State Lifts Monopoly on Alcohol Production
Friday, 27 July, 2007
State Lifts Monopoly on Alcohol Production
Friday, 27 July, 2007
On July 17, a new law governing the production and distribution of alcoholic drinks and other products containing alcohol came into effect. The new law lifts the state monopoly over the production of alcoholic drinks but not over the manufacture and sale of pure ethyl alcohol.
Commercial firms will now be allowed to make vodka as long as they have total assets of 130,000 US dollars.
With the minimum drinking age set at 18, the law also bans the sale of alcohol on all forms of public transport and in any childcare, educational, medical, sports or cultural institution.
Nasirdin Shamshiev, head of macroeconomics and analysis at the economics ministry, says one of the main goals of the new law is to raise tax revenue from the production of alcohol and related products.
“The drinks industry is becoming unprofitable due to the increase in illegal imports, so tightening controls over the industry will increase government revenues,” he said.
In lifting the state monopoly, the architects of the law hope that manufacturers will stop operating illegally, obtain a license and bring in investment to develop a legitimate business.
According to various estimates, around 70 per cent of all alcoholic products on the market are imported illegally. The agency that supervises alcohol production and sale, part of the agriculture ministry, says about 100 tons of alcohol is smuggled into Kyrgyzstan daily.
Elmira Makeshova, a legal expert with the agency, says the new requirements are rigorous strict but attainable, and should help make the industry more orderly and help it develop.
At the moment, she said, there are still many underground producers turning out drinks, and it is impossible to supervise this illicit industry.
Sapar Orozbakov, director of the Bishkek Centre for Economic Analysis, says government revenues should grow significantly if the legislation functions properly. But he fears that the liberalisation could be held back by the fact that the drinks industry is currently in the hands of a small number of officials, who will be reluctant to allow private producers into the marketplace.
Economist Avazbek Momunkulov agrees that widespread corruption could make it difficult to make the new law work.
“It is impossible to achieve improvements in a particular sector - including drinks production – if the system as a whole is corrupt,” he said. “[Illicit] production will continue, and manufacturing licenses will simply be bought, as the law is hardly observed at all in this country,” he said.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
