Electronics manufacturers see strong prospects for Indonesia<\/p>\n
Adianto P Simamora, The Jakarta Post, Jakarta<\/p>\n
The country's electronic goods manufacturers have started
\nproducing digital electronic items even though demand is still
\nrelatively low because they expect that consumer purchasing power
\nwill soon recover in line with the improvement of macroeconomic
\nindicators.<\/p>\n
Electronics companies are also now in tough competition to
\nbring their technology to Indonesia in anticipation of robust
\ndemand for digital electronics in the near future.<\/p>\n
In addition, they are also planning to make Indonesia their
\nproduction base for the regional market, which is now imposing
\nimport tariffs of below five percent on electronic goods under
\nthe Association of Southeast Asia Nations (ASEAN) free trade area
\n(AFTA) scheme.<\/p>\n
Electronics executives Lee Kang Kyun of PT Samsung Electronic
\nIndonesia and Sung Kyun of LG Electronic Indonesia agreed that
\ndemand for digital electronics would soon rise sharply in
\nIndonesia.<\/p>\n
\"I am optimistic enough to say demand will follow the latest
\ntrends, in which people will soon move away from their old
\nelectronics products to digital ones,\" Lee told The Jakarta Post
\nover the weekend.<\/p>\n
He said that his headquarters in Korea had agreed to make
\nIndonesia a production base for high-tech products, which would
\nbe exported to ASEAN countries and Australia.<\/p>\n
Samsung currently markets digital electronic items, including
\nDigital Video Disk (DVD) players, projection TVs, plasma TVs and
\nLCD TVs.<\/p>\n
Samsung has produced about one million DVD players since the
\ncompany set up a plant in January 2002 in Cibitung, West Java.<\/p>\n
A year later in January 2003, Samsung brought its projection
\nTV technology to Indonesia. It produces some 1,500 TV sets every
\nmonth.<\/p>\n
Starting in June, the company then produced plasma TVs from
\nits Cibitung plant. \"We have so far produced 150 items,\" Lee,
\nSamsung's marketing director, said.<\/p>\n
\"We shall also market imported home theater products here,
\nstarting this month, but we hope to produce such products here
\nsoon,\" he said.<\/p>\n
However, he declined to state the total value of Samsung's
\ninvestment here.<\/p>\n
The company is expected to book US$300 million from domestic
\nsales in 2003, compared with last year's $170 million, while
\nexport sales are predicted to increase to $850 million in 2003
\nfrom $800 million last year.<\/p>\n
\"Sales of digital products will still contribute about 20
\npercent to this year's total revenue,\" he said.<\/p>\n
Meanwhile, LG Electronic said that the company would also
\nbring its technologies to Indonesia for the production of digital
\nelectronic items.<\/p>\n
\"Digital products are the future of electronics. We have to
\nfollow the trend,\" Sung, LG's marketing director told the Post.<\/p>\n
He predicted people would move from Video Compact Disc (VCD)
\nplayers to DVD players this year as prices were expected to
\ncontinue falling.<\/p>\n
\"We hope to control some 20 percent of Indonesia's DVD market
\nthis year,\" he added.<\/p>\n
LG has produced slim-type DVD players priced at about Rp
\n800,000 per item since January 2003 at its Cibitung plant.<\/p>\n
The company is expected to start producing projection TVs here
\nnext month so that the company can reduce its prices.<\/p>\n
\"As of now, we still import both projection TVs and plasma TVs
\nfrom Korea,\" he said.<\/p>\n
He said that the price of digital TVs was still high. Sixty-
\ninch plasma TVs, for example, were sold here at $18,000 per item.<\/p>\n
LG predicted its sales would reach some $300 million this
\nyear, as compared with $200 million in 2002.<\/p>\n
Both companies admitted that their move to introduce high-tech
\nelectronic products in Indonesia was a result of the government's
\ndecision to cut luxury taxes on electronic products last January.<\/p>\n
However, they still urged the government to provide a further
\ntax stimulus to encourage more electronic companies to invest in
\nthe country.<\/p>\n
\"Luxury taxes of 10 percent to 40 percent on such digital
\nproducts are still high and we therefore hope the government can
\nreduce them,\" Lee said.<\/p>\n
The giant electronic companies planned to set up manufacturing
\nplants here in the mid-1990s, hoping to benefit from the
\ncountry's cheap labor costs and huge market potential, but
\nshelved their plans due to an unfavorable tax climate and rampant
\nsmuggling.<\/p>\n
\"This made Indonesia lag far behind other countries in the
\ndigital electronics industry,\" Lee said.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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