22 November 2008

A Liquor Shortage for Jakarta


I do not go out all that often and I am guessing that I will probably not be going out at all for the foreseeable future with "The Kid" being born in a mere six days from now. However, I did notice recently that the price of my regular vodka & cranberry has almost doubled in price in just over a week. I just figured this was a trickle down on the imploding global economy that is being propped up by various bail out packages throughout the world. But, alas, it has more to do with a liquor shortage.

Probably more specifically it has to do with the sudden ratcheting-up of excise or duties on imported alcohol that now sees some 60 containers of liquor sitting idly in some Indonesian ports. The duty on the imported alcohol sitting in Indonesian ports is 300% apparently and importers are refusing to cough up and pay the higher duties. This is but part of the problem. The Government also imposes a quota on imported alcohol. This is designed to protect local producers from the market power of big multinational alcoholic beverage producers.

Nevertheless, standard fare is that this quota is usually tapped out by mid-year and the lack of further imports leads to plenty of smuggled liquor and other less than legal mechanisms of getting more imported liquor into the market.

The end result is that this is likely to make business difficult for places that sell alcohol as people are likely to be much more discerning when it comes to drinking and how much they drink. A three-drink night may well become a one-drink night and an early night at that. The trickle down effect is likely to not only impact the bottom lines of the businesses but also the people that they support, such as staff.

It looks like I will be saving some money.

4 comments:

pj said...

Hi Rob

We are seeing the same shortages in Bali. Prices are going up and stocks are going down.

Rob Baiton said...

PJ...

So I am hearing.

I guess if you are a tourist that it is now a case of BYO.

mia said...

The whole situation is silly. There is clearly a demand for booze but the Government just refuses to be seen as promoting alcohol. If they reduce the tax and increase the import quota, imagine the potential income for the country...

I heard the diplomats from all wine/spirits producing countries are getting together to lobby the Ministry of Trade, but who knows when or if it will generate some result.

How can we achieve the target for Visit Indonesia Year 2008 if there is no wine, butter, cheese, prime cut beef etc? Clearly not all tourists can exist on nasi campur alone.

Rob Baiton said...

Mia...

Maybe it is the potential income for customs officers that is a prime motivation?

The arguments that this is in order to protect the local alcohol producers would seem to fly counter to the idea of not promoting alcohol consumption.

The idea would be to prohibit alcohol sales in all places but tourist areas or require the production of a passport before alcohol can be produced and thereby prevent all Indonesians from being able to purchase the demon drink.

Nah, the whole government approach on this alcohol thing is a little bit out of touch with the reality but I guess this is sometimes the way that it is in Indonesia.

I would have thought simple supply / demand economics would have worked best on this issue.

Tourists might not be able to live on nasi campur alone but they probably could for a few days :D

Back to the alcohol. The import duties and excises already make alcohol really expensive here. The last time I transited through KL I bought a bottle of vodka which worked out to be about IDR 120,000. The same bottle in Jakarta is sold for about IDR 1.3 million in the Le Meridien Hotel (went there for a function and asked at the coffee shop).

Wine is the same. A bottle of red that I would pay about AUD 10 - 12 for retails in places like the Cork and Screw for IDR 460,000. Crazy. But, there is still demand for it.