Reducing alcohol import will require curbing local demand

Policy: Bhutan’s most successful failure to date has been in trying to address the issue of excessive consumption of alcohol. Various measures have already been tried, not counting the National Policy and Strategic Framework To Reduce Harmful Use of Alcohol (2015-2020) that the cabinet endorsed recently.

As one of the new measures to reduce consumption level, the Ministry of Economic Affairs will now not issue approval to projects proposing to produce beverage with more than 8 percent alcohol content. But ministry officials say that if Bhutan must address the issue effectively, it should begin by reducing alcohol import.

But reducing alcohol import will not succeed without first cutting local demand.

Tandin Tshering, director of Department of Industry, said that ministry new mandate would challenge the import of alcohol. “…[I]mport will entirely depend on demand reduction. It’s simple economics. If we’re in curbing local demand, the import will go down.”

This implies that banning the import of alcohol is not a solution that Bhutan should resort to.  Import bans often meet with difficult economic answers. Bhutan imposed temporary ban on import of alcohol in 2012 because the country was faced with extreme trade imbalance.

The ministry will review alcohol import rules to reduce import volume and also revisit penalty for violations related to alcohol trade.

Alcohol imports soared last year by almost Nu 100 million after the government lifted the ban on import of alcohol. In 2014, a total of Nu 301 million was spent on importing 3.3 million litres of alcohol.

According to record with National Statistics Bureau, a total of Nu 580 million was spent to importing 16.9 million litres of alcohol in 2011.  Following ban that was imposed in March 2012, alcohol import figure dropped to Nu 316.7 million.  It further declined to Nu 203.2 million in 2013.

The cabinet lifted the ban in January 2014 after examining the recommendations of the multi-sectorial task force. The cabinet said that restrictions did not serve the purpose and weren’t in line with bilateral and regional trade arrangements.

“We can’t impose non-tariff measures such as banning import and limiting import quantity,” said Tandin Tshering. “Volumetric reduction of alcohol can be reduced only by increasing tax.”

Nirmala Pokhrel

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