Liquor producers against obligatory labeling move

Liquor producers against obligatory labeling move

By Hidayat Jati

JAKARTA (JP): Liquor producers say they are opposing a move by a private firm trying to control the industry through compulsory labeling.

"We have doubts with the legality of their claim that a private firm can exercise some control over this industry instead of the relevant government agencies," Hatta Arpan, chairman of the Association of Alcoholic Beverage Producers, told The Jakarta Post here yesterday.

"We will not pay anything to that firm until we resolve the legality issue," he said.

Hatta was reacting to a news report which stated that PT Arbamass Multi Invesco had been given the authority to supervise the distribution of alcoholic beverages throughout the mainly Moslem-populated Indonesia.

"We were never officially consulted or notified by the government or Arbamass about this plan," Hatta said.

Emir Baramuli, an executive of Arbamass, was quoted by Kompas yesterday as saying that the supervision will be conducted through the sales of stickers which the firm will sell to beverage producers.

Without the stickers, no alcoholic drinks can be sold or distributed legally, said Emir, who is son of Golkar legislator Arnold Baramuli.

Arbamass, which has several subsidiaries in different industries, is also partly owned by Ari Sigit Soeharto, a son of industrialist Sigit Hardjojudanto.

Emir said the prices of the stickers will depend on the alcoholic content of the beverages. For drinks with less than five percent alcohol, the sticker will cost Rp 600 (around 27 U.S. cents) per bottle/can, and the sticker will cost Rp 750 for those with alcohol content of five percent to 55 percent.

Emir did not explain how exactly the stickers could be used a means to supervise distribution.

He also claimed that Arbamass already controlled distribution in West Kalimantan, Irian Jaya, South Sulawesi and Bali.

Hatta denied this and said that Emir's claim was only true in the case of West Kalimantan.

Strict

In Indonesia, it is legal to produce, sell and consume alcoholic drinks. The industry, however, is strictly regulated and heavily taxed.

The government stipulates that imports of liquor can only be carried out by two firms, PT Rajawali Garuda Nusantara and PT Tjipta Niaga.

In practice, the distribution is supervised by the Indonesian Hotel and Restaurants Association, which allocates the products strictly among its members. The distribution is conducted by several leading grocers, including PT Hero Mini Supermarket and PT Tebet Indraya Supermarket.

Imports of liquor are also subject to high duties -- 40 percent on beer and 170 percent on 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.

Emir said that his firm, which has no previous experience in beverage distribution, was given a permit by the Directorate General of Local Autonomy Administration of the Ministry of Home Affairs on Feb. 19, 1994.

He also said Arbamass gained the permit because current regulations "are not synchronized".

Meanwhile, Hatta, who flatly rejected the claim that the existing mechanism has failed to supervise the liquor trade, said yesterday that the Ministry of Home Affairs is not the appropriate agency to issue such a license.

"We usually answer all government inquiries to the Ministry of Health, Ministry of Trade, Ministry of Industry and the National Police when that is required," he said.

Despite Hatta's apparent determination to oppose Arbamass' move, one executive of a leading liquor producer expressed his skepticism.

"Arbamass has such a strong political connection, and I fear they will have their way although this rent-seeking move is obviously unfair," said the executive, who requested anonymity.

"I know cases of some regional distributors, who rejected the company's offer, suddenly finding themselves under police investigation," he added.

The executive also expected that after Arbamass got what it wanted, prices of liquor would soar, which would push sales down, especially in the case of beer.