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Eastern Spirits

Future Expansion of Alcoholic Beverage Production Facilities Limited to Bali and East Indonesia

(3/9/2014) The Indonesian government will continue to tightly control investment in the alcoholic beverage sector and provide limited opportunities for expansion in a highly regulated environment.

The alcoholic drink industry is currently listed by the Investment Coordination Board (BKPM) on the negative investment list (DNI), making new investments to produce alcoholic beverages problematic. Moreover, existing alcoholic beverage producers are not allowed to expand current production or build new factories.

Bisnis.com reports that the Industry Minister, M.S. Hidayat, said the negative Investment list for alcoholic beverages has undergone a revision that will soon be published.

The new policy, said Hidayat, will see the government give opportunities to existing companies to expand their alcoholic beverage production by building new factories. However, warned Hidayat, any new expansion will remain supervised and must conform to a number of rules and regulations.

Hidayat added: “This is only for expansion and not for new licenses. It can happen that an existing company could cooperate with a new company, but I am not recommending that. Businesses can look for partnerships.”

Control of the alcoholic beverage sector will continue by allowing expansion of production facilities only in specified areas, such as East Indonesia and Bali.

The rules will stipulate that factory expansion must also accommodates the local culture and obtain permits from the governor and regent where the factory is located.

The chairman of the Indonesian Entrepreneurs Association (Apindo), Sofjan Wanandi, said the importation of alcoholic beverages continues to increase. For this reason, he said the domestic alcoholic beverage industry must be assisted in order to reduce the need for imports. “Don’t issue new permits, but issue permit only for existing operators. It’s better to build our industry instead of continually importing from Singapore and Japan,” said Wanandi.