Electronics manufacturer urges components duty cut

Zakki P. Hakim, The Jakarta Post/Jakarta

The government should cut import tariffs on electronics components so as to help improve the competitiveness of local electronics makers in the global market, an top industry executive said on Wednesday.

"Our products cannot compete with those from other ASEAN countries due to Indonesia's high import duty on electronics components," said PT LG Electronics Indonesia president Young Ha- kim.

He said Thailand, for instance, had reduced its import duty to 5 percent on components from ASEAN member countries -- as required under the ASEAN Free Trade Agreement -- but also from other Asian countries like South Korea.

"We need the government to support us by reducing the import duty," Young told reporters on the sidelines of a product launch for a refrigerator with a built-in TV.

Indonesia's import duty on electronics components range between 10 percent and 40 percent, he said.

"Although Indonesia is our base for manufacturing refrigerators in the region, the cost here is still higher than in Thailand," said Young.

LG Indonesia plans to manufacture 1.8 million refrigerators this year -- a 20 percent increase from last year's production volume -- of which 60 percent will be exported to Vietnam, Malaysia, Thailand and Singapore, said Young.

Separately, Ministry of Industry and Trade's director general of electricity, machinery, electronics and miscellaneous industries Subagyo said the government needed to impose a higher import duty to protect the national component industry.

However, he said in certain cases, some electronics producers could submit a request for lower tariffs to the Ministry of Finance, which would consult the industry ministry in making a decision on the incentive.