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.