AFTA could bankrupt local brewers

Sudhabodi Sattabusya, senior

vice president of Singha Corp, a

local leading brewery and owner

of the Singha and Leo brands, said

the Excise Department applied

different tariffs to imported and

domestic beers, causing the latter

already to suffer a huge price dis¬

advantage.

He said under the 1994 General

Agreement on Tariffs and Trade,

which was aimed at eliminating

ATFA 'COULD BANKRUPT LOCAL BREWERS'

  KWANCHAI RUNGFAPAISARN

THE NATION

The free-trade agreement that will take effect among Asean members next year could bankrupt local breweries, as unfair taxation will cost them their competitive edge against imported beers.

Sudhabodi Sattabusya, senior vice president of Singha Corp, a local leading brewery and owner of the Singha and Leo brands, said the Excise Department applied different tariffs to imported and domestic beers, causing the latter already to suffer a huge price disadvantage.

He said under the 1994 General Agreement on Tariffs and Trade, which was aimed at eliminating discrimination and reducing tariffs and other trade barriers to trade in goods, Thailand's tax authorities could levy tax on imported beers based on their real transaction values - or their cost, insurance and freight price. This practice favours certain imported beers, especially from China, that can be sold locally at very cheap prices.

"This is quite different from the tax paid by local brewers, which is based on the value of a fixed ex-factory price assessed by the Excise Department," said Sudhabodi.

He said for example, the price of a large bottle of Singha beer had been set by the department at Bt42.93, and the tax rate was based on that amount.

Tax rates are different for different classes of beer, which have been divided into economy, standard and premium, based on the Excise Tax Department's own judgement.

Sudhabodi said Thailand and Singapore were the only two markets allowing imported beers and liquors to enter tariff-free under the Asean Free Trade Agreement (Atfa).

"Many countries within Asean, however, will still levy import duties, to protect their local beer industry," he said.

He said Burma, the Philippines and Vietnam would continue to levy a 5-per-cent tariff on imported beer, while Indonesia and Laos would collect 40 per cent.

Marketing manager Piti Bhirom Bhakdi said the government was aware of the problem but that no real action has been taken yet.

"This will surely kill off the local breweries, because the present tax system will not allow us to compete in the global arena," said Piti.

Piti said the only solution would be for the local authorities to levy excise tax based on alcohol content rather than price. Under such a fair system, local and imported beers containing the same alcohol content would be charged the same tax rate. It would then become a matter for breweries to make their costs more competitive.

"And we'll have an advantage over imported beers in the areas of product quality and strong connections with local agents and wholesalers," he said.

Meanwhile, Singha Corp yesterday kicked off its Singha Biz Course for the second year running.

The programme carries the theme of "A Society's Worth Is Measured by Its Individuals". University juniors and seniors from across Thailand in any field can attend and learn valuable business lessons from Singha executives and experts from leading organisations and universities, as well as lecturers from Duke University in Durham, North Carolina.