Labeling a move to 'protect' the young

Labeling a move to 'protect' the young

By Hidayat Jati

JAKARTA (JP): PT Arbamass Multi Invesco's President Emir
Baramuli pledged yesterday that his company's labeling system
would help reduce the negative impact that the sale of alcoholic
beverages has on the country.

"Our labeling system will help protect the younger generation
from the damaging impact of alcohol," Emir said in defending his
company's license status, which was acquired from the Director
General of Regional Autonomy of Home Affairs Ministry.

Arbamass plans to control the sale of alcoholic beverages
through compulsory labeling.

"We are greatly concerned about the quality of our human
resources within the next five years," Emir said while pointing
out the dangers of uncontrolled liquor distribution.

A leading brewer, however, has opposed Arbamass's intention to
control the industry by legally obliging all producers to use
their company's stickers on their beverages destined for the
market.

"We reject the claim made by PT Arbamass Multi Invesco that it
can control the liquor industry by forcing producers and
distributors to buy their stickers," Rubian Harahap, Commerce
Director of the listed PT Delta Jakarta, maker of Anker Beer,
told The Jakarta Post by phone Monday evening.

The obligatory labeling move was opposed by The Association of
Alcoholic Beverage Producers (Aspromia) last week for the same
reason.

"How can a private firm, and not a relevant government agency,
control an industry?," Hatta Arpan, Aspromia's chairman, asked
reporters.

Beer producers are not grouped with Aspromia, but rather with
the Association of Beverage Industry (Asrim), which has not made
a formal statement on the matter.

Beer is by far the best selling alcoholic drink in the
predominantly Moslem Indonesia. Delta Jakarta alone, which is
partially owned by the Jakarta Municipal Authority and San Miguel
Malaysia, made Rp 114.68 billion (US$52.12 million) in sales in
1993.

The liquor industry was shaken recently by a news report which
cited that Arbamass had been authorized to supervise the
distribution of alcoholic beverages throughout the country in
cooperation with the local administrations.

Emir Baramuli, president director of Arbamass, was quoted by
Kompas last week as saying that the supervision will be conducted
through the sale of stickers, which the firm will sell to liquor
producers, importers and distributors.

Without the proposed stickers, the sale and distribution of
alcoholic drinks will be considered illegal, claimed Emir, who is
the son of Golkar legislator Arnold Baramuli.

Arbamass claims that the letter they obtained from the
Director General of Regional Autonomy Warsito Rasman empowers
them to carry out the labeling move.

However, a copy of the actual letter shows that the document
was simply a circular note addressed to provincial authorities.

Warsito's letter, dated Feb. 19, 1994, only reminds the
governors of the need to control the distribution of alcoholic
drinks in their respective areas.

Arbamass was not mentioned at all in the director general's
circular.

Arbamass, which has several subsidiaries in different
industries, is also partly owned by the 24-year-old businessman
Ari Sigit Soeharto.

Emir said that the prices of the stickers will depend on the
alcohol content of the beverages. For drinks with less than five
percent alcohol, the sticker will cost Rp 600 per bottle/can, and
Rp 750 for those with alcohol content of five percent to 55
percent.

He also said that Indonesia has a high rate of liquor
consumption. Indonesians consume about 192 million liters of
beverages with less than five percent alcohol, about 70 million
liters of liquor with alcohol content between five percent and 20
percent, around 27 million liters of drinks with alcohol content
of 20 percent and 55 percent all in one year, he said.

Denial

In a statement to the Post, Emir denied the allegations that
Arbamass's labeling move was illegal and a form of rent seeking.

Despite this assurance, Harahap of PT Delta still doubted the
validity of what Arbamass claims to be its permit.

"How could the government give a permit to a company before it
even exists?" said Harahap.

Arbamass's company profile states that the firm was founded on
April 20, 1994, about two months after the date of the circular
from the director general of regional autonomy.

According to the profile, Arbamass also secured a license to
sell liquor from the Directorate General of Food and Drug Control
of the Ministry of Health by Decree No. PO. 01.02.1.1.104.

Arbamass also claims to possess the Nering permit, which
allows a firm to store and distribute alcoholic beverages.

Regulation

In Indonesia, it is legal to produce, sell and consume
alcohol. The industry, however, is closely regulated and heavily
taxed.

The government stipulates that liquor can only be imported by
two state firms, PT Rajawali Garuda Nusantara and PT Tjipta
Niaga.

Subsequently, the handling of imported liquor is supervised by
the Indonesian Hotel and Restaurants Association. The association
only distributes the products among its members, which include
several leading grocers like PT Hero Mini Supermarket and PT
Tebet Indraya Supermarket.

Imported liquor is also subject to high duties -- 40 percent
for beer and 170 percent for wine, brandy, whisky and gin --
while domestic sales are subject to a 35 percent luxury tax on
top of a 10 percent value added tax and excise duty.

Aspromia executives said that their associations, founded in
June last year following a government crackdown on vices, was
formed to supervise domestically produced alcoholic drinks
(including low-priced traditional liquor and local whisky) except
beer.

"We aim to mediate between producers and licensed retailers,
who are also our members, and the government. We do not see why
this duty should be granted to a private company which has no
prior experience in this business," said Anton Djawardi,
Aspromia's secretary general, here yesterday.

Emir, however, contended that Arbamass will not distribute
liquor but merely "supervise in cooperation with relevant
agencies."

Too High

Harahap also claimed that the prices of Arbamass's stickers
are too high. He said that most local administrations, with the
approval of regional legislatures, have already stipulated in
their Perda regulations that regional levies for alcoholic
beverages should range between Rp 100 and Rp 150.

In South Sulawesi, for example, local liquor levies range from
Rp 100, Rp 150 and Rp 175.

The Aspromia chairman expressed his fear that forced labeling
might eventually bankrupt some of the liquor manufacturers.

"We employ a lot of people and we regularly buy agricultural
products from farmers for fermentation," Hatta said without
elaborating.

Emir strongly rejected these accusations, arguing that
Arbamass is not a rent-seeker, nor is it trying to become a
monopoly.

"We are the extended arm of the government, but to control
something we must be wise and firm," he said.

Emir said his company had invested significantly in developing
networks for the sticker operation.