Bars face liquor trou­ble

The Myanmar Times - - Front Page - EI EI THU eiei­thu@mm­times.com

Only about 10 per­cent of es­tab­lish­ments serv­ing liquor are legally al­lowed to do so but the gov­ern­ment is not is­su­ing new per­mits.

ONLY about 10 per­cent of the places serv­ing liquor in the coun­try are legally al­lowed to do so, tourism ex­perts say, and while the wide­spread avail­abil­ity of un­li­censed premises serv­ing drinks is cost­ing the lo­cal econ­omy in un­paid taxes, the Min­istry of Home Af­fairs re­fuses to is­sue more li­cences.

The Liquor and Tax De­part­ment, un­der the home af­fairs min­istry, has is­sued only 41,153 liquor li­cences for the whole coun­try, U Khin Aung Htun, joint sec­re­tary of the Myan­mar Tourism Fed­er­a­tion, told The Myan­mar Times in a re­cent in­ter­view.

Many hote­liers be­lieve the right to serve liquor is granted as part of the ho­tel li­cence is­sued by the Min­istry of Ho­tels and Tourism, but they are wrong, he said. A sep­a­rate li­cence to serve al­co­hol must be ob­tained from the Min­istry of Home Af­fairs.

“Ba­gan has only four li­censed restau­rants and about 30 ho­tels with a li­cence to serve drinks. All the oth­ers op­er­ate on the ba­sis of an un­der­stand­ing with town­ship ad­min­is­tra­tors,” he added, hint­ing at a be­low-the-counter sys­tem.

And he said only one in ev­ery 10 of Yan­gon wa­ter­ing holes is legally li­censed, con­tribut­ing to a short­fall in tax duty.

Many bar own­ers al­lowed their li­cences to lapse when taxes were put up at the end of March 2015, pre­fer­ring to strike a deal with un­der­stand­ing lo­cal of­fi­cials, he added.

He would like to see the gov­ern­ment bring in a pol­icy that would en­cour­age hote­liers and bar own­ers to get a li­cence and re­duce the tax losses.

Restau­rant and bar own­ers must pay in­come tax based on their net prof­its, as well as col­lect­ing a 5 per­cent com­mer­cial tax on each sale from cus­tomers.

In­come tax of 5pc is payable on net prof­its from K2-K5 mil­lion, 10pc on prof­its worth K5-K10 mil­lion, 15pc on prof­its worth K10-K20 mil­lion, 20pc on prof­its be­tween K20-K30 mil­lion and 25pc on prof­its of more than K30 mil­lion, ac­cord­ing to the In­ter­nal Rev­enue De­part­ment.

An­other prob­lem, ac­cord­ing to U Khin Aung Htun, is that the black mar­ket for liquor sales can drive up prices.

“Some own­ers bribe an ad­min­is­tra­tor in­stead of pay­ing for a li­cence. But they can end up pay­ing more be­cause they’re afraid of be­ing ar­rested. They then put up the price of the drinks to cover the cost and every­body loses out – the bar owner, the cus­tomer and the tax of­fice.”

The wine and spir­its sold in such places also of­ten en­ter the coun­try il­le­gally, since the law for­bids im­ports of for­eign liquor ex­cept to duty-free shops at in­ter­na­tional air­ports, he said.

“The coun­try will keep los­ing money over this is­sue as long as al­co­hol is be­ing im­ported il­le­gally. But [the gov­ern­ment] also has to crack down on peo­ple who break the law.” He said the temp­ta­tion to dis­til fake al­co­hol could bring health risks, and that the cur­rent sys­tem per­pet­u­ated cor­rup­tion.

For U Myo Win Nyunt, a di­rec­tor at the Min­istry of Ho­tels and Tourism, the prob­lem is likely to grow as more tourists travel to the coun­try.

The min­istry ex­pects as many as 7.5 mil­lion tourists a year to visit by 2020, and as for­merly closed parts of the coun­try in Kayin, Kayah and Chin states open up to tourists, the prob­lem of un­li­cenced ho­tels will no longer be lim­ited to Yan­gon and Ba­gan.

“We grant about seven ho­tel li­cences each month,” U Myo Win Nyunt said. “As of the end of July, we had al­ready is­sued li­cences to 1361 ho­tels with 53,355 rooms. An in­ter­na­tion­al­stan­dard ho­tel will have restau­rants and bars, which re­quire sep­a­rate liquor li­cences, so we need a bet­ter pol­icy.”

But the tourism and home af­fairs min­istries are di­rectly odds over this ques­tion, with the Min­istry of Home Af­fairs try­ing to keep the num­ber of li­cences down, and the Min­istry of Tourism want­ing to at­tract more vis­i­tors.

“Pol­icy at the Min­istry of Home Af­fairs pol­icy de­ters hote­liers from ap­ply­ing for a liquor li­cence,” said one dis­trib­u­tor, ask­ing to re­main anony­mous.

“Peo­ple who want to open a bar, restau­rant or ho­tel have to get hold of a CS2A li­cence. They can buy a K200,000 li­cence on the black mar­ket for K2 mil­lion and trade it for an FL17 li­cence with the help of a friendly town­ship ad­min­is­tra­tor for an­other K8 or K10 mil­lion. That will al­low them to trade im­ported liquor and wine, but not draught beer.”

The home af­fairs min­istry is not sell­ing any new liquor li­cences for the time be­ing, which means that all new li­cences must be bought on the black mar­ket.

A CS2A li­cence cov­ers only lo­cally made al­co­hol, while an FL17 al­lows the bearer to sell im­ported liquor, wine and beer. For the sale of draught beer, a sep­a­rate li­cence known as FL9 is re­quired, for an an­nual fee of K1.2 mil­lion.

All of these al­low con­sump­tion on the premises. For home con­sump­tion, from su­per­mar­kets and liquor stores, a re­tailer can pay K1.5 mil­lion for an FL12 li­cence, or a whole­saler can pay K3 mil­lion for an FL11. A re­cent crack­down on un­li­censed sales of draught beer has left many beer sta­tions out of pocket.

Tourism min­istry di­rec­tor U Myint U said, “Hote­liers com­plain to us that the Min­istry of Home Af­fairs takes too long to deal with their li­cence ap­pli­ca­tions. Some­times they’re re­jected even though we have rec­om­mended ap­proval.”

Bar own­ers mean­while are still smart­ing from a ban on late-hours drink­ing.

One owner said, “The law re­quires us to close at 9pm, but the po­lice used not to bother us un­til 11, un­less the au­thor­i­ties wanted to set an ex­am­ple. But every­one knows that some places stay open all night.”

Photo: Aung Myin Ye Zaw

A shop as­sis­tant lifts a box of Myan­mar Beer.

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