ASEAN KEY DESTINATIONS
A toast to Hong Kong-none for Asean
By David Swartzentruber
In 2008 Hong Kong made a very crafty decision. On February 27 of that year import duties on wine and beer were dropped, not just a little but dropped to zero.
The result is this upcoming event: “A record-breaking wine auction of 11,000 bottles conservatively estimated to be worth US$10 million will be held from Saturday, at the annual Sotheby's Spring auction in Hong Kong.”
An historical news report from the U.S. wine magazine, Wine Spectator, provides this account: “But over the past 15 months, it has gone from a city (Hong Kong) with one of the highest wine duties in the world to duty-free—from 80 percent in early 2007, to 40 percent by March 2007 and now to zero.”
Somewhere, somehow, someone or a group of people in the Hong Kong government got the message and the above news dispatch vindicates their decision. On a recent visit to Thailand, Invest HK officials told AseanAffairs that the revenue generated from the wine trade in Hong Kong far exceeds the amount of import duties that Hong Kong previously collected. Wine distributors and auctioneers have shifted headquarters to Hong Kong, bringing in more income to the SAR.
The top wine auction centers in the world used to be New York and London, now HK is at the top. However, the rest of Asia seems to be stumbling in this sector.
Wine is seen by some Asians, especially those in government, as “foreign,” although Thailand, Myanmar, Vietnam and Indonesia have domestic wine industries.
The most active industry is in Thailand where there are about 10 wineries, so let’s take a look at Thai alcohol policy.
Historically, Thailand has had a bias against wine, undoubtedly fueled by some of the domestic spirits producers, who are some of Thailand’s richest citizens. Spirits with a high alcohol content sell for less in Thailand than wines with a much lower alcohol content. The low tax on spirits certainly raises the health costs in Thailand just as the discriminatory tax on wine lowers wine sales. Thailand has refused to accept the international standard for alcohol taxation which is: “The higher the alcohol content, the higher the tax.”
Those close to the Thai government tell Asean Affairs that between the anti-alcohol lobby on one side and the domestic spirits producers on the other, fueled by their large bank accounts, the government is frozen in place on the issue.
On the other side of Asia, with the right steps, Bangkok could become the Asean wine capital. Don’t hold your breath and cheers to HK!
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