Electronics sales could triple this year
Adianto P. Simamora and Evi Mariani, The Jakarta Post, Jakarta
Several major electronic makers predict sales of electronics in the country to triple this year as a result of tax breaks and the strengthening of rupiah, which have led to a significant drop in the prices of electronic goods.
Such an ambitious target, set by PT Samsung Electronics Indonesia by PT LG Electronics Indonesia, was prompted by optimism of strong domestic consumption.
Public consumption, which has been the backbone of the country's economic growth over the past several years, has been expected to become the main engine for this year's target of 4 percent economic growth.
Lee Khang Hyun, marketing director of Samsung, said the drop in price was the main factor encouraging people to purchase more electronic goods this year.
The country's electronic manufacturers cut the prices of their products by between 15 to 20 percent in February following the government's decision to cut luxury taxes on electronics.
Prices have further dropped by between 5 percent and 10 percent lately due to the strengthening of the rupiah against the U.S. dollar.
Analysts have predicted that the rupiah would continue to strengthen for the next several months.
"This is a good chance for us as we can further cut the prices of our products and the strengthening of the rupiah has thus far not yet hurt the exports of electronics," Lee said.
Samsung expected to book some US$150 million from the sale of consumer electronic goods, such as television sets, refrigerators and air conditioners on the local market this year, compared to last year's figure of $80 million. Meanwhile, sales from information technology goods are expected to reach $230 million.
Its exports are projected to reach $850 million.
"To reach the target, Samsung will introduce a number of new products this year. We will also spend some US$20 million on a marketing campaign," said Lee.
Meanwhile, LG has predicted its sales in the country would reach some $300 million this year, compared to $200 million in 2002.
Sung Kyun, Marketing manager LG Electronics said that the company made such an optimistic target after seeing the high interest of consumers in buying locally assembled products following the drop in prices.
"People should prefer buying local products over the smuggled ones as the price gap between them has narrowed," Sung told The Jakarta Post.
He said luxury tax cuts had made locally made products more competitive against both the illegally imported goods and cheaper imported products from China.
The increasing trend in the sale of consumer products was not only experienced by television and refrigerator vendors.
The Indonesia Computer Business Association (Apkomindo) predicted computer sales were expected to increase by 20 percent this year to 720,000 units from 600,000 unit last year.
"Although currently computer sales are slowing a bit, we still expect them to rise again starting this month," Hidayat Tjokrodjojo, chairman of the association told the Post.
He said rather than causing an increase in sales, the strengthening of the rupiah has apparently today slowed sales as consumers preferred holding their money and waiting for the lowest prices of the imported consumer goods.
Meanwhile, the Indonesia Motorcycle Association (AISI) predicted that sales of motorcycles could reach 2.6 million units in 2003, from last year's of 2.3 million units.
"Demand for motorcycles is still high, the industry players are now offering incentives to attract consumers," Ridwan Gunawan president of AISI said.