The Irrawaddy

Myanmar Govt Lost $50 million in Tax to Beer Smugglers in 2016

People toast with beer at a bar in Ciudad Juarez, Mexico June 20, 2017. Picture taken June 20, 2017. REUTERS/Jose Luis Gonzalez - RC1D5890C680

Yangon—Illegal beer imports cost the Myanmar government around $50 million in tax revenue in 2016, according to a report by global research firm Euromonitor International.

Nearly 1 million hectoliters — up to 30 percent of all the beer sold in Myanmar — was illegally imported, according to the report released on Monday. Euromonitor estimated the loss in tax revenue at $48-52 million.

To support local producers, the government has prohibited imports of alcoholic beverages since 1995. Only certain hotels and duty-free shops are permitted to import foreign brands, a policy that has given rise to a thriving black market for beer.

An estimated 80 percent of smuggled beer enters via the Thai border, with the rest coming through the Chinese border. Most of it is sold in areas near the borders, according to the study.

“Not only beer, but also various brands of food and beverages are being smuggled into the country across the Thai and Chinese borders. They are sold cheaply, as no tax is paid. The government is losing tax revenues and local brewers are losing sales,” said an official of the Myanmar Brewers Association who requested anonymity.

Affordability is the key driver of smuggled-beer consumption, according to the report, with a 330 ml can of smuggled beer costing about 35 percent less than locally produced beers on average.

“Local brewers have to pay tax to the government and bear other operating costs. So they cannot compete on price with smuggled beer. And consumers choose the cheaper ones,” the brewers association official said.

Nearly 30 illegally imported beer brands are available in Myanmar, 95 percent of them well-known Thai brands, the official said.

The local beer industry paid 150 billion kyats in tax to the government under the Special Goods Tax Law in 2016, according to the report.

According to Euromonitor International, one of the biggest independent providers of strategic market research in the world, the study was done between August and November 2017 in four townships: Mawlamyine in Mon State, Myawaddy in Karen State, and Tachilek and Taunggyi in Shan State.

The research included extensive desk research, store audits in the four townships and interviews with retailers, distributors and government officials, Euromonitor said.