The electronics manufacturing industry is struggling to compete with black market, parallel import, and smuggled goods.

The national electronics industry’s output has declined by half in 2006 so far because of the rampant availability of smuggled and black market electronics goods on the market, according to Rachmat Gobel of the Gabungan Elektronik Indonesia (Gabel), the Indonesian Electronics Association. This represents a continuation of last year’s decline in production, which was recorded at 40%.

Gobel says that sales of household electronics items and white goods have actually increased in 2006, compared to last year, but that illegally imported products take up an ever-increasing share of those sales. He said on the 18th:

The market has been growing but smuggled goods have caused domestic factory output to decline by 50%.
(Pasar memang tumbuh, tapi produk selundupan ini menyebabkan pabrikan dalam negeri menurunkan produksi hingga 50 persen.)

Based on data and forecasts put out by the Electronic Marketer Club (EMC) sales of fans were at 6.3 million units in 2004, 7 million in 2005, and 7.5 million by the end of this year. Refrigerator sales in 2004 were 1.9 million units, declining slightly in 2005, and rising to 2.05 million in 2006, projected. 844,000 washing machines were sold in 2004, rising to 900,000 the following year, and reaching 1.05 million units by 2006. Television sales in 2004 were 4.5 million units, 4.9 million in 2005, and 5.7 million in 2006. The tropical staple, the air conditioner, had sales of 898,000 units in 2004, 1 million in 2005, and 1.15 million by the end of 2006.

Gobel went on to say that factories in China and some Asean countries were the main source of black market electronic goods in Indonesia. Such goods, he complained, escaped import taxes, which were in the range of 40-60% for such products. However he mentioned that some local factories also produced “fake” branded electronic and white goods.

Gobel re-stated the Electronic Marketing Club’s earlier plea to the authorities, particularly the Directorate of Customs and Excise, to take more action against smuggling, and to consider abolishing or reducing the “luxury” sales tax (Pajak Penjualan Barang Mewah (PPnBM)) on white goods.