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19 April 2010

Long journey for alcoholic beverage in Indonesia

Two sides of the wish.
Circulation of beverages containing ethyl alcohol (alcoholic beverage), such as Beers, Tequila, Vodca, Martell, Johnny Walker, Hennessy, Wine, etc, seems to still be a prolonged debate in Indonesia as the largest Muslim country in the world. MUI (Majelis Ulama Indonesia / English: Indonesian Ulema Council ) as the highest Muslim authority in Indonesia has issued a Fatwa that stated "Haram" (Haraam / forbidden) for these type of drinks. I believe that all religions in Indonesia (Islam, Christian, Buddhist, Hindu) including all good parents do not want their children to be a drunkard. In this case, I think, Muslim community is more extreme against this alcoholic beverage.

On the other hand, Pancasila is the philosophic fundamentals of the state, and the national motto is "Bhinneka Tunggal Ika" (Unity in Diversity). The country need to protect pluralism and diversity in the society under "one umbrella". It's clear that Indonesia is not a religious state, as it has been said by former president Abdurachman Wahid.

Starting point of the journey of alcoholic beverage debate.
I still remember when I lived in Bali in 1994, "AS" together with "EB" through their company namely "AMI" (sorry for just write the initials) were crowded mentioned relates to the circulation of alcoholic beverage (such as Johnny Walker, Martell, Hennessy, Chivas Regal, Tequila, etc) in Bali province for the first time. They run a business that controlling the circulation of alcohol beverage through a mechanism called labelization (labeling). Each manufacturer and distributors of alcohol beverage is subject to levy of Rp.600 and Rp.750 per liter, respectively for beverage containing alcohol between 5% to 55%. At the time, this mechanism is supported by the local government (governor of Bali). From Bali, then these controversy regarding the circulation of alcoholic beverage was sticking on the surface and became a starting point of its long journey, and still debated to this day, that is whether all alcoholic beverage should be banned or controlled (means NOT banned).

In many regions always arises prolonged debate in the Regional Representative Council (Indonesian: DPRD / Dewan Perwakilan Rakyat Daerah) during the process of drafting local regulations on alcoholic beverages and night entertainment business. Nonetheless I believe local governments will think twice to ban the circulation of alcoholic beverages in their respective region because there is no prohibition at central government regulations (top level law). According to the hierarchy, local regulations must not violate to the law on top level. Just a note, there is a case on regional regulation in Banjarmasin city that prohibit alcoholic beverages but then rejected by the central government with the reasons contrary to the rules above.

On the other hand, the spirit of regional autonomy has been delegated some authority to local governments to take policy in accordance with the conditions and dynamics of society life in their respective areas, although not allowed out of the central policy framework. This also affects the policies in each regions against alcoholic beverages and night entertainment business, that is local governments have the authority to decide:
  • The amount of regional tax rates for entertainment business that sells alcoholic beverages (see the strict regulations in this post).
  • The place that allowed to sell alcoholic beverages, whether only in starred hotel or also allowed in pub, discotheque, karaoke, cafe, and nightclubs that are independent (outside the hotel), and whether also allowed in certain supermarket and shop.
  • Limiting the operating hours for night entertainment business. In some regions the operating hours is officially allowed from 21:00 until 00:00 and in other regions is allowed until 01:00 or 02:00.
  • The distance between the outlets that sell alcoholic beverage and the worship places, schools, hospitals and housing. Some regions sets the distance to 200 meters, while on other regions has set to 500 meters. The problem is how to the alcoholic beverage outlets that violate this rule but they had already existed before this rule was made, or how if a new worship place or a new school suddenly built adjacent to the outlets that already exists. There is an idea for zoning (moving all the night entertainment outlets to a special zone). But how much it cost? Not so easy to do that. I think a wise approach should be taken.
Strict regulations for alcoholic beverage and night entertainment business.
Many publicity about the negative impact of alcoholic beverages on various media and the number of pressure / protests from some particular groups to ban its circulation, I think quite influence to the birth of these strict rule. I feel that perhaps this was a middle way for this issue.

According to Undang-Undang Republik Indonesia Nomor 28 Tahun 2009 Tentang Pajak Daerah Dan Retribusi Daerah (English: Law of The Republic of Indonesia number 28 year 2009 concerning The Regional Tax and Regional Retribution), on Article 45 Paragraph (2) mentioned that the tax rates for entertainment business such as fashion show, beauty contest, discotheque, karaoke, nightclub, dexterity game, massage parlors, and steam bath / spa, may be set to a maximum of 75% (seventy five percent). It means the tax rates on each regions (city / district) may be vary and can be set up to 75%. And according to Article 44, the amount of taxes to be paid is XX percent multiplied by the amount of money received or that should be received. It means XX percent from gross revenue (NOT from net profit).

In the field of alcoholic beverage excise tax, starting on 1 April 2010 applied the Peraturan Menteri Keuangan Nomor 62/PMK.011/2010 (English: The Minister of Finance Regulation Number 62/PMK.011/2010) about the excise rate of ethyl alcohol, beverage that containing ethyl alcohol, and concentrate that containing ethyl alcohol. According to this new regulation, in general the excise rates for alcoholic beverages increased by 300 percent. As a comparison please refer to the old rules in 2006, that is Peraturan Menteri Keuangan Nomor 90/PMK.04/2006 (English: The Minister of Finance Regulation Number 90/PMK.04/2006).

With this tax and excise, this means that trading and selling alcoholic beverages was allowed, although a bit burdensome for entrepreneurs and consumers. I think the imposition of high taxes and excise may also trigger the trade of illegal products as its negative impact.

Arguments from the group who is pros and cons.
Often I heard the pros group usually using moderate thinking and objective towards these issue. Their arguments are:
  • If all manufacturers, importers, distributors and outlets of alcoholic beverages is banned then please imagine how many employee who lose their job.
  • Alcoholic beverage industry contributes significantly to the state revenue. Take an example just for beer. National beer industry has become the largest taxpayer, generating approximately Rp. 1.5 trillion of PPNBM tax (value added tax for luxury goods) and excise to the government, said Ipung Nimpuno, spokesperson of Gabungan Industri Minuman Malt Indonesia / GIMMI (English: Malt Beverage Industry Association of Indonesia) on VIVAnews
  • This industry also support the tourism sector. Should foreign tourists can not drink beer in Indonesia. I think an intriguing question for readers of this blog who have a plan for a vacation in Indonesia.
  • Indonesia is not a religious state.
  • If we want to maintain our health, do not smoking. If we do not want to get drunk, do not drink alcoholic beverages. This goes back to yourself.
And below is the arguments from the group who cons:
  • Drinking alcoholic beverage is forbidden by religion.
  • Many acts of violence occurred because triggered by alcohol.
  • Alcohol has ruin the moral of society.
  • Alcohol ruin our health.
Really a polemic that raises the pros and cons. My big question is: "Whether Indonesia should free from alcohol?" End of words, I don't know whether "these journey" will stop or to be continue. If you ask my views then I will just say "I'm a moderate thinker". How with you?

36 comments:

  1. I am hoping to get back to Indonesia regardless of the availability of alcohol, but I don't drink. The smoking was annoying to me - especially since I have a mild asthma - but I generally assume you need to go with the country's culture as much as feasible, so I wouldn't complain.

    The only thing I will highlight on the arguments is that the tax revenue and employment arguments don't have a pretty end. Here in the US we are giving official government sanction and encourage one vice after another.

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  2. I love your "I'm a moderate thinker". I would like to paraphrase: "I am a moderate drinker".

    As for the arguments pro and contra I can see the sense of both sides. And I do agree with the comment by Looney, which comes down to 'do in Ro9me as the Romans do'.

    However I've got the awkward feeling that authorities forcing me to change private preferences, are too patronizing. I prefer a society which leaves it to me to live a decent, moderate life and don't want to force it on me.

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  3. Hohhoo...your words are always great, I'm on your way Mr!

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  4. Tikno, banning alcoholic beverages anywhere in the world creates a criminal class with connections to the law enforcement machinery and politicians and corruption takes place. In India, only one state Gujarath has total ban on alcoholic beverages. It is called Prohibition here. In Gujarath, you can get any brand of liquor from anywhere in the world at prices cheaper than neighbouring non prohibition states. Look at what happens in Pakistan a declared Islamic Republic. http://www.nytimes.com/2010/04/13/world/asia/13bootleg.html

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  5. Looney,
    I also really want to be like you, a good habit for no drink and smoke. On the other hand, you also have another good habit for not force anyone to be like you.

    Colson,
    I'm sure you able to sense and see deep inside.

    Zahra Lathifa,
    Thank you for follow me.

    Rummuser,
    Another side effect of banning these drinks. Thanks for the intriguing link.

    Dorothy Rimson,
    Thank you.

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  6. Drinking is controversial. As long as you don't drink excessively then it's ok.

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  7. I think money will win in the end. Prohibition will be lifted for the sake of taxation.

    For the individual, nothing is more important than being true to oneself.

    All the best - Maxi

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  8. "Many acts of violence occurred because triggered by alcohol." Funny knowing that coming from a country where most violence happens because of religion.

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  9. Zuiyanhong,
    Feel like you're also think moderate like me.

    Malone8, you have shared an intriguing comment and I catch the point is: honest with ourselves. Thank you!

    Sheilla, are you sure?

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  10. To be honest with you I can't even be more positive about that.

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  11. Sheilla,

    However I can feel the point of your comment, which is about radicalism in religion. I think this is a bigger thing and you're quite true.

    If you have time please read my article about: "night worker ladies between pity and cost of living" which I think also related with labor problems at:

    http://love-ely.blogspot.com/2008/07/night-worker-ladies-between-pity-and.html

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  12. salam friend
    I agree with the raid and destroyed a liquor like that, so reducing the circulation of alcoholic beverages can damage the young generation in our country.

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  13. Nice article. Thnx for sharing!

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  14. As long as someone allows manufacturer to produce these alcoholic beverages nobody could stop those who sells them. It is a matter of the comsumer being aware of the side effects. Thanks for sharing.

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  15. NURA,
    I just think objectively. Many things can affect the morality and mentality of young generation, other than alcohol also include the love and education from parents, illegal drugs, free sex, broken home, the influence of surrounding environment and friends, etc. I think of love and education from parents / family is very influential

    How is your days in Saudi Arabia? Hopefully everything going well.

    Ana Christina,
    Thanks for your comment.

    Jolly Princess,
    Because I'm still using eastern approach so I still thinking of parents should takes responsibility to built these awareness.
    Because... besides alcohol, there are so many temptation in this world that can influencing the morality and mentality of young generations.

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  16. As an American, I see our experience with prohibition (and other drugs) and tend to think it pointless to ban alchohol. People can make it too easily and will anyway. It will be just less safe because the potency and manufacturing methods will be unknown. It also creates black markets which, of course, can turn violent real quick.

    Tikno, very good blog, I see you have visited mine, it would be great if you could follow it, as I have so few following :)

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  17. Don,
    Thank you for sharing your opinions. About the black market, I think a link in Rummuser's comment above is interesting.

    PS: has done!

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  18. Alcohol is a poison, no matter how small one takes, but it only takes effect after one has consumed it in a considerable amount. The other species of alcohol called methanol is even more evil, it causes harm immediately after one takes a small amount of it. This kind of alcohol is usually present in cheap products throughout this country.

    However, alcohol also has positive effects especially if it is applied to kill bacteria and viruses on surface infections. That's why according to me, one has to use or consume alcohol wisely and responsibly and it must be used for positive or remedial treatments...

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  19. Yari NK,
    Thanks for your comment. But... the intentions which is want to be discussed in this post is NOT the use of alcohol in chemistry or medical field.

    Feels like you share your opinion indirectly and carefully, so it's difficult to see whether you are agree or not with the existence of night entertainment busines and the trade of alcoholic beverage like beer, wine, vodca, etc.

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  20. Aha! If you want me to answer your points concerning night clubs etc it is not easy for me to analyse because a lot of factors have to be taken into consideration, and it is not easy to say whether this or that must be banned or not. It is not working that way.

    But I see the alcohol issues apart from the night club issues, etc. For me personally if one wants to avoid alcoholic booze it is not dependent on the presence of the night club, because people will potentially consume alcohol whether or not there are night-clubs. So, to me, the most reasonable points to avoid alcohol consumption are viewed from the medical or biochemical views....

    So, I'm terribly sorry if I can't answer all your points... :D

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  21. Andrie Callista,
    Thank you.

    Yari NK,
    As I write on the top of this post I can see a dilemma at national level so I can understand your difficulty. :)

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  22. Do not allow no new factories, and factories that replace the old product that is not alcoholic, and from the outside stop!

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  23. Anonymous06 May, 2010

    bikehikebabe said:

    I never had a desire to drink after getting high once & not liking it. I want to be in control. I force myself to take a gulp of cheap red wine when I think of it. Good for the heart.

    Once at a party when someone was trying to get me to drink, I said, "I'm an alcoholic." That worked.

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  24. Nuances pen,
    I respect your stance.

    Bikehikebabe,
    I'm glad to hear you can control yourself for not get drunk. Is that means self-control is most responsible than the liqueur itself?
    Although alcoholic beverage has its negative side effect... have you ever imagine if your country USA is free of alcohol one day?

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  25. Drinking is controversial.Thank you for sharing your opinions.

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  26. QLC,
    If just drink a gulp of wine, I think is not so controversial.

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  27. Hi Tikno

    Nice article. I would only wish to add that for a lot of Indonesians the price of a drink is prohibitive. To get around this they end up buying unlicensed or homemade drinks often with disastorous results. There has been a lot of cases of methanol poisoning in both bali and java this year. The government should adopt a more realistic pricing progrom to discourage illegal producers of arak.

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  28. Pj,

    I agree with you that the government should adopt a more realistic pricing program to discourage illegal producers / black market.
    But ... it seems central government also "heard" the voices from the cons group (maybe because they're majority) although not 100% fulfilling their willingness.
    Making the price of alcoholic beverages to be expensive and create strict rules against night entertainment business is like to take a middle way.
    Now our central government (through Trade Minister) trying hard to prevent illegal product. But... how long they can do it? Large profit margin will always arousing many people interests, right?
    Pj, is there any same strict rule against alcoholic beverage and night entertain business in your country?

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  29. Tikno

    I'm originally from Canada. Hard alcohol, beer and wine are all taxed there although not to the extent that they are here. Bars and restaurants have to be licensed by the government to serve alcohol. The only real restrictions is age and operating hours. You have to be a minimum age to be served alcohol anywhere in canada- age varies province to province.How late you can serve depends on your license. Penalties are quite expensive for seving alcohol after regulated hours or serving to those under legal age (large fines, suspension of license).

    I think as long as taxes are high, there will always be a flourishing black market.

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  30. Pj,

    Seems reasonable in there. I just guess that the contras atmosphere between both Indonesia and Canada against alcoholic beverage is how their society's view based on religion. This is more to the how extreme of their point of view.

    And about the flourishing of black market... a link on Rummuser's comment above is interesting.

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  31. Hi Tikno

    This is a great debate that will go on for ever I think. I remember when cans of Bintang beer were 7000 and now they are 13000 which in 4 years is an outageous price increase.
    I would not mind or object if the tax raised was seen to be put into the system for the less fortunate to benefit from, but unlike the Tobacco industry the Brewers here are the minority. I agree alcohol should be expensive to try and stop people from drinking, however I dont see the price of cigarettes being raised in price. Both drinking and smoking can cause long term health problems for those that partake.
    These taxes also create as already mentioned blackmarkets and alcohol becomes more appealing to those that are curious. It will in the long run have an impact on the tourism Industry and other sectors of foreign investment. If people want to enjoy beautiful islands and a glass of wine when the sunsets then great. But why come to Indonesia if Malaysia, Thailand, Singapore etc offer that and dont keep raising or changing the prices.
    This short term focus in my opinion will not deliver in the long term for anyone. And again I feel that as long as Indonesia focuses short term on its policies it will not realise its full potential.

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  32. Hi Luke,

    That was the prices range on stores about three years ago, and now become about Rp. 17.000 - 20.000 (can vary on each region).
    If you go into a nightclub / bar / pub here then the prices of a can of Bintang beer is about Rp. 35.000 - 60.000 depending the club luxury. For premium beers like Corona, Heinneken are about Rp. 50.000 - 80.000.

    I catch your point on tourism effect. Is it can make a significant impact?

    By the way, how long have you lived in Indonesia? Are you teaching English here?

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  33. Hi Tikno,

    I have been here since January 2007 and I have only lived in Jakarta but travelled here and there through the islands. It is simply a wonderous place and for all its faults its a great place to be.
    I am currently running an English School here as the principal and it is hard work but great fun.

    As regards to alcohol and tourism. Indonesia does not have a successful and well promoted tourist industry. It is also less coordinated and thought through as well.
    Travellers arriving into Jakarta or Bali are often met immediately with confusion, frustration and a myriad of people and scams which aim to take their money. Thailand and Malaysia do not have that.
    Changing prices, different rates for Indonesians and foreigners and a general lack of help make from my experience the country less rewarding and welcoming.
    It is easier to go to Thailand or Malaysia at the end of the day as every thins works. And alcohol is available at any place a westerner stays or visits as they know they can make money from that without charging a higher price but just by making it available. In my local hero 13500 for a can of Bintang. Still in shock or am I grieving!!!!

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  34. Luke,

    Opss... Rp. 17.000 - 20.000 is for big bottle (620 ml) and you are right for a cans or small bottle (330 ml).

    Many thanks for your reply. Hopefully people who involved in tourism industry will find your comment about the uncomfortable experience from foreign travelers, especially about scams and the different rates for Indonesians and foreigners, and conduct an investigation.

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