Fri, 16 May 2008
From: The Jakarta Post
By The Jakarta Post , Jakarta
The Electronics Marketers Club (EMC), which groups together top electronics distributors, is predicting a tough time ahead for the industry as a government-planned fuel price increase is set to hurt purchasing power and sales.

EMC secretary general Handojo Soetanto said Wednesday the group predicted an average 20 percent rise in domestic fuel prices would stunt the industry into a 5 percent growth this year, down from a previous 20 percent estimate.

"And if the government increases fuel prices by 30 percent, we will probably reduce our growth target by more than 15 percent," Handojo said.

"What we're worried about is the public's purchasing power. The last time the government raised fuel prices, which was back in October 2005, sales declined by up to 30 percent," he said.

"The most important thing is the recovery speed of public purchasing power. In 2005, it took 12 months for the public to recover.

"If the government has a program which could increase people's buying power, then our growth rate could still change," he said.

According to the EMC, in the first four months of the year monthly electronics goods sales averaged Rp 1.4 trillion (US$151 million). Last year, sales reached over Rp 15 trillion.

However, Industry Minister Fahmi Indris said sales could still grow into double digits despite the fuel price increases, and even reach 11.5 percent.

"The government will do its best to push for a conducive business climate for this sector, including by reducing luxury goods taxes on electronic goods," he said during an electronics goods consumer exhibition.

Rachmat Gobel, head of the Electronics Producers Association, was similarly optimistic.

"Looking at our production rate as a whole, I believe the electronics industry will remain stable, since many of our local companies are also export-oriented," he said.

Rachmat, who estimated a minimum growth rate of 10 percent earlier this year, said the government should protect local industries from an influx of exported goods into the domestic market.

"We have to defend our market from imported goods. The U.S. market is slowing down, so firms that are currently exporting there would export their goods to emerging markets like Indonesia," he said. (anw)



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