Electronics industry ready for 2002 ASEAN free market era

Electronics industry ready for 2002 ASEAN free market era

Adianto P Simamora, The Jakarta Post, Jakarta

While many local industries claim to remain unprepared for the
implementation of the ASEAN (Association of South East Asian
Nation) Free Trade Area (AFTA) scheme next year and call for the
government's protection, the country's electronics sector
welcomes the free market era.

Executives of the country's top electronics companies told The
Jakarta Post that the industry, which is dominated by big foreign
investors from South Korea and Japan, has long been prepared for
the free market era.

"There is no crucial impact of the implementation of AFTA on
the electronics sector," Lee Kang Hyun, general manager of PT
Samsung Electronic Indonesia, said on Friday.

Under the AFTA program, beginning in 2002, the six oldest
members of ASEAN -- Indonesia, Malaysia, Singapore, Brunei,
Thailand and the Philippines -- are required to reduce their
import duty on most manufacturing and agricultural products to
between zero and five percent.

The new ASEAN members, Vietnam, Laos, Cambodia, and Myanmar,
are allowed to delay the AFTA implementation until later years.

This means, starting in 2002, manufacturers and farming
companies in Malaysia, Singapore, Brunei, Thailand and the
Philippines will have greater access to sell their products on
the Indonesian market, while the Indonesian producers will have
more opportunity to market their products to those countries.

Lee said import duty on electronic products was already below
five percent.

"In that sense, we are already prepared for AFTA," he said.

He noted however that the low import duty on electronic
products imposed by other ASEAN countries under the AFTA scheme
would not benefit electronics companies in Indonesia because many
of them had sister companies operating in those countries and
they had an agreement not to enter each other's markets.

Thus, the main concern of many local electronics companies
during the AFTA era is how to protect their market share in the
country amid an influx of new electronic products, Lee said.

Sung Khiun, marketing manager for PT LG Electronics Indonesia
said the local producers should offer quality products with
competitive prices to compete with the flood of imported products
during the AFTA era.

"Consumers will become more selective as a greater variety of
electronic products with attractive prices will be available on
the market," he told The Post.

The local producers also need to improve efficiency and
productivity as well as quality to survive against tighter
competition, he said.

Adhi S. Lukman, secretary general of the Indonesian Electronic
and Electrical Appliance Industries Association (Indonesia-EEIA),
said for now, the main concern of the local electronics industry
pertained to the excessive smuggling of electronic products and
the government's policy of imposing a luxury tax of between 10
percent and 75 percent on electronic products.

He refused to name the source country of the smuggled
products, but industry experts claim that most of the contraband
comes from China.

The smuggled electronic products and the luxury tax imposition
have really hurt the local electronics companies, making them
less competitive on the local market, Adhi said.

Sung shared the view, calling on the government to curb the
smuggling and revoke the luxury tax on electronics.

"Please, stop the smuggling and revoke the luxury tax," Sung
pleaded.