Big Alcohol is lobbying to delay the oncoming alcohol tax increase in Vietnam. Their argument is that the alcohol industry and businesses need time to recover from the losses during the COVID-19 pandemic. But, estimations suggest Big Alcohol would have no problem increasing profits in 2022.
In April this year, Vietnamese Deputy Prime Minister Le Linh Khai approved the Strategy for Tax System Reform till 2030. As per the strategy, Vietnam will adopt a road map to increase excise taxes on tobacco and alcohol products.
The aim of excise tax increases for alcohol and tobacco are two-fold:
- Limit production and consumption and fulfil international commitments, and
- Review and adjust the excise tax rates on several commodity items to suit social-economic conditions in the 2021-2030 period.
By increasing taxes on these health harmful commodities, the government intends to reduce consumption of these products and protect people’s health and the environment.
The government is still considering how much to increase taxes on alcohol and tobacco products. The current rates are 65% on beer and 35% to 65% on liquor.
Big Alcohol wants the alcohol tax increase delayed, claims COVID-19 effects but SABECO projects increases in revenues and profits
Alcohol companies in Vietnam are lobbying to delay the planned alcohol tax increase that is intended to protect public health and people’s well-being in Vietnam. The alcohol industry claims to “need more time to recover from the effects of the COVID-19 pandemic.” However, estimates of revenue and profit for 2022 from the largest beer maker in Vietnam, SABECO, show that Big Alcohol has no problem increasing profits in 2022.
A study published in The Lancet found that Vietnam is one of the heaviest beer-consuming countries in the world. Between 2010 and 2017 there was a 90.2% increase in per capita alcohol use in the country, driven mainly by heavy beer consumption. Vietnam’s beer market is currently the largest in Southeast Asia and ninth largest in the world.
Recently, the Vietnamese government lifted its COVID-19 restrictions, thus, opening up restaurants, bars, and nightclubs around the country again. This means a rise in alcohol consumption across Vietnam. Alcohol demand is further rising with the influx of tourists since the re-opening of borders.
Saigon Beer Alcohol Beverage or SABECO owned by Thai Beverage is ramping up production aiming to maximize profits in 2022.
The company has already invested about 650 billion dongs ($28 million) installing cutting-edge filling equipment at a plant in central Vietnam. This upgrade will expand its annual beer production capacity to about 250 million liters. An increase of about 150% from 2010.
The beer giant is looking to gain consolidated revenues of about 35 trillion dong in 2022, up 32% from the year before. Their consolidated net profit is set to be rising about 17% to 4.5 trillion dongs.
Analysts at the Vietnamese unit of South Korea’s Mirae Asset Securities believe that Vietnam’s alcohol industry will grow in 2022 with beer consumption likely to reach pre-pandemic levels.
All of this points to the fact that the alcohol industry is lying about the impact of the pandemic just to avoid higher alcohol taxes.
Alcohol harm in Vietnam
According to the World Health Organization (WHO), Vietnam’s per capita alcohol use has been on the rise since 2010. In 2016 it was at 8.3 liters – higher than the average of the WHO Western Pacific Region.
Alcohol harm is pervasive in Vietnam. Almost half of young people (45.9%) who consume alcohol in Vietnam engage in binge alcohol use.
Despite Big Alcohol trying to delay the alcohol tax rise, there is a clear and urgent public health and safety need to increase alcohol taxes. Higher prices of alcohol help reduce consumption levels and related harms.
- As Movendi International reported previously, Vietnam is Asia’s third-largest beer consumer, after China and Japan.
- In the six years prior to 2019, Vietnam saw beer volumes climb by an average 6.6% compared to an increase of 0.2% for consumption globally.
- Alcohol consumption in Vietnamese adolescents is at an alarming level and increasing. According to the national survey of adolescents and youths in 2008, approximately 80% of young men and 36.5% of young women aged 14 to 25 years used alcohol.
The WHO reports in 2016 in Vietnam there were:
- 11,368 deaths ue to alcoholic liver cirrhosis;
- 6750 deaths due to alcohol caused road-traffic injuries; and
- 3591 deaths due to alcohol caused cancer.
The harm for men is especially apparent with 9.8% suffering from some alcohol use disorder including 5.9% who are dependent users. Vietnam is placed on the high end for years of life lost due to alcohol.
According to research about the global burden of disease in 2016, 12% of deaths in Vietnam are due to alcohol.
Big Alcohol is the biggest reason why Vietnam had not had proper alcohol tax increases in the first place.
In 2019, the National Assembly of Vietnam passed the Alcohol Harm Prevention Law. It came into effect at the beginning of 2020. As Movendi International previously reported, this law was heavily influenced and watered down by Big Alcohol lobbying. The alcohol lobby launched a targeted attack to nullify and water-down many components of Vietnam’s alcohol law throughout the process from 2017 till the law was passed in 2019.
Subsequently, the alcohol law passed in 2019 did not include any alcohol taxation measures. Instead, the National Assembly decided that the proposal to raise the alcohol price would be discussed within the premise of a separate law on taxation. Now the alcohol industry is trying to delay the progress of alcohol taxes in Vietnam again.
Sources
Nikkei Asia: “Vietnam’s brewers toast rising beer sales in wake of COVID“
VN Express: “Liquor industry wants tax increase delayed“
