Current Condition of the Electronics Industry in Indonesia
The electronics industry of Indonesia has been experiencing a period of rapid growth. According to the Indonesian Electronics Producers Association (Gabel), domestic sales of electronic products typically increase by around 11% every year. In Indonesia, the electronics industry includes various subsectors from semiconductors to consumer electronics.
In the late 1990s, there was a revolution in the country’s electronics industry because of the increased ability to achieve cost efficiency through the use of economies of scale as well as supply chain management. The growth of electronics production in Indonesia is not only connected to growth in demand for consumer electronics but also to the increasing number of electronic applications for manufacturing production and processing of information.
When discussing the electronics industry in Indonesia, it is very important to note the shift of electronics manufacturing from Japan, Taiwan, South Korea, and Singapore to four countries in Southeast Asia of which one is Indonesia. Indonesia has benefited from the relocation of electronics manufacturing centers from Japan, Taiwan, South Korea, and Singapore. This relocation was mainly caused by the appreciation of the currencies of these countries. Another factor was the fact that several countries in Southeast Asia including Indonesia began to encourage electronics manufacturing in their countries. Other such countries included Malaysia, the Philippines, and Thailand.
The Electronics Industry and the Indonesian Economy
The electronics industry plays an important role in the Indonesian economy. The electronics industry has been bringing and is expected to continue to bring enormous economic benefits to Indonesia if its growth and development is not hampered. The export of electronic products is one of the main Indonesian export products which could give a positive contribution to Indonesia’s international trade. One important factor supporting the increase of Indonesia’s electronic exports in the world is the decrease of international tariffs which have been imposed on Indonesian electronics products.
Nevertheless, the Indonesian electronics industry may still be further developed by being supported by appropriate strategies and government policies as well as stakeholder participation. For this reason, the government ought to take steps such as improving the investment climate, improving infrastructure, and supporting research and development activities within the electronics industry. Through such actions, it is expected that the electronics industry of Indonesia will not only further develop but will also increase its contribution to exports as well as to the country’s economic growth in general in the future.
Televisions contribute most to total electronics sales in Indonesia. They account for around a third of the market. They are followed by refrigerators and other large electrical appliances such as air conditioners and washing machines. Market penetration for electronics and household appliances is still relatively low in many areas of the country, but the ongoing expansion of retail outlets which specifically sell electronic goods all over Indonesia have made the future growth of the industry likely. Today, private individual electronic stores sell the majority of all consumer electronics and appliances which are purchased in Indonesia.
Local electronics brands have the majority of the share of the market for small appliances. In Indonesia, larger electronic appliances are primarily sold by foreign brands. They usually do so through joint ventures with local manufacturers which primarily import the components and then assemble the products in Indonesia for the local market and exports alike. Well-known brands such as Toshiba, LG, Sony, Panasonic, and Samsung have established themselves throughout the country through the use distribution networks as well as intelligent and well-planned advertising strategies.
Why One Should Start an Electronics Company in Indonesia
The latest surge in the fortunes of the Indonesian electronics industry serves as a compelling reason for one to start an electronics company in the country. Many business experts have predicted a further increase in the revenue of the industry which has solidified the decision of many to start planning an electronics company in Indonesia. The increased consumption of electronic goods in Indonesia and other countries of Southeast Asia is one of the key drivers of the investment. Indonesia’s massive population as well as its steadily increasing GDP have been major contributors to demand for such products. Most of the electronic goods on display in Indonesia’s electronics stores are built from imported parts but are assembled within Indonesian borders.
The availability of inexpensive labor in Indonesia compared to several other Asian countries has also caused many to become interested in starting an electronics company in Indonesia. Indonesian minimum wages are set at provincial and district levels rather than nationally. They are generally high enough for employees to live from day to day while at the same time not so high that t