The price of foreign liquor, already high due to excessive import duty and import quota, is likely to shoot up further after the government amended the Alcohol Control Guideline, 2022 imposing new limits on importers.
Alcohol retailers will now only be able to import foreign liquor comprising 40% of their total demand, while the remaining 60% will be met through locally-manufactured liquor.
Similarly, social clubs which have 200 or more alcohol-licence holders as members can import 40% of their total demand for alcohol and collect the remaining 60% from local manufacturers.
Previously, there was no limit on selling foreign liquor for bars, restaurants or clubs.
The new limit will not only make foreign liquor dearer but also encourage smuggling, said industry insiders.
The limits come at a time when the government is trying to curb illegal trade of foreign liquor through strengthening the monitoring of bonded warehouses and easing import limitations.
At present, high import duty -- which can reach a maximum of 600% -- and various import limitations have created a black market for foreign liquor.
Against this backdrop, the National Board of Revenue (NBR) introduced a software last year for diplomatic bonded warehouses to check leakage of duty-free foreign liquor by digitalising bonded operations.
The implementation of the software created a serious crisis of foreign liquor as duty-free bonded warehouses were the main source of its supply in the market.
Black market sales, furthermore, deprived the government of revenue.
The government has earned only Tk52 crore in revenue from foreign liquor imports in the last five years as only 5% of the total alcoholic beverages entering the country were commercially imported.
The revenue earned from the imports was little despite the highest duty, up to 600%, being slapped on alcoholic products as most foreign liquor was imported duty-free by six private diplomatic bonded warehouses.
As the government is losing revenue from the liquor business, the NBR is planning to cut tax rates to encourage commercial imports and stop illegal supply from duty-free warehouses.
The commerce ministry is also going to revise the import policy order by increasing the import ceiling for liquor importers.
Currently, importers are allowed to import alcoholic beverages on 7.5% of their foreign currency account balance. Under the draft amendment of the policy order, this has been proposed to be increased to 10%, according to a source at the commerce ministry.
Additionally, the Department of Narcotics Control (DNC) proposed to fix the import ceiling at 12%.
Currently, hotels which have foreign currency earnings can import liquor.
In the draft of the amended import policy, any organisation which has foreign employees can import alcohol subject to approval from the DNC and commerce ministry.
However, other restaurants and bars which do not have foreign currency can purchase from the Parjatan Corporation.
The existing import policy order does not mention from which source non-foreign currency earners can purchase alcohol.
Meanwhile, the revenue authority is trying to issue licences against two state-owned organisations, including the InterContinental Hotel and the Parjatan Corporation, aimed at breaking the liquor syndication of the existing six private bonded warehouses.
Carrying alcohol will also be made easier under the newly issued guideline.
Anyone who wants to carry alcohol can apply to the deputy director of the DNC for a pass.
Any person who does not have an alcohol licence can carry alcohol using the pass, which can be extended to a month.