Indonesia to ban alcohol. Cui bono?

Will it come as a surprise if Indonesia really banned all alcohol in the country? Heavily populated with Muslim community and a country made up of over thousands of islands, I don’t think the majority will feel a thing if this bill eventually passes through. But I do think that might make Singapore seems a lot more appealing to their expatriate population and, of course, the wine loving super high-rollers.

History taught us that to outlaw alcohol is not a fix-all solution. Thorough enforcement action to rid alcohol beverages from homes and establishments requires a colossal amount of effort, next to impossible. And if people cannot have alcohol legally, they will just have to get it illegally.

Already with one anti alcohol bill pending enforcement this Thursday in Indonesia, the Islamist party, United Development Party (PPP), had just proposed a new priority bill to effectively cut alcohol (i.e. sale, consumption, production and distribution of alcohol beverages) across the country.

Consumption of alcohol has long been considered forbidden in Islamic teachings, but the Islamist party lawmakers insisted this was a matter of health and not ideology. To further their cause, lawmakers stated 58 percent of criminal activities were due to alcohol influence even though they provided no scientific evidences. In another news report from The Jakarta Post, the Indonesia trade minister was quoted that alcohol should be banned as it affects the moral upbringing of children, using his observation that children were not showing respect to their parents as an example (seriously?)

According to Daniel Witt, President of the International Tax and Investment Center (ITIC), total prohibition, or complex and exorbitantly high tax system on alcohol, had long been the reason alcohol black markets exist. Lacing beverages with methanol to increase alcohol strength often resulted in fatal scenario, while the ill-gotten monetary gain for these criminals, resulted in low, or even no tax revenue for the government.

Unfortunately, Indonesia is no stranger to methanol poisoning. In 2009, 25 people died in Bali and Lombok after consuming locally made alcohol beverage spiked with methanol. And in 2013 alone, more than 52 lives were lost due to methanol poisoning in Indonesia.

How big is the drinking population in Indonesia? In a study by Nielsen, only 2.2 percent of the population above 20 years old drank alcohol in the 12 months before. Indonesia is home to 237 million people based on the 2010 census, so my guess is about 4 million Indonesians. A huge drinking population compared to Singapore.

report by Euromonitor studied the growth of Indonesia alcohol market in 2013. In the excerpt, the author summarised the growth of alcohol consumption was strongest in the beer segment, with on-trade market clearly outshining the off-trade, suggesting that drinking at home was not common. The growth was likely driven by the mushrooming of pubs, lounges and nightclubs, satisfying the need of people who wanted to see and be seen in hip places. It also mentioned that the growth in tourism had been an important factor for the increase. In year 2014, more than 9 million international visitors visited Indonesia, spending on average 7.5 nights in hotel and US$1,142 per person.

What will a complete alcohol ban do to these figures?

Call it Schadenfreude if you wish, but Singapore might actually benefit from the bill.

Firstly, with news of Prowine Asia coming to Singapore on a biannual basis starting from April 2016, the island country has gained another badge that affirmed its potential position as the wine hub of South East Asia. Secondly there are facilities like Singapore Wine Vault to store high value wines securely, which will attract many Indonesian tycoons with a knack in wine investment to patronise Singapore more often than before. The western world might describe Singapore as a uni-partisan government with limited freedom, but at least we are politically stable with predictable legislation. Our warehouses don’t get break-in as often as developing countries.

To put it bluntly, take away alcohol and you take away a reason for tourists to spend the same amount of money during their visit. Likewise, expatriates who have long enjoyed ice-cold beer during summer, will find it less appealing to move to Indonesia.

Beer is not a luxury, it is staple.


Photo credit Ryan McFarland

the author

One fine day, Wai Xin woke up and decided to throw Java coding out of window in exchange for a career in wine. Believing strongly that wine is for enjoyment and not a trading commodity, he encourages sensible, affordable drinking and the exploration of individual preferences.