Could Indonesia Ban Booze?

Tattis, a 40-year old mother in Jakarta, complains every day about how difficult it is to get a cold beer in her neighborhood in Indonesia’s Banten province, a suburb of the sprawling city.

“It’s so hot these days, and getting a cold beer is like trying to find a treasure chest,” she told Asia Sentinel.

Things may now get a whole lot worse. First was the official ban on beer and other alcoholic drinks, which affects some 70 percent of commercial establishments including convenience stores and other small shops. The regulation was introduced in January by the trade ministry, but officially imposed in April to give those stores three months of preparation to submit to the new regulation.

The ban was specific only to the “Class A” alcoholic beverages – those with less than five percent alcohol content such as beer, low-alcohol wine, and Shandy. The ban is also restricted to the 16,000 minimarts and 55,000 small retailers in the Muslim-majority nation; supermarkets, hotels and food outlets would still be able to sell these alcoholic beverages.

Economic worries

The news was shocking enough to Indonesians in general as well as foreign observers. However, things are getting to a whole new level for this. Some lawmakers have continued their struggle in support of a bill prohibiting the consumption of alcoholic beverages in the largest Muslim population in the world despite deep concerns that this is not good for the country’s economy.

“This has huge consequences,” said a western businessman. “There would also likely be a spread of illegal liquor, which actually kills a lot of people here every year already. Nobody in their right mind would want such a law but in the current environment, with idiocy at the helm, it could pass.”

Although the country has sporadically had shortages of imported spirits in the past as various interests fought it out over who got customs payoffs, it has never faced an all-out ban like the one that may be looming.

The potential ban is considered to be art of a wider move to turn away from globalization in the belief that it harms the country. Natural resource exporters are under pressure, foreign companies face mounting regulations, banks and other companies are being forced to place their data centers onshore, dollar transactions have been made illegal, a 2004 Water Law was reversed, leaving soft drink bottlers, water companies and even privatized city water providers with no legal basis for the permits they rely on to do business.

Islamic forces now want the courts to make private electricity suppliers illegal, ban the holding of foreign exchange to marginalize foreign investors.

Tourism impact

It is estimated that a complete ban would have a devastating effect on tourism as well as the drinks industry and distribution businesses, and put as many as 200,000 jobs at risk. Some 9.4 million international visitors entered Indonesia in 2014, spending more than US$1,100 per person. Visitors mostly are from Singapore, Malaysia, China, Australia, and Japan. The island of Bali lives and dies on tourism.

Nonetheless, the ruling Indonesian Democratic Party of Struggle (PDI-P), the Golkar Party and the Democratic Party, respectively the largest party and second- and fourth-largest parties in the House of Representatives – have reportedly agreed to deliberations on the bill.

The Islamist National Development Party (PPP) and Prosperous Justice Party (PKS) initiated the measure in 2012. If enacted, it would prohibit the sale, production, distribution and consumption of all beverages containing more than 1 percent alcohol. As written, it would subject any person consuming alcoholic beverages to three months to two years in prison or a fine of Rp10 million (US$775) to Rp50 million. The bill does include a clause allowing exemptions. In its explanatory narrative section, the exemptions include “consumption for customary uses, religious rituals, tourism, in pharmacies and in places authorized under the regulations.” However, it is uncertain if those exemptions will stay.

Some in the Indonesian government say the move may be taken as part of a broader commitment to protect young people from social ills like drugs and alcohol, rather than for ideological reasons. But some are still concerned about the potential impact it could have, including the rise of illegal sales of often-deadly bootleg alcohol and the overall negative message it would send.

If the bill is passed, publicly listed PT Multi Bintang, Indonesia’s biggest brewery, which is controlled by Heineken International BV, would be the prime casualty. The company’s president commissioner, Cosmas Batubara, said the business and investment climate would be severely disrupted if the bill were passed, but remained optimistic of eventual changes to the bill, as it was still at its earliest stage.

“Lawmakers may have their opinions, but they do not represent the entire House,” Cosmas was quoted as saying by The Jakarta Post.