Smuggled cigarettes, alcohol beat the ban

Fake or untaxed alcohol and tobacco products are flooding the market as the Ministry of Commerce and importers face an impasse over planned import reform, industry sources say.

The Internal Revenue Department announced early this month that it would crackdown on untaxed, illegally imported and sometimes fake goods that are freely available at wholesale markets such as Yuzana Plaza and Mingalar Market.

Minister for Commerce U Win Myint promised traders that they would be allowed to legally import wine, alcoholic beverages and tobacco products during a series of meetings in late June with companies such as City Mart, Gamone Pwint, Star Mart, Sein Gay Har and others. The minister also told importers that tax and duty rates would be adjusted, although he did not say when this would happen.

Director for Illegal Trade Prevention and Supervision Control Committee U Tin Ye Win said the ministry will give permission to import as soon as importers accept two conditions: that they would take responsibility to pay the duties owed on goods already imported and in warehouses, and whether they would fully comply with the new tax policy when it is introduced.

U Tin Ye Win said the ministry hopes to encourage the biggest importers to form an agreement to import specific brands, with shipments logged and coded, to allow the authorities to easily pinpoint fake products and tax evaders.

“None of the big importers have agreed to this policy,” he said, “even though they say they want import tax reform urgently.”

“Smaller dealers also want import licences because they want to import products, but in small batches, not for the whole market,” he added.

The Myanmar Times was unable to reach the Myanmar Retailers Association for comment.

U Tin Ye Win said the ministry is also wary of fast reform, stating that importers had exploited the easing of import restrictions for items such as seasoning powders and motorcycles two years ago.

He said importers had swiftly flooded the market with smuggled goods and few had paid tax.

The alcohol and tobacco impasse developed in spectacular fashion in late 2013, with raids conducted on City Mart and Quarto Products – two of the best-known importers and suppliers. Since then, the government has not provided new licenses for liquor shops or suppliers following an outcry in parliament over the profusion of liquor shops in major cities. The Ministry of Home Affairs also increased annual licence fees by nearly 50 percent early this year.

The tightening of the liquor sale and distribution market produced familiar results, said U Tin Ye Win.

“We saw negotiations for the sale of liquor distribution licences,” he said.

U Zaw Moe Win, a spokesperson for the Myanmar Liquor Association, said even though the association does not oppose liquor import reform, it wants local manufacturers, who cannot easily avoid paying tax, to operate on a level plain.

Customs duties for imported alcohol stand at about 40pc, while the Internal Revenue Department also levies a tax. However, officials from the Ministry of Finance and Ministry of Commerce have said they are looking at adjusting taxes in line with other ASEAN countries.

The association has already proposed that imported liquor be sold for no less than US$6 a bottle, while local producers should raise their prices to K5000 a bottle, he said.

“We don’t oppose imports as some people think we do but we just want the market to be monitored closely,” he said.

U Zaw Moe Win added that some small producers make fake products by buying empty bottles from restaurants, filling them with locally made liquor, and applying stickers, corks or lids from Thailand and China to complete the forgery. “These fakes just bottle the goods at home and sell the bottles to liquor shops that put profit ahead of genuine products,” he said.

The most common fakes are scotch whiskys: Johnny Walker Red, Black and Blue Label bottles, as well as High Commissioner. He said genuine High Commissioner should sell at wholesale for about K5000 a bottle, while the fake is K3500, and genuine retails near K7000, he added.


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