Mon, 10 Feb 2003

Electronics prices drop, time to buy, say traders

Sari P. Setiogi, The Jakarta Post, Jakarta

If you want to fill your house with the latest model electronics goods, now may be the time.

The price of electronics, following last month's announcement by the government of the abolition or reduction of a number of taxes, has gone down significantly from last year.

When The Jakarta Post visited a well-known electronics center in downtown Glodok, West Jakarta, on Friday, most prices had fallen from 10 percent to 30 percent from last year.

These declines are the result of the new tax rules introduced by the government early last month. The government eliminated or reduced luxury taxes on some 45 products, mainly electronics.

Television sets measuring up to 21 inches, washing machines with a maximum capacity of six kilograms, refrigerators with a maximum capacity of 180 liters, air conditioners with a maximum capacity of one PK are some of the items now exempt from luxury taxes.

[PK is a Dutch term for horsepower, which is equivalent to a freezing capacity of 9,000 British thermal units per hour.]

Other items receiving a luxury tax reduction of 30 percent, 20 percent or 10 percent include televisions measuring from 21 inches to 42 inches, washing machines with a capacity of six kilograms to 10 kilograms and air conditioners with a capacity of between one PK and two PK.

At Glodok, a Sony MHC-VX222 mini-compo stereo with three-CD changer sells for Rp 2.3 million (about US$255), though customers are allowed to bargain. Hendra, owner of New Asia Electronics, said he used sell similar stereos for between Rp 2.5 million and Rp 3.8 million.

The store also offers a 29-inch Toshiba 29A3DE true-flat television set for Rp 3.5 million, about Rp 600,000 less than before the tax reduction. A similar product can be found at Victory Electronic for Rp 3.45 million.

Television sets from smaller manufacturers like Chang Hong, Aurora, Bombasound and Jonsa have also started to enter the market at much lower prices. A 14-inch Aurora television set, for example, sells for Rp 675,000, and Bombasound and Jonsa TVs for Rp 700,000.

A Samsung washer-dryer with a capacity of seven kilograms is available for Rp 1.5 million, as compared to its former price of Rp 2 million. A Samsung WT11S2 washer, without dryer, with a capacity of 11 kilograms is tagged at Rp 1.8 million.

Refrigerators can also be had at lower prices since the new tax rules. A single-door Toshiba with 12-liter capacity is available for Rp 1.175 million, down from about Rp 1.5 million.

Reduced prices can also be found at electronics superstore Electronics City in the Sudirman Central Business District in South Jakarta.

Several items had been discounted ostensibly to commemorate the Chinese New Year earlier this month. But an attendant who asked not to be named said on Saturday the discounts might have something to do with the new tax rules.

Back at Glodok, Hendra told the Post there seemed to be a significant increase in the interest in electronics goods, with more customers coming to his store, particularly on the weekend.

"But there has been no noticeable increase in sales yet," he said. "People appear to still be waiting for further price reductions, which I don't think will happen.

"It would be hard for retailers if the prices changed substantially too often. We would not be able to make business calculations," Hendra said.

On the other hand, he is certainly pleased with the current situation.

In the past, producers had to compete with much cheaper smuggled goods, but now the price gap between legal and smuggled goods has narrowed.

Ahiung of the Maju Jaya store in the Harco Glodok shopping center told the Post smuggled goods were now only about Rp 25,000 to Rp 75,000 cheaper than legal goods.

With such a small difference, customers now prefer to buy legal products with a warranty rather than buy smuggled goods that do not contain warranties, he said.