Electronic makers see little room for price increase

Adianto P. Simamora, The Jakarta Post, Jakarta

Following the government's utility price hikes, local electronic manufacturers will limit the increase of the price of their products to between 5 percent and 10 percent, according to an industry official.

The chairman of the Association of Indonesian Electronics Producers (Gabel), Adhi Sukmono, said on Monday that industry players would soon meet to discuss what impact the price hikes would have on production costs, but added that producers would be extra careful in deciding the increase to their products' prices amid consumers' weakened purchasing power.

He also said that fuel and electricity expenses contributed only a little to overall production costs.

He said that about 80 percent of the production cost was linked to imported components, which means that fluctuations in the exchange rate of the rupiah to the U.S. dollar would have a larger impact on cost.

"We are still calculating the impact (of the utility price hikes) on our production cost," Adhi said.

"Our main concern is the rupiah's stability against the U.S. dollar as most components are still imported and it would influence the price of electronic products," he added.

The government raised fuel prices as well as electricity and telephone rates. Protests are growing over the new policy as it puts a greater burden on people and could cause production costs to soar. There are fears the protests could escalate and cause social unrest and political chaos, while putting further pressure on the rupiah.

Elsewhere, Adhi warned that if the country's security condition worsens because of the protest, electronic manufacturers could not develop their businesses here.

"And as a result, more illegal electronic goods will flood into the country, and we will be left out," he said.

The electronics sector employs thousands of workers.

Adhi added that local manufacturers would be hesitant to prop up electronic prices because of the massive influx of cheaper smuggled goods into the country.

"We are facing complicated problems," Adhi said.

Electronic manufacturers have repeatedly called on the government to boost antismuggling efforts to help locally made goods compete on the local market.

They also urged the government to review the tax on electronic goods, which has curbed the growth of electronic producers.

Up to 52.5 percent in tax is levied on electronic goods sold in the country.