Alcoholic beverage industry is difficult to expand because the industry is included in the Investment Negative List (DNI). The government proposes to provide licensing relaxation in order to expand. As a result of the inclusion of this sector in DNI, alcoholic beverage entrepreneurs cannot increase production capacity, either improving the existing plants or constructing new plants. “Actually, entrepreneurs want to make a great expansion, but do not get license, either for expansion or construction of new plants”, said Benny Wahyudi, Director General of Agro Industry of the Ministry of Industry in Jakarta (Monday, July 15).
Therefore, he process licensing relaxation in the form of relaxation of license for alcoholic beverage industry to expand. Licensing relaxation was considered highly necessary because in addition to the domestic market consumption which is quite high, export demand from Korea, Japan, and Australia is quite much. However, what happens now is that demand cannot be met because it is hampered by capacity issues. This resulted in many alcoholic beverages imported to Indonesia. In fact, Benny continued, this industry in Indonesia is quite capable.
Benny said that the license stalled since 1996. Since then, beverage sector containing ethyl alcohol is experiencing stagnant growth. In fact, according to him, there is economic value and local wisdom in these beverages. Indonesian beverages products containing ethyl alcohol was in demand by foreign markets. However, there is no special capacity to meet export demand. According to him, if the overseas market requested additional demand, domestic manufacturers could not meet it because of limited production capacity. Therefore, licensing relaxation was proposed again.
Benny said that one of the requirements if the Investment Negative List is relaxed and there are investors coming in, they have to get a license from the governor and the regent where the industry is located. Foreign investors are also allowed to enter as long as they partnered with local companies. Foreign companies are also required to export their products so that local companies are not rivaled.
Consumption of beverages containing ethyl alcohol in the country continues to increase. Data of the Ministry of industry stated that in 2012 consumption stood at 263 million liters, up from 2011 at 255 million liters, and in 2010 at 245 million liters. In 2012, import of beverages containing ethyl alcohol stood at 457,607 liters and in 2010 at 296,600 liters. The number is down from 2011 at 457,607 liters and in 2010 at 296,600 liters. Number of beer lovers is very large, especially foreign tourist. He is optimistic that the business is able to support tourism development. “But we cannot advantaged of that opportunity, because alcoholic beverages are included in the Investment Negative List”, he said.
Benny said that many foreign investors are lining up to enter such as Jack Daniels and Johnnie Walker. He saw a there were no new investment in this sector, the production capacity of domestic alcohol beverages cannot cover the high growth of demand. So, the steps taken are import. The Ministry of Industry is proposing that the rules on Investment Negative List should be rather relaxed, with some of proposed requirements.
Because the investment tap is closed, Benny said, resulted in many alcoholic beverages imported to Indonesia. There are many investment opportunity, but the rules do not allow. Benny said that his party had proposed to the Investment Coordinating Board (BKPM). It is estimated that the proposal has entered the Coordinating Ministry of Economy. According to him, entrepreneurs hope that the revised Investment Negative List can be accelerated so that investment license for alcoholic beverages is not hampered by regulation. By looking at the huge opportunity, he hopes that BKPM may reconsider the policy. (E)
Business News - July 17,2013