Monday, July 27, 2015

Import Tariff Increase Puts Pressure on Alcohol Drinkers

Indonesia Import Tariff Increase Puts Pressure on Alcohol Drinkers
Import Tariff Increase Puts Pressure on Alcohol Drinkers. Liquor, beer, and wine drinkers will have to pay more than double the price for imported drinks in coming months after the government raised import tariffs.

Brandy, whiskey, vodka and other imported liquors will now be subject to a 150 percent import tariff. Drinks that have alcohol content of less than 46 percent are currently subjected to a Rp 125,000 import tariff per liter.

Other alcoholic beverages of less than 15 percent alcohol volume in a tw0-liter units will be subjected to a 90 percent import tariff. Currently they are subjected to a Rp 55,000 import tariff per liter. Malt beers are subjected to a Rp 14,000 import tariff per liter.

Heru Pambudi, the Finance Ministry’s director general of customs and excise, said on Thursday the new regulation was meant to promote the growth of local brewers by balancing the supply from local factories with imported goods.

Following the news, the share price of Multi Bintang Indonesia, Indonesia’s biggest beer producer and local unit of Dutch brewer Heineken, rose 1.8 percent to close at Rp 7,000 at Indonesia Stock exchange, amid 0.1 percent decline of the market’s benchmark index.

The Finance Ministry also hopes the new regulation will boost the country’s revenue from the import duty, Heru said.

“We made this regulation to be more proportional. We could add bigger import tariffs for the higher alcohol content,” he said.

Heru said an importer must pay Rp 2,500,000 for every one-liter bottle of whiskey worth Rp 1,000,000. A whiskey drinker, on the other hand, must pay more than Rp 2,500,000 as he should also pay a 10 percent value added tax.

BPS data showed Indonesia’s import on beverages with alcohol content — from sparkling wine, wine, sake, brandy, whiskey, rum, gin and vodka — in 2014 reached 2.6 million kilograms or worth $13.1 million, but only accounted for 0.007 percent of overall imports in 2014.

Apart from alcoholic beverages, the government also raised import duties on clothes, condoms, carpets, electronic devices, vehicles and foods.

Suahasil Nazara, head of the finance ministry’s fiscal policy, dismissed concerns that the new duties would increase inflation and curb the consumption growth. “I think the effect will not be big,” he added.

Still, some economists warn the policy would likely attract smugglers who want to profit from price disparities between Indonesia and other countries. “There’s always a possibility of smuggling. We can’t always win, especially when the price [of alcoholic beverages] is cheaper abroad,” said Lana Soelistianingsih, an economist at the University of Indonesia.