Liquor businesspeople may be reaching for the bottle for consolation after Yangon Region’s decision to raise the annual licence fees that shops and manufacturers must pay to operate.
Fees will significantly increase for a range of different liquor manufacturers and sellers after legislation was passed on September 1, with licences for beer manufacturers increasing the most, by a multiple of 10.
While some businesspeople oppose any licence fee increase, others say the rules are unfair as they only apply to businesses in Yangon Region and disproportionately affects smaller businesses.
Raising fees so dramatically in one region but not the rest of the country will stifle local competition, said a senior official of the Myanmar Liquor Association.
“I support the idea of raising annual fees to ensure more quality products, it’s a fair idea – but the whole industry across the country should be treated equally,” said the official, who also represents a large-scale liquor manufacturer.
Raising liquor licences may squeeze out the industry’s small players and raise state revenues, though the laws may be unevenly applied. For instance some firms could use one cheaper type of licence as cover to engage in other types of liquor trade, he said.
The official also said he predicted increased fees in one area would lead to a flight of liquor businesses outside the Yangon region.
The fee increase was proposed by the General Administration Department of the Ministry of Home Affairs in May – the same institution that said it raided about 2000 illegal liquor sellers in Yangon in the first four months of the year.
Wholesale import licence fees are set to triple to K3 million a year, while distribution licences go from K1.2 million to K3million. Liquor shops and liquor-selling restaurants will see licences double to K1 million and K1.2 million respectively, according to the laws which are to come into force this fiscal year.
At the top end, the price of a distiller’s licence increased about five-fold, with licences now sitting from K5 to K15 million depending on the distiller’s size. Likewise, brewer’s licences increase by a factor of 10 to now cost from K5 million to K50 million depending on size.
The fee increase also comes as large-scale foreign manufacturers such as Heineken and Carlsberg breweries are set to enter Myanmar, challenging local incumbents.
Although the government will receive more state revenues from the fees, the increase will likely be passed on to consumers, said U Nay Myo Aung, Yangon Region representative for Seikkan township.
“If the government raises taxes on producers, they will increase their prices to maintain their profits, and consumers will be hurt,” he said.
Other small-scale players say they have already been forced to change their business plans by licence fees.
U Sein Win, former distributor of locally made liquor brand 555 BE based in Thingangyun township, said he had switched from a distribution licence to a cheaper restaurant licence.
“There wasn’t much benefit to staying as a distributor, I can’t compete with the most popular brands, and it’s a narrowing market for a small guy like me,” he said.
Although liquor businesspeople have complained that it is unfair Yangon and the rest of country charge different fees, some officials say it is part of a Union system that different areas have different rules depending on local circumstances.
U Ye Tun, a Pyithu Hluttaw member of the Shan National Democratic Party, said local government policy depends on the stance local parliament suggests it should take.
The focus should not be on raising government revenue, but on controlling alcohol consumption and bringing rules in line with best international standards, he said.
He added the national government had also considered and rejected proposals to raise excise taxes on beer and cigarettes earlier this year, partly in a bid not to discourage foreign investors from entering the sector.
Source: MYANMAR TIMES