Eight companies have applied for permits to import alcoholic drinks after the government’s decision late last year to end the monopoly previously awarded to state firm PT Sarinah, a minister has said.
“Eight companies have applied. But we haven’t made a decision. It will be decided soon,” Trade
Minister Mari Elka Pangestu said Monday after a cabinet meeting at the State Palace.
Despite the ending of the monopoly on the importation of alcoholic drinks, starting from April 1 there will be no luxury tax slapped on liquor, as stipulated by the 2009 law on value added and luxury taxes, the Finance Ministry said, although the ministry will adjust the excise figure imposed on the drinks.
The Trade Ministry in October last year issued a regulation allowing more companies to import
alcoholic drinks. Those planning to import the drinks must show documents stating they can import at least 3,000 cartons of drinks from 20 brands.
The monopoly awarded to Sarinah had led to widespread smuggling as the absence of competition made alcohol drinks expensive.
Finance Minister Sri Mulyani Indrawati said that since mid-2007 the Directorate General of Customs and Excise has managed to prevent at least Rp 525 billion (US$57.23 million) in state losses resulting from smuggling of alcoholic drinks.
On Monday the Jakarta branch of the Directorate General of Customs and Excise destroyed 65,000 bottles of alcohol, spokesman Evy Suharyanto said.
Illegal alcoholic drinks are common especially in Jakarta and the resort island of Bali as legal drinks are sold at prices at least twice as expensive as the illegal ones, which can be bought for less than Rp 200,000 per one-liter bottle.
By comparison, a legal bottle (one litter) of alcoholic drink sells for less than Rp 200,000 in neighboring Malaysia or Singapore.
The Finance Ministry has imposed a high tax rate on alcoholic drinks, calling this as “sin tax”, taking into account that such drinks may have a detrimental effect on people, said Anggito Abimanyu, head of the Fiscal Policy Office at the ministry.
Mulyani said the ministry would make an adjustment to the excise rate imposed on alcoholic drinks following the abolition of the luxury tax. She, however, refused to elaborate.
Alcoholic drinks are significantly important for the tourism industry, as shown by widespread protests in 2008 due to the drinks shortage when the Directorate General of Customs and Excise intensified efforts to combat smuggling of illegal alcoholic drinks. The Indonesian Hotels and Restaurants Association said foreign tourists demanded sufficient supply of alcoholic drinks when visiting Indonesia.