensure the smooth proceedings of any
business transactions. As non-conformity and ignorance of the realities that
will be faced would result in unwanted effects on the importation of alcohol. Any
miscalculations in relation to these barriers on the part of businesses may
also lead to the transpiring of legal risk that would indefinitely have an
impact on businesses.

The issues in which this paper that will be touched
on are the major legal risk factors that would be faced in the importation of
alcoholic beverages with an emphasis on the Malaysian market. In this paper, we
will be delving deeper into matters relating to the right to sell that relates
to the importation of alcohol, issues relating to the marketing of alcoholic
beverages and also pressures would that arise from governmental and
non-governmental organisation that may lead to ensuing legal risk for
businesses involved.

In this first section of the paper, the
subject of the right to sell will be looked into further. We will therefore be
delving deeper into the issues pertaining to the right to sell of alcoholic
beverages in Malaysia such as licenses that includes premise licenses, liquor
licenses and import licenses. Thereafter, the documents necessary for the
importing of alcoholic beverages into Malaysia will also looked into. The
setting for this section is an importer who wishes to import alcohol from
Australia into Malaysia.

Firstly, any business within Malaysia that is
wanting to import alcoholic beverages into Malaysia would need to have prepared
a number of licenses prior to the importing. These licenses assist businesses
in proving to government authorities of the legitimacy of the business dealing.

One of the first license that is required for
an importer to have is a premise license. The purpose of a premise license is that
it is a document that details and proves that the importer has the required
permission that would enable them to hold and store the alcoholic beverages at
specific locations which would be clearly laid out and stated on the specified
license. Importers of alcoholic beverages therefore need to apply for premise
licenses from their respective municipal councils before proceeding with any
transactions.

Moreover, importers would also have to apply
for a liquor license prior to importing alcoholic beverages. Liquor licenses
are documents that would allow an importer to eventually market the products to
market be it through retail or wholesale. The absence of a liquor license would
render any sale of alcoholic beverages to be an illegal transaction and would
therefore not recognised by the law. The local city or town council are the
ones who have the authority and is responsible for processing liquor license
applications.

The next step in the importation process of
alcoholic beverages is for the application of an import license that is to be
issued by the Royal Malaysian Customs Department which is valid only for a year.
The import license is essential for any business as only with it that any
importing can take place in Malaysia without being taken action upon by the
Malaysian government. An example would be the seizure of containers in Johor
that was full of liquor that was without an import license. It was also revealed
through the media that all ports in Malaysia would eventually be cooperating
with the Customs Department to assess the legality of alcoholic at ports which are
to be accompanied by an import license.

Once these licenses have been applied and
approved, the next step in the importing of alcoholic beverages is ensuring
that the import shipments are accompanied by the necessary documents.

A certificate of origin is a document required
for the process of importing in which it details the place where the products
and goods were produced, manufactured or processed. It is to be prepared by the
exporter upon request by the importer. It is then to be certified and approved
by an established and approved government entity in the exporter country of
origin. The Customs Act of 1967 states that all Malaysian importer needs to
ensure that their shipment of alcoholic beverages comes with a certificate of
origin.

Another document that needs to be present is
the bill of lading. It is to acknowledge that the carrier did received the
shipment and lays out the terms in regarding to the carrying of such goods. The
bill of lading is important to a Malaysian importer as it is used not only as a
receipt but also as a document professing the title to the shipment that are
required to be shown to the Customs Department.

Other than documentation, importers of
alcoholic beverages must also have security stamps labelled on the products
that they are importing. This is to prove that the alcoholic beverages that are
in the shipments are paid for in import duties or to validate that they are in
fact duty free. This aspect of the importing process in alcoholic beverages is
done to ensure the prevention of counterfeiting and smuggling of illegal liquor
between borders. The security stamp is to be displayed on the front of bottles
to safeguard the legality of incoming shipments of alcoholic beverages.

Failure to have the proper requirements in
place for the right to sell such as in licenses, documentation and proper
security stamps could lead to the seizure of goods by the Customs Department
which is laid out in Section 114 of the Customs Act 1967 which gave authority
to Customs Department officials to confiscate the goods suspected to be in
breach.

For example, the result of not having the
appropriate security stamps along with the shipment is that it would have dire
consequences on the business owners as the business owners cannot get their
products on time and if the importer itself was a retailer, the importer cannot
also market it’s product onto the market. A good example that proves this point
is the RM 4.3 million worth of liquor that was seized and removed from the
shelves of stores in Selangor, equivalent to more than 530,000 litres that was
conducted by the Customs Department in late 2015. The reason for the raids and
subsequent seizures of the liquor was because security stamps proving payment
of import duties were not present on the bottles, indicating that were
counterfeit or smuggled.

This sort of raids and seizures has prompted
the widespread use of fake security stamps on bottles. This has led to the
Customs Department in unveiling a new gadget or tool that can be used to detect
the authenticity of security stamps, called the ‘SM 45’. This means that
importers have to be that much more careful in their documentation in order to
avoid stern actions to be taken against them and to always abide by the laws
surrounding the issue of documentation.

In this part of the paper, we will be looking
further into issues surrounding the marketing of alcoholic beverages in
Malaysia while at the same time making comparisons with those of other
countries. Issues that will be discussed includes policies that arises from
religious and cultural sensitivities, the displays of alcoholic beverages in
stores and the marketing of alcohol to minors.

International business and dealings also face
the issue of marketing restrictions in Malaysia. Firstly, any form of marketing
relating to alcohol is sure to stir up debate in Malaysia. One must always
remember to constantly bear in mind that with Malaysia being a Muslim-majority
country, these marketing activities surrounding alcohol should also take into
consideration of law pertaining to the safekeeping of religious and cultural
susceptibility. International parties when dealing with Malaysia therefore
would have to be extremely careful in their approach towards marketing to avoid
making any mistakes deemed to be an offense in light of the laws that exist
within the borders of Malaysia that would otherwise generate negative responses.

Just like many national policies within
Malaysia, the Advertising Code for Television and Radio is undoubtedly heavily
influenced by the government’s effort to spread and advance Islamic values. Considering
the fact that with Malaysia being both a multiracial country and a Muslim
majority country, restrictions on the advertising of alcohol can be said to be
somewhat limited only to mass media outlets that have Muslim majority readers
or viewers depending on the type of mass media be it television or print media.
Mass media that utilised other language than the Malay language and which has
majority non-Muslim readers and viewers are allowed to run advertisements
related to alcohol.

A good example of religious and cultural
sensitivities can be observed in the outrage that was seen from certain
quarters of the Muslim public stemming from supermarkets and hypermarkets
advertising alcohol and liquor products on their shopping carts and trolleys. This
has even once led the Domestic Trade, Cooperatives and Consumerism Minister to
announce that plans for the introduction of ‘halal’ and ‘non-halal’ trolleys in
supermarkets and hypermarkets are in consideration which has led to uproar
amongst within the public domain.

In comparison with New Zealand, international
businesses in negotiations with New Zealanders have to take into account the
very restrictive laws New Zealand has on alcohol advertising. New Zealand has
in place the Sale and Supply of Alcohol Act of 2012 which clearly dictate the
requirement that stores nationwide should limit advertising of alcohol to
obscure areas within the store. This means that alcohol retailers should ensure
that their advertising are not in prominent spots of a store where it is easily
seen or visible by the public eye.

A real-life example of this law being put into
affect is the case between a medical officer and two small supermarket chains
in New Zealand. The medical officer sought changes in the layout of stores that
would place even greater limits on alcohol displays in supermarkets than what
was intended when the Supply of Alcohol Act of 2012 was enacted. The judge
hearing the case sided with the medical officer in what proves to be latest
case of the law being used to restrict the exposure of consumers to alcohol.

Besides that, most countries today also have
in place laws and regulations relating to the advertising of alcohol to
underage people or minors. Most accept that alcohol producers should bear the
responsibility of not targeting their advertising campaign towards minors. Malaysia
is no different in which the Malaysian Code of Advertising Practice clearly
mentions that alcohol advertising should never be directed towards those of 18
years old and under. This law is similar to that of the United States of
America, in which the Federal Alcohol Administration Act (FAAA) laid out
specific guidelines on advertising of alcohol that clearly states that it
should never be targeted at minors. The Administrative Code of all states in
the United States mentioned that advertising surrounding alcohol and liquor
should not include any statement, representation, symbol, depiction, or
reference that could influence the buying or consumption of alcohol by those
who are underage.

One prominent case in the United States of
advertising targeting minors was that involving Diegeo in which a case brought
against the company for allegedly exposing minors to alcohol marketing
campaigns. The case was brought up against the company in order to recover
revenues gained through the unlawful act of advertising alcohol to minors in
the United States by including a pirate character in their advertising. In the
lawsuit, the company was stated to have breached the country’s consumer
protection laws in regards to minors in that they were accused of being
involved in a deliberate and deceptive plan to expose underage Americans to
alcohol advertising.

Furthermore, some countries imposes strict
rules and guidelines against the advertising of alcohol that included other form
of activities that were classified as ‘sinful activities’. The Advertising
Standards Bureau of Australia mentioned that a subject in an advertisement for
alcohol cannot be shown to be involved in any gambling activities in the same
advertising. The bureau added to this by adding further that advertisements of
alcohol should not be set in a setting that has the presence of gambling such
as a casino nor an environment where people are visibly gambling. Moreover,
Australia’s code of advertising also mentioned that the alcohol brands should
never be present in gambling advertising or that an alcohol brand be a co-sponsor
of the advertisement.

In mid-2016, UBET, a sports betting
corporation was accused of including alcohol advertising into some of its
marketing campaigns that led to authorities from Liquor and Gaming New South
Wales, a government agency that regulates advertising relating to alcohol and
gaming to press charges against UBET for advertising breaches. The courts would
later come to a guilty verdict and the betting company was ordered to pay a
hefty fine of approximately 8,000 Australian dollars.

Malaysia is not as serious as some countries
when it comes to the marketing of alcoholic beverages as it is still allowed
all be it with regulations and restrictions associated with it. South Africa on
the other hand are on the brink making amendments that would completely outlaw
the marketing of alcoholic beverages be it through the newspaper, television
and social media. This amendment is due to be introduced because of the major
public health crisis that has been brought about by irresponsible alcohol
consumption and misuse with estimates that the health crisis could potentially
cost the country 12% of its gross domestic product annually.

In this last section of the paper, the issues
relating to pressures that arises as a result of influences from numerous
governmental and non-governmental organisations will be looked at further to
determine its effects on the importation of alcoholic beverages. We will look
at how these organisations utilise their influence in advocating for new
legislations. Their influence mainly comes from their interests in religious
and cultural matters as well as interests towards health concerns.

Pressures by uncompromising non-governmental and
governmental organisations have fully integrated themselves and formed part of
the business landscape today. It cannot be denied that these pressures have
forced businesses to change their approach towards corporate strategy and
corporate performance. In Malaysia, one of the rising forces in the business
environment today are pressures from religious organisation. With the rise of
religious fundamentalism worldwide constantly on the rise today, Malaysia is
not immune to this shift with many religious organisations today wielding
considerable power in leveraging their influence onto business practices to
suit their preferences and liking. These pressures that are on the rise can
pose huge threats and risks for any international dealings in alcohol trade to
be conducted with Malaysia.

Just recently, pressures from countless
non-governmental organisations have led to the cancellation of the KL Beer Fest.
Numerous religious groups came together to voice their discontent and
displeasure at the hosting of such an event where alcohol and liquor would
represent the main draw of attention. Such groups cite religious sensitivities
and sanctity of Islam as the main reasons why such events should not be held.
Such organisations that included Pertubuhan Kebajikan Dakwah Islamiah Malaysia,
Biro Aduan Masyarakat Selangor and the Persatuan Pengguna Islam Malaysia pushed
for the cancellation which was duly carried out by the authorities after
constant pressuring from these groups. In the meantime, alcohol brands such as
Carlsberg have also come under huge criticism in the past from such religious
groups for promoting such events using advertising with women in ‘revealing cloths’.

Furthermore, pressure was also mounted against
state authorities by Muslim governmental and Muslim non-governmental
organisations for the taking down of billboards promoting Malaysia’s Oktoberfest
in 2014. Again, citing religious and cultural sensitivities as the main reason
why advertising relating to alcoholic beverages should never be put it such a
prominent location. This pressure eventually led to state authorities to
declare the billboards to be illegal and was subsequently taken down. Political
organisation PAS has weighed in on the issue by stating that alcohol are
against societal norms and is forbidden in Islam. While another political
organisation, Parti Pribumi Bersatu Malaysia’s youth wing also launched a
campaign calling for the ban of all alcohol related activities. The real-life
examples that was just discussed above clearly reflects the massive hurdle that
is religious and cultural sensitivity that importers must be aware of in order
to avoid unnecessary legal risk that may otherwise arise.

Pressures arising from religious and cultural
tension brought about by groups either governmental or non-governmental can
also be seen in Indonesia where Islamic fundamentalism is noted for their
presence. In recent times, Muslims politicians have been calling for a total on
alcohol in the country including its production, manufacturing, distribution
and consumption. These politicians are pushing for laws that would be similar
to those in Aceh where alcohol is banned.

In contrast, pressures relating to alcohol
elsewhere in the world are mostly brought up due to health concerns rather than
religious or cultural reasons. Health concerns relating to the consumption of
alcohol have led to numerous public discussions worldwide regarding the sensibility
of alcohol advertising. This has led to countless organisations who have begun their
campaigning against alcohol consumption by using numbers and statistics
relating alcohol related deaths as their trump card in their battle towards pushing
for the banning all forms of alcohol related advertising. The amounting
pressures arising from groups in relation to health concerns should be taken
seriously by importers as some of these groups have begun pushing for new
legislation that would either partially or completely ban alcohol related
activities.

One such example could be seen in the United
Kingdom, in which the British Medical Association has regularly petitioned for
the complete ban of all alcohol related advertising and sponsorship of sporting
events and music festivals. This was due to the rise in popularity of binge
drinking in the United Kingdom that has posed serious threats to the health of
the general public. The British Medical Association cited concerns relating to
the culture of binge drinking among youths as one of the most serious health
threats of recent times. The group said that those who are under-aged or minors
are more susceptible to advertising and thus more likely to be influenced by
said advertising hence why alcohol related advertising should be banned
completely.

In short, importers have to be aware of the
pressures discussed above as future legislation resulting from such pressures
can have a direct impact on business activities.

From the aforementioned, it can be observed
that numerous factors have the potential to give rise to legal risks to
importers of alcoholic beverages in Malaysia. These risks may arise in relation
to the right to sell of alcoholic beverages, the marketing of alcoholic
beverages and pressures from governmental and non-governmental organisations.
Therefore, importers of alcoholic beverages have to be cautious and always do
their due diligence by conducting research prior to the start of any business
dealings to avoid bearing the brunt of legal risks that may potentially arise
as a result of a lack of preparedness.