RI uncompetitive compared to neighbors<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
Some leading electronics and car producers are planning to
\nrelocate their production bases or set up new plants in one of
\nthe ASEAN countries to take advantage of the low import tariffs
\nunder the ASEAN free trade area (AFTA).<\/p>\n
Indonesia, however, will likely fail to compete with the other
\nASEAN countries, particularly Thailand, in attracting investors,
\nseveral industry players warned.<\/p>\n
South Korean electronics giant LG Electronics, for instance,
\nis considering relocating its air conditioner production to one
\nof the ASEAN countries.<\/p>\n
\"Our headquarters will likely prioritize Thailand as its
\nproduction base in the ASEAN countries,\" Shun Khiun, marketing
\nmanager of PT LG Electronics Indonesia, told The Jakarta Post
\nover the weekend.<\/p>\n
\"Some problems, such as the continued political uncertainties
\nand labor policies, have been the main factors discouraging our
\nheadquarters from entering Indonesia,\" he said.<\/p>\n
Thailand has a better labor policy and \"more conducive\"
\ninvestment climate, Shun said, but he did not provide details.<\/p>\n
LG now exports air conditioners to the ASEAN countries from
\nSouth Korea with high import tariffs.<\/p>\n
AFTA came into force on Jan. 1 in six ASEAN member states,
\nnamely Indonesia, Malaysia, Thailand, Brunei Darussalam,
\nSingapore and the Philippines.<\/p>\n
The four other ASEAN countries -- Laos, Myanmar, Cambodia and
\nVietnam -- have delayed the implementation of AFTA until between
\n2006 and 2010.<\/p>\n
In line with AFTA, the six ASEAN countries have reduced import
\ntariffs on almost all products to between zero percent to five
\npercent.<\/p>\n
Lee Khan Hyun, general manager of PT Samsung Electronic
\nIndonesia concurred with Shun Khiun, saying that Indonesia would
\neven be unable to compete with Vietnam in attracting investors in
\nthe electronics sector.<\/p>\n
Lee particularly criticized smuggling and the government's tax
\npolicies.<\/p>\n
\"Our headquarters is very concerned about the high level of
\nsmuggling and the luxury tax imposed on electronics products.\"
\nLee told the Post.<\/p>\n
The Indonesian Electronics Association has repeatedly called
\non the government to curb the smuggling of electronics products
\nand to revoke luxury taxes on such products so as to enable them
\nto compete with an influx of cheaper electronics products.<\/p>\n
\"We can't calculate our potential share in the domestic market
\nbecause about 50 percent of the electronics products traded here
\nare illegal,\" Lee said.<\/p>\n
The government has imposed luxury tax of between 10 percent
\nand 75 percent on electronics products, but smuggled products are
\nsold free of such taxes.<\/p>\n
In the automotive sector, Japan's Honda Motor Co Ltd has
\ndecided to invest US$30 million in setting up a new car plant in
\nKarawang, West Java, to strengthen its presence in the Southeast
\nAsian market. The construction of the plant started Thursday.<\/p>\n
The company said that Honda would utilize Indonesia as its
\nfirst and only production base in the ASEAN countries for its new
\nStream minivan.<\/p>\n
\"We will export Stream minivans to the other ASEAN countries
\nbased on the lower import tariffs,\" Satoshi Okamoto, vice
\npresident of PT Honda Prospect Motor, said, adding that the new
\nplant would have a production capacity of 40,000 units per year.<\/p>\n
Thailand, however, for many automotive companies is still more
\nattractive than Indonesia.<\/p>\n
Honda has established a plant in the country to produce
\nvarious top Honda models, including the Honda City, Civic, Accord
\nand CR-V with a total capacity of 70,000 units per year,
\naccording to the company's website.<\/p>",
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"sponsor": "Okusi Associates",
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