Sri Lanka needs more balanced and holistic alcohol policy

24 April 2014 05:58 am Views - 12163

By G.D. Dayaratne
Alcohol sales would have no doubt peaked during the last week or so, along with Avurudu festivities across the country – rural and urban alike.
The use of alcohol is embedded in the daily lives of many ordinary citizens in our island nation. Despite certain efforts by the government in regulating the production and consumption of alcohol, the Sri Lankan alcohol industry has reached new heights. Like how a bad mix of alcohol will give you a bad hangover, a bad mix of policies can give bad results.

This article argues that Sri Lanka should aim for a holistic and balanced policy mix in dealing with the production and consumption of alcohol.



More alcohol, more revenue
In Sri Lanka, drinking customs and habits are prevalent in the country’s multi-ethnic culture, mainly as a result of nearly four centuries of colonial rule, and also, later due to the influence of globalization. Therefore, over the years, alcohol production and consumption in the country has increased - from the more locally-based drinks such as toddy to widely popular drinks such as arrack and beer.

With the privatization of Sri Lanka’s key alcohol industry in 1992, the production of liquor has been increasing exponentially. This was further heightened since the end of the North-East war in 2009, with the emergence of ‘new’ markets in the former conflict-affected areas.

The production and sale of alcoholic beverages can be considered an important contributor to the Sri Lankan economy. It generates revenue for the government from the excise taxes imposed on both local and foreign legal alcohol, creates employment opportunities, and earns substantial profits for the industry entrepreneurs.
Alcohol is certainly no ordinary commodity in the market. This was clearly exemplified in the recent past, where tax revenue from liquor increased from Rs.16 billion in 2005 to Rs.60 billion in 2012 – an increase of 275 percent within seven years.

However, despite the economic benefits generated from the industry, misuse or excessive consumption of alcohol can result in many adverse effects, on human health and on society as a whole.

The existence of a thriving illicit alcohol industry, which accounts for nearly 65 percent of the total alcohol market in Sri Lanka, has also aggravated alcohol-related health problems in Sri Lanka. Therefore, it is useful to explore the implementation of effective measures to prevent or reduce the harm caused by alcohol in the country. As this article goes on to argue, this will require the formulation of a more balanced and a holistic policy framework.







Is there an alcohol policy in Sri Lanka?
Alcohol policies or the regulations, laws and rules which govern the manufacture, promotion, distribution, sale and use of alcohol are consequential in effectively monitoring the industry and also to reduce or prevent alcohol-related harm.

Throughout the past century, these policies have changed all over the world. In countries such as Australia, Canada, and many in Western Europe, positive results have been achieved through altering the patterns of drinking, specifically through shifts from hard to soft liquor. More attention is also given to promote moderate drinking for adults, considering the many health concerns and other social dilemmas attributable to alcohol.

In the Sri Lankan context, the country never had a comprehensive or a pragmatic alcohol policy. Yet, it has followed certain ad hoc policies from time to time. In 1998, Sri Lanka attempted to formulate a National Alcohol Policy which only included a ban on alcohol related advertising on television and radio, but on the other hand, allowed liberal imports of alcoholic beverages. Even the ‘Mathata Thitha’ (‘End to Alcoholism’) concept enshrined in the Mahinda Chinthana Vision (2005) comprises ambitious objectives on the sensible use of alcohol. However, there has been no clear target or designed programme or a clear timeline for the strategic implementation of a policy so far.

The highly politicized nature of the alcohol industry - in producing liquor, in issuing of alcohol licenses or in enforcing legislative actions (particularly in relation to illicit liquor) – has also complicated matters. Meanwhile, shortcomings in the existing taxation of alcohol production, where taxes are imposed only on legal alcohol and disregards illicit liquor, can also be seen as a drawback in effectively addressing this policy concern.



What needs to be done?
In this light, the need for a well framed national action policy on alcohol production and consumption in Sri Lanka is indispensable. In order to achieve this, first, it is important to understand the drinking culture in Sri Lanka. This will help get a better sense of creating a level playing field between the legal alcohol industries (producers), the government (law enforcer), as well as the consumers.

Policy makers should clearly understand the harm caused by illicit liquor, particularly among the rural and urban poor, and include an effective mechanism to monitor its production and availability in the country. Re-evaluating the credibility of alcohol license holders, introducing heavy penalties for violating excise laws, and developing public awareness on alcohol-related abuse are some of the mechanisms that need to be included in a more holistic alcohol policy for Sri Lanka. After all, the most significant aspect of an effective alcohol policy lies not only in having good legislative actions, but, in implementing and enforcing it in a coherent and an effective manner.

(The above article is based on the latest IPS publication ‘State of the Sri Lankan Alcohol Industry and Analysis of Governing Policies (Working Paper Series No.19) authored by G.D. Dayaratne. It is the first research publication in Sri Lanka that takes an independent and pragmatic look at this issue in order to influence this important area of national policy. The publication can be purchased at IPS and leading bookstores. For more information, visit http://www.ips.lk/publications/.  To view the full version of this article, and to comment on it, visit ‘Talking Economics’ www.ips.lk/talkingeconomics)