Harco Glodok electronics market in the doldrums

Damar Harsanto, The Jakarta Post, Jakarta

Vendors at Harco Glodok electronics market in Kota, West Jakarta, revealed on Monday that they had been experiencing quiet trade in electronic goods during the last two-and-a-half months, though their prices had dropped due to the strengthening of the rupiah against the U.S. dollar.

"I think the market will be slow for the next two months to three months," said Aliang, who runs Berjaya electronic shop in the area.

World Cup 2002 in South Korea and Japan, which was expected to boost demand for electronic goods, particularly television sets, has apparently not improved sales.

Aliang noted that slow business might be a result of a wait- and-see attitude by customers toward the continuous strengthening of the rupiah against the U.S. dollar, which could further lower the price of electronic goods.

The rupiah has continued to strengthen since early this year due, according to analysts, to improvements in Indonesia's macroeconomic situation.

The rupiah broke the psychologically important level of Rp 9,000 to the dollar on Wednesday, for the first time during the last eight months. During morning session on Wednesday, the rupiah was trading at 8,970-8,980 to the dollar. Last year, the rupiah was hovering between Rp 10,000 and Rp 11,000 per dollar.

"Many consumers have delayed their electronics purchases to await price falls based on the continued strengthening of the rupiah," said Aliang.

He added that the strengthening of the local unit had caused the price of imported electronics to fall by Rp 50,000 to Rp 150,000 per item sold.

Besides, Aliang also attributed the quiet market to the approach of the new academic year when parents had to set aside money for paying school fees and the other expenses associated with preparing for a new school year.

Another vendor Tony Wijaya concurred with Aliang, saying that he only managed to sell five television sets and another five hi- fis per day during March. In February, he recorded sales of 10 of each per day.

"When the dollar was hovering at Rp 11,000, the price of electronics as well as the demand were relatively stable," said Tony.

Owing to the plunge in demand, Tony said, most vendors were unwilling to increase their stocks.

Tony expressed confusion at why demand remained low despite an expected surge in the wake of the flooding that hit Jakarta in January and February.

"I don't know why the flooding did not increase demand, as it was reported that there had been widespread damage to electronic equipment," he said.

Aliang said that under such conditions, vendors were inclined to lower their prices in order to attract more customers. "Many vendors have engaged in a price war to win over customers," Aliang said.

"What we must do now is sell our goods as quickly as possible regardless of the resultant small profit margin," he said, adding that his shop's net profit had dropped sharply to Rp 30 million in May, from Rp 70 million in February.