One More Round on Indonesian Alcohol Rules

Presidential regulation restores legal umbrella for sale of adult beverages, but is the glass half full or half empty?

By AmCham Correspondent
Monday, February 3, 2014

A new presidential regulation (Perpres) governing the distribution of alcoholic beverages has again stirred up the perennial debate between the hospitality industry and religious hard-liners over the consumption of alcohol in Indonesia.

The regulation, signed by President Susilo Bambang Yudhoyono on Dec. 6, 2013 restored the legal cover for the distribution of the alcohol in Indonesia after the Supreme Court last year annulled a 1997 presidential decree that provided the only legal cover for distribution.

Under the July 2013 decision, the Supreme Court ruled that Presidential Decree No. 3/1997, the legal basis for the sale and distribution of alcoholic beverages in Indonesia, should be abolished.

The court said the decree violated the state ideology of Pancasila, the Constitution of 1945, the Regional Autonomy Law, as well as laws on consumer protection and health.

The court ruling was followed by a draft bill proposed by the United Development Party (PPP) to completely ban the production, distribution and consumption of alcoholic beverages in the country.

The PPP argued that alcoholic beverages have a negative impact on society and are bad for health. The bill would wreak havoc in the tourism and entertainment industries if it becomes law.

The new Perpres restores the legal umbrella under which alcohol can be sold, and has been welcomed by hotel and tourism executives, although experts say it remains vulnerable to legal challenges because of a grey area over the power of regional and central governments.

Industry observers say the real battle is not about alcohol, but the regulatory power of the central government and local governments over alcohol distribution and consumption.


The Good News

Hariyadi Sukamdani, deputy chair of the Indonesian Hotel and Restaurant Association (PHRI), welcomed the Perpres as it gave the association’s members more certainty over their ability to distribute alcohol.

“This is good news indeed,” said Hariyadi, who is also the president director of PT Hotel Sahid Jaya International, one of Indonesia’s leading hotel groups.

The 1997 decree was challenged last year by the Islamic Defenders Front (FPI), a hard-line Islamic group that believes alcohol should be banned as part of its overall drive to impose Islamic rule in the country, despite the fact that the constitution recognizes basic personal liberties, including religious freedom. This led to the Supreme Court decision to abolish the 1997 decree.

Cyprianus Aoer, executive director executive at PHRI, was also enthusiastic, but expressed concern over the legal standing of the Perpres.

He said the Perpres is not much different than the abolished 1997 decree, which is a positive. It also added a clause that allows alcoholic beverages to be sold in duty free stores, which he said was also “good.”

He said the association did not have a problem with a new clause that prohibits the sale of alcohol near places of worship, schools and hospitals. “I agree with that,” he said.

The regulation, a copy of which is available at the official website of the Ministry for Administrative Reform, divides alcohol into three categories: less than 5 percent alcohol level, between 5 percent and 20 percent and more than 20 percent – just as in the 1997 decree.

Only licensed premises such as clubs, bars, hotels and restaurants are allowed to sell drinks with more than five percent alcohol. Meanwhile, liquor with less than five percent can be sold freely in licensed modern convenience stores such as Carrefour, Hypermart, Alfamart, Indomaret and 7-Eleven.

The regulation also mandates governors, district heads or mayors to regulate the location of distribution areas, and control consumption. 

“This is good, because as a diverse nation, we have to respect, not only the foreigners’ lifestyle, but also our own traditions,” Cyprianus said.

“Drinking alcoholic beverages, for some ethnic groups, especially in the eastern parts of Indonesia such as Flores or Bali, is closely related to their traditions and religious rituals. We have to respect that,” he added.


The Bad News

There is a serious grey area in the new regulations, however, when it comes to possible overlapping authority between central and local governments. Cyprianus was not sure this regulation could stand up to another legal challenge against the sale of alcohol.

“The central government must clearly supervise the bylaws, otherwise they will contradict this Perpres,” he said.

The 2013 Supreme Court ruling favored 20 bylaws that set local restrictions on alcoholic beverages, and that were already under review by the home affairs ministry because they contradicted the now-abolished 1997 decree.  

Many districts, including Depok, Indramayu and South Tangerang, have passed bylaws banning alcohol distribution locally.

Cyprianus said stronger legal cover “would be nice,” but he doubted lawmakers had the time to pass a draft law that favored alcohol distribution, given that it is a sensitive issue, especially in an election year.

The government should also toughen supervision over homemade and illegal alcohol products that pose a serious danger to the health of drinkers, he said.

Numerous incidents have been reported of drinkers dying or falling seriously ill after knowingly or unknowingly consuming bootleg booze in Bali and elsewhere.

“What sparked the media debate recently was actually illegal products, not licensed products. They [illegal products] are what need to be strictly supervised,” Cyprianus said.

Lawmakers have been in limbo over the PPP’s draft bill proposing a ban on alcohol since last year. The bill is strongly opposed by representatives of the tourism and hospitality sector on the grounds that it would hurt business and investment.

The new legal cover predictably drew fire from Islamic parties. They criticized Yudhoyono, saying alcohol is bad for health and morality.

Ida Fauziah, the chair of DPR Commission VIII on Religion, Social Affairs, and the Empowerment of Women called on SBY to void the Perpres.

The lawmaker from The National Awakening Party (PKB) claimed that some people had died after drinking alcohol. The PKB has links with Nahdlatul Ulama, Indonesia’s largest Islamic organization.

The FPI also said it will challenge the Perpres through a judicial review to the Supreme Court.

Meanwhile, PPP secretary general M Romahurmuziy, said the party will push for the draft bill to be approved by the DPR before March. 

“This draft law will abolish all alcoholic distribution, even to retailers on the streets of Indonesia and therefore, legally make the Perpres not effective before the law,” Romahurmuziy told

Leave your comments

terms and condition.

People in this conversation

Comments (1)

  • Guest (Arian Ardie)

    Great summary article on the current status of controversial legislation.

Usage of the AmCham Indonesia website states your compliance of our Terms of Use