Tax breaks could lower price of electronic products
Arya Abhiseka, The Jakarta Post, Jakarta
The price of electronic products is expected to drop after the government announced tax breaks last week for some products.
The lower price should also help create a more vibrant market.
"I hope it will work, as many consumers have been discouraged by the utility price increases, resulting in a slow market," said Jeanette, a retailer at Harco Plaza, Glodok, West Jakarta, over the weekend.
She hoped the reduction in the price of electronics products would occur in the coming few months.
She said, for example, that her shop was now selling a 14-inch television set for around Rp 700,000, compared with its former price of Rp 825,000.
"It would be good if the market started to heat up again, then maybe I could sell a TV set at a price even lower than Rp 700,000," Jeanette said.
Earlier this month the government raised the price of fuel products, electricity and telephone charges as part of efforts to cut expensive subsidies. The simultaneous price increases will cut into the public's purchasing power and cause the production costs of many companies to soar, both of which would definitely hamper local electronics manufacturers already struggling to fight with cheaper, smuggled products.
To help avoid the negative consequences, the government introduced last week a luxury tax cut and exemption for dozens of electronic products, such as TVs, washing machines, air conditioners and mobile phones.
Apart from easing the burden on electronic goods manufacturers as a result of the utility price hikes, the policy should also assist them to compete better against cheaper smuggled products.
But electronics producers have yet to decide on whether they will lower the price of their products.
"We are still making the necessary calculation," said one official of an electronics company.
But the official added that there was a possibility for the price to decline by 10 percent to 20 percent, particularly on those products that would enjoy luxury tax exemption.