Retail prices of consumer goods such as televisions and home appliances could rise by as much as 20 percent this year, as manufacturers squeezed by the weak rupiah pass higher production costs on to retailers, said the head of an organization representing the retail electronics sector.
“There’s nothing we can do about it because electronics manufacturers have already raised their prices - our hands are tied,” Handojo Soetanto, secretary general of the Electronic Marketers Club, said on Thursday. “We still have businesses to run, employees to pay and mouths to feed.”
The Ministry of Trade projects production prices of electronics goods will rise by 3 percent this year. Albert Yusuf Tobogu, the ministry’s director of imports, said the weakening of the rupiah against the dollar was to blame for the spike in manufacturing costs in the second half of 2008. He said import duties were not a factor.
“Due to uncertainties in the domestic electronics sector, the government has decided not to raise import duties on components and raw materials,” Albert said.
Import duties on electronics components ranging from audio capacitors to parts for air conditioners currently stand at about 7 percent.
Rachmat Gobel, chairman of the Indonesian Electronic Producers Association, or Gabel, said 60 percent of the components used in the production of consumer electronics were imported.
Production costs rose by as much as 10 percent in the second half of 2008, as the cost of imported materials soared, said Handojo.
Manufacturers are still under pressure to raise prices.
Handojo said consumer demand for electronics goods and home appliances fell significantly in November, when monthly retail sales of products such as televisions and washing machines rose 5.7 percent to Rp 1.52 trillion ($141.4 million). December sales figures are not yet available.
“Over the last few years, monthly sales have increased by an average of 10 percent or more,” Handojo said. He attributed falling sales growth to slowing demand and a decline in consumer purchasing power.
From the beginning of December, many electronics retailers began raising prices by about 10 percent.
At one market in Central Jakarta this week, shop owners said that they had raised the prices of most goods by 10 percent to 15 percent over the past month.
Vendors were selling 21-inch LG televisions for between Rp 1.15 million and Rp 1.2 million this week, for example. Average retail prices for these models in fourth-quarter 2008 stood at Rp 1 million.
Handojo said retailers were already preparing to raise prices further in the coming weeks, in anticipation that manufacturers would jack up prices again in February.
“I’ve heard that prices are going up, so I’ve decided to raise my prices by another 5 to 10 percent next month,” said one store owner in Jakarta, who requested that his name not be used.
The EMC said that 2008 sales of consumer electronics goods rose at least 15 percent from 2007 to Rp 17.5 trillion.
Handojo said the retail sales outlook would remain grim for the next few months.
“We believe retail sales of electronics goods will decrease by 10 percent in the first half,” he said.
Jeane Keet, a spokeswoman for Gabel, said electronics producers were planning to raise prices early this year, but declined to reveal specific details.
“I can’t say at the moment how much prices will rise,” Jeane said.