APSN Banner

GAPMMI says excise on sweetened drinks would 'reduce industry competitiveness'

Tempo - February 27, 2024

Annisa Febiola, Antara, Jakarta – Head of the Indonesian Food and Beverage Entrepreneurs Association (GAPMMI) Adhi Lukman claimed that the implementation of excise on packaged sweetened drinks (MBDK) will erode the industry's competitiveness. Excise is said to be a burden because the increased costs are passed on to consumers.

"Reducing competitiveness amid the industry's struggle towards normalcy after the Covid-19 pandemic," he remarked on Monday.

The government will implement excise on packaged sweetened drinks in 2024 after previously being postponed. The government is targeting excise revenue from MBDK of Rp4.39 trillion this year.

"[MBDK excise regulations] have reached the final stage," said Deputy Minister of Health Dante Saksono Harbuwono on January 29, 2024, as reported by Antara.

Dante said that the regulation is currently being socialized and coordinated with relevant stakeholders, one of which is the Ministry of Finance to formulate the amount of excise charged.

"We will execute this as soon as possible since there are no real obstacles. It will be ratified this year," said Dante.

So far, GAPMMI has not been officially invited by the government regarding the MBDK excise plan, Adhi explained. However, GAPMMI has had discussions with several government institutions on the excise policy.

"We have not been officially invited by the government, in this case, the Ministry of Finance. However, we have discussed it with several government institutions because there is news about the plan," he said.

In essence, GAPMMI considers this policy to be very inappropriate. "Especially if the aim is to reduce NCDs (non-communicable diseases caused by sugar)," said Adhi.

Regarding the projected decline in turnover in the sweetened beverage industry, GAPMMI is still reviewing the magnitude. However, based on a 2012 study regarding sweetened carbonated drinks, the elasticity is around 1.7 percent. Meaning, that every one percent increase in price will reduce sales by 1.7 percent.

Source: https://en.tempo.co/read/1838029/gapmmi-says-excise-on-sweetened-drinks-would-reduce-industry-competitivenes