Electronic makers see little room for price increase

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.