Sat, 27 Dec 2003

Robust growth brings digital era to RI

Eva C. Komandjaja, The Jakarta Post, Jakarta

The country's production of consumer electronics has been booming in the last three years. This is supported by continued investment by foreign companies, who are interested to expand their market share in the country of 220 million people.

Minister of Industry and Trade Rini M.S. Soewandi predicts that electronic exports will reach US$7 billion this year, compared to last year's $6 billion.

Two big South Korea-based electronic companies, PT LG Electronics Indonesia and PT Samsung Electronics Indonesia, are optimistic about the growth of Indonesia's market, pledging more investment in the coming years.

LG general manager Moon Ik Jang said the firm planned to invest $90 million to boost its production and sales in Indonesia next year, up from an estimated $69 million this year. Last year, the firm invested approximately $56 million.

The firm, which wants to be the best seller of electronics in Indonesia, even plans to increase its investment to $113 million in 2005, Kompas quoted Moon as saying.

LG president Young Ha Kim said that the company expected its TV sales in the country to reach 20,000 units this year, giving the firm total revenue of $300 million. For next year, the firm has projected its TV sales to rise to 30,000 units worth $460 million.

Meanwhile, Samsung, which also wants to be the No. 1 electronics producer in Indonesia, puts an additional $20 million in new investments per year.

Samsung's total sales in the country is expected to reach $300 million this year, 60 percent higher than last year's $180 million. Its exports, which account for 75 percent of its products in the country, are expected to reach $800 million this year, according to Samsung marketing director Lee Kang Hyun.

Currently, Samsung controls 13 percent of the market share for TVs in Indonesia, with total sales estimated at 350,000 units per year. It is targeting a market share of 20 percent next year.

Both Samsung and LG underlined the increase in the sales of digital TVs this year, saying the trend is promising and could bring Indonesia faster into the digital era.

"I am optimistic enough to say demand will follow the latest trends, in which people will soon move away from their old electronic products to digital ones," said Lee.

He also said that his Korean headquarters had agreed to make Indonesia a production base for digital products, which would be exported to ASEAN countries and Australia.

In early 2003, the company brought projection TV technology to Indonesia. It now produces approximately 1,500 projection TV sets per month. Starting last June, the company also produced plasma TVs at its Cibitung, Tangerang plant.

"Sales of digital products will still contribute about 20 percent to this year's total revenue," he said.

Last month, LG opened its fourth TV production line in its Tangerang factory. The new $1 million line is dedicated to producing 12,000 projection TVs per year and is expected to boost LG's market share in Indonesia from 10 percent to 20 percent in 2004.

With the new line, LG is also looking forward to seizing 30 percent of the projection TV market in Indonesia by 2005.

LG expects that in 2006 only 40 percent of the total market in Indonesia will use conventional TVs, while the rest will be using high-tech ones such as plasma or liquid crystal display (LCD) TVs.

"Digital products are the future of electronics. We have to follow the trend," Sung Khiun, LG marketing director, said, adding the country's digital TV market growth was estimated to grow by 50 percent per year.

Both LG and Samsung admitted that their move to introduce digital electronic products to Indonesia was a result of the government's decision to cut luxury taxes on electronic products in January this year.

With sales of digital TVs steadily increasing, the ground in Indonesia has been increasingly fertile for local TV stations to go digital.

Digital broadcasting is a new technology that will deliver vivid, theater-like pictures to TV screens. The signals allow much larger amounts of information to be relayed. Another feature of digital broadcasting is viewer participation, such as surveys, contest balloting or educational programs.

Gufroni Sakaril, Indosiar TV station's spokesman, said that his station was ready for digital broadcasting, but it had thus far put the plan on hold due to the small number of digital TVs in the market.

"We have the equipment for digital broadcasting, but we still have to wait for the demand from our audience to go digital," he said.

Gufroni added that when Indosiar first broadcast in 1995, it had predicted that all TV sets owned by the public would be digital by year 2000, but as it turned out, three years after that most TV sets are still analog.

He added that when most people already have digital TVs at home, Indosiar would go digital.

In Japan, digital broadcasting was launched on Dec. 1, but it would only be available in three cities -- Tokyo, Nagoya and Osaka. The Japanese government has invested approximately $1.6 billion to get the system started.

The United States has had terrestrial digital broadcasting since 1998 and other countries such as Britain, Sweden, Australia and South Korea also already have it.