Falling rupiah scares away electronics consumers

Falling rupiah scares away electronics consumers

Zakki P. Hakim, Jakarta

The decline of the rupiah against the U.S. dollar has dealt a
blow to the country's electronics sector, forcing traders to
raise their prices and subsequently resulting in a drop in sales.

The rupiah slid to Rp 9,065 on Friday, a 4.2 percent fall
since May 5, when the United States' Federal Reserve announced it
was ready to raise its interest rate.

Several personal computer (PC) and personal data assistant
(PDA) vendors interviewed by The Jakarta Post claimed it had been
hard to sell a single unit since the rupiah's depreciation.

Meanwhile, vendors of warranted household appliances and
electronics goods such as refrigerators, air conditioners,
washing machines and stereo systems said they had learned from
their distributors that prices would increase by around 3 percent
starting June 1.

"As for unwarranted products, their prices have increased
alongside the rupiah's decline," said Joseph, a shop owner at ITC
Cempaka Mas, Central Jakarta.

Local electronics traders usually sell warranted and
unwarranted products, the latter of which are cheaper and are
believed to be smuggled.

The price of an unwarranted PlayStation One console has
increased to Rp 635,000 from Rp 600,000 in the wake of the
rupiah's decline, while an unwarranted Sanyo stereo system is now
Rp 1,025,000, slightly up from last week's Rp 1 million price
tag.

Lee Kang Hyun, chairman of the Electronic and Electrical Home
Appliances Industries (GABEL), said should the rupiah remain at
around Rp 9,000 next month, its members would increase prices by
up to 5 percent.

Lee, also marketing director of PT Samsung Electronics
Indonesia, said GABEL members had been trying to delay a hike as
long as possible, hoping that the rupiah would return to around
Rp 8,500.

A PDA vendor, Widhi, said she was unable to sell a single unit
of the XDA O2 last week, whereas normally, she sells at least two
units a week. The price of the product had risen to Rp 8 million
from Rp 7.75 million prior to the drop in the rupiah.

"It is a very popular product, but since the middle of this
month, people stop by only to ask whether the price has fallen
yet," she said.

She said customers were very sensitive to the dollar rate and
quickly stopped making purchases even at a slight strengthening
of the currency.

She hoped the rupiah would become stable again after the
presidential election on July 5, but doubted the increase in the
greenback was due to domestic, rather than foreign, factors.

"I heard the rupiah is declining because the U.S. is going to
increase its interest rate," she said, adding that the government
should take action immediately to stabilize the local unit.
"Otherwise, the economy will be stuck again."

She said Rp 7,000 to the dollar was good for business, but a
steady rate was more preferable, as it would make it easier to
project sales figures.

Taroreh, a PC vendor, shared Widhi's concerns, as she had
received no orders for the last two weeks.

She is now offering a complete PC package at a base price of
US$500, or Rp 4,550,000, at a rate of Rp 9,100 per dollar. The
price of the package has increased by around Rp 200,000 over the
past two weeks.

The decline has apparently yet to affect the price of cellular
phones, with vendors claiming the most influential factor in
pricing is the balance of supply and demand, rather than the
dollar value.

Tuti, who works at a Nokia boutique, said the price of a Nokia
9210 Communicator had risen to Rp 4.75 million from Rp 4.6
million, but she maintained the hike was due to an increase in
demand.