Matsushita asks Indonesia to cut sales tax on luxury goods

By Sylvia Gratia M. Nirang

TOKYO (JP): Japan's electronic industry giant Matsushita Electric Industrial Co., asked the Indonesian government on Monday to lower sales taxes on luxury goods imposed on color TV sets and refrigerators.

Matsushita's Executive Director Morihiro Sato said the sales tax imposed on TV sets and refrigerators were now inappropriate as the two electronic appliances were no longer considered luxury goods in the country.

"The two products have led the Indonesian market in the past five years. They are very popular products for most Indonesians. So we think that imposing a 20 percent luxury tax will only damage the local sales," Sato said in a meeting with Indonesian Minister of Industry and Trade Rahardi Ramelan here.

Sato said Japanese electronic makers were no longer producing the 14-inch color televisions because Indonesians preferred to purchase ones with bigger screens.

The government currently imposes a 20 percent luxury tax on televisions with screens larger than 14 inches and refrigerators with a capacity of up to 200 liters.

Sato also said that Matsushita booked a sharp decline in its sales in Indonesia's market last year due to the country's worst ever crisis.

Last year Matsushita's eight Indonesian affiliates recorded 9 billion yen (US$75 million) in domestic sales. They booked 54.6 billion yen ($500 million) in export sales last year, an increase of about 10 percent compared to the export value in 1997.

"Matsushita's Indonesian affiliates still survive amid the sluggish domestic sales because 86 percent of their products are exported," Sato said.

Sato said that his company believes the prospect of the electronic industry in Indonesia would remain bullish despite the country's prolonged economic crisis.

"We still see Indonesia as the most important market to us, given its huge population which is very adaptive to new electronic products," he said.

Sato said that instead of pulling its investment out, Matsushita planned to expand its business in Indonesia.

"This year we plan to invest 36 trillion yen or about $3 billion to expand the operation of our existing plants in Indonesia," he said without elaborating further.

Sato said, Matsushita would use the production slowdown to improve the technology and human resources of their local partners by providing extensive training for their workers.

"Right now, despite encouraging domestic sales, the Indonesian government should also develop electronic supporting industries, which produce raw materials and components, in order to boost exports," he said.

He added that currently the Indonesian electronic industries were heavily dependent on imported raw materials and components, making it hard to get optimal benefit from big exports.

Matsushita's Indonesian affiliates produce audio, television, home appliances, video-recorders, speakers, semiconductors, batteries and others under the brand National/Panasonic.

Rahardi, who is leading a trade mission to Japan, said that Indonesia expected to generate $20 billion in export value from electronic goods in the next 10 years from the estimated $4 billion this year.

"But we badly need your help to reach this target. So please continue investing your money in Indonesia. From the government's side, we pledge to create a more conducive market for the electronic industry," he said.

Rahardi said the government was currently preparing a new electronic policy to attract investors and to create a more competitive market.

He said that the country's exports of electronic goods declined by 12 percent to $2.9 billion last year compared to its figure in 1997.