Prices of electronics goods drop by up to 13%

Sari P. Setiogi, The Jakarta Post, Jakarta

The prices of electronics products have dropped by between 4 percent and 13 percent following tax cuts introduced by the government recently, according to an industry executive.

"There's been a big (price) adjustment," said PT LG Electronics Indonesia's marketing and sales manager Sung Khiun during a product launching ceremony on Thursday.

The government earlier this month eliminated or reduced luxury tax on some 45 mainly electronics products as part of a fiscal stimulus package to help the business sector cope with the ongoing economic downturn and encourage new investment in various sectors.

Khiun said that the prices of LG television sets of up to 21 inches had gone down by between 5 percent and 7 percent, while the prices of refrigerators with a maximum capacity of 180 liters had fallen by between 4 percent and 6 percent.

He added that the prices of air conditioners with a maximum capacity of one PK had dropped by between 8 percent and 13 percent.

According to Khiun, a one-PK air conditioner is now available for Rp 2.5 million. In June 2002, a one-PK LG air conditioner was being sold for around Rp 3 million (US$337).

Samsung's managing director Lee Kang Hyun said that his company had also made some price adjustments in response to the tax changes.

"The prices of Samsung televisions and air conditioners have been reduced by between 5 percent and 10 percent," he said, but quickly added there had been no significant increase in sales so far.

He expected that sales would start growing over the coming months.

Handoko Setiono, spokesman for the Electronics Marketers Club told The Jakarta Post earlier sales of electronic goods could rise by between 15 percent and 25 percent this year due to the tax cuts.

Elsewhere, Khiun said that LG planned to expand its audio manufacturing business in Indonesia this year and to make Indonesia its second largest export base after China.

"Indonesia actually has great potential as an export base for electronics exports, but to attract investors, tax breaks are not enough," he said, stressing that the government needed to encourage the development of the components industry, curb illegal imports of electronics products and, most of all, ensure consistency in government policy and regulations.