'Luxury tax on electronic goods must be scrapped'<\/p>\n
A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
The Ministry of Trade and Industry has proposed to the Ministry
\nof Finance to drop the existing luxury tax on electronic goods,
\narguing that the tax has discouraged investment in the sector.<\/p>\n
I Gusti Putu Suryawirawan, director for electronics and
\ninformation technology at the Ministry of Trade and Industry, was
\nquoted by Antara as saying on Thursday that some of the
\nelectronic products should have no longer even be considered as
\nluxury goods.<\/p>\n
He pointed out on items such as 14 inch-televisions,
\nflatirons, fans and radio cassettes.<\/p>\n
According to Lee Kang Hyun, chairman of the Indonesian
\nElectronics Association (Gabel), electronic goods, both imported
\nand locally produced, are subject to luxury taxes of between 10
\npercent to 70 percent.<\/p>\n
Among of electronic products imposed with a 20 percent tax are
\nrefrigerators (with a capacity of more than 230 liters), heaters,
\nair conditioners, washing machines, flatirons, and
\n21-inch to 29-inch televisions.<\/p>\n
Putu said that the luxury tax had caused the prices of
\nelectronic products here to become more expensive, which in turn
\nlimits the market demand.<\/p>\n
He said that this year's sales of electronic products was
\nestimated at only around Rp 32 trillion, compared to the market
\npotential of around Rp 50 trillion.<\/p>\n
He explained that the weak market demand had discouraged
\ninvestors to make new investments in the domestic electronics
\nindustry.<\/p>\n
He cited, as an example, that electronics giant Sony Corp. had
\ndropped its investment plans in the local electronics sector due
\nto weakening sales.<\/p>\n
Reports had earlier said that many investors opted to build
\nhigh-tech electronic manufacturing plants in other countries in
\nthe region like Malaysia, Thailand and China partly because of
\nthe unfavorable tax policy here.<\/p>\n
Industry analysts said that combined with lingering labor
\nconflicts and security problem, only low-end electronic product
\nmakers stay in Indonesia.<\/p>\n
\"Because of this problem, the luxury tax on electronic goods
\nmust be scrapped,\" he said, adding that the Ministry of Trade and
\nIndustry had made the proposal since last year, but so far there
\nhad been no response from the Ministry of Finance.<\/p>\n
He said that the latter must move quickly to help revive
\nforeign investments at home.<\/p>\n
Meanwhile, Lee said that the luxury tax had encouraged certain
\npeople to smuggle in electronic products in order to be able to
\nsell them here at cheaper prices because they didn't have to pay
\nthe taxes.<\/p>\n
This in turn is hurting the sales of electronics makers here.<\/p>\n
\"In order to win competition in the tight market, some often
\ntake a short cut by smuggling the products,\" Lee said.<\/p>",
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