Halt to liquor licences leads to informal deals

A clampdown on unlicensed liquor shops and a ban on new licences have created a robust secondary market for liquor licence permits and done comparativly little to prevent problem drinking, according to businesspeople.

The Ministry of Home Affairs last year raided about 2000 liquor shops to check on licences, making it increasingly important that shops have a licence when doing business.

Yangon Region parliament also significantly raised the annual fees to be paid by licensed shops in 2014, as well as halting the issue of new licences.

Shop owners have responded by not turning in their liquor licences when they no longer need them, but instead sell them directly to a different shop through an informal secondary market.

Although Yangon Region no longer officially allows local authorities to simply transfer licences, in reality many local offices have still processed licence transfers. Some local offices also have continued selling new licences despite the official ban.

Myanmar Retailers Association general secretary U Nay Myo Thant Tin said the current arrangement forces shop owners to look to informal sources for permits. In turn it becomes more difficult to regulate the industry, leading to more illicit activities.

Fake alcohol products are prevalent on the market. Many are shipped across from border areas and others are local products simply poured into bottles with famous international branding and resealed to fool consumers.

“Restrictions should be relieved for us, to allow us to do business in a formal way, paying regular tax,” said U Nay Myo Thant Tin.

Authorities had raised fees and cut down on licences to reduce problem drinking, said Yangon Region parliamentary representative U Nay Myo Aung. However, he said restricting the number of licences may not be the best way of approaching the problem, and instead suggested following other existing rules such as not allowing liquor buyers to be under 18 years old.

“Liquor shops are now located every 50 to 100 steps in townships, so whether the shops are illegal or legal, it’s clear the policies are not yet effective,” said U Nay Myo Aung, who represents Seikkan township at Yangon Region parliament.

In addition to the restrictions on new permits, fees have also been increased. Although Yangon Region approved raising the annual fees paid by liquor shops in September 2014, the Ministry of Home Affairs, which is in charge of collecting the money, has so far continued charging previous rates. However, businesspeople say it is likely the ministry will increase the fees soon to match Yangon Region’s rates, perhaps in the coming fiscal year.

Industry insiders say the government does not yet appear likely to retreat on its policies toward alcohol.

Eleven whisky general manager U Zaw Zaw Aung said he understands fees will change in the next fiscal year, 2015-16, while there could be more restrictions on liquor companies involved in distilling and bottling booze.

U Nay Myo Aung said some township-level officials from the Ministry of Home Affair’s General Administration Department are themselves getting involved in the secondary market for liquor licences.

“It is a challenge to suggest policies and participation in the industry, as I represent only Seikkan township and can’t complain on the problems of other townships,” he said.

Liquor licences in Yangon are fetching about K600,000 on the open market, only a little above the cost of K500,000 to transfer a licence through government offices, said U Sein Win, an agent of 555 liquor distribution.

The relatively low costs in Yangon come as there have been many licences issued in the past, though prices could rise if supply of licences is constricted in the future, he said.

“The liquor business is narrowing due to higher tax and strict government policy,” said U Sein Win.

A General Administration Department official in Dagon Seikkan township said policies exist to cut down on drinking. However, authorities do not prevent transferring licences, as they recognise there is no other way for businesspeople to obtain licences, he added.


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