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21 June 2010

Lightbulb production hurt by agreement

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Several local energy-saving light bulb producers have reduced their output because they are unable to compete with rival products from China, an executive of an association of local light bulb producers has said.

John Manoppo, the chairman of the Indonesian Electrical Lighting Industry Association (Aperlindo), told the Jakarta Post last week that the influx of cheaper lightbulbs from China had severely hurt local producers.

“Many of them have stopped producing light bulbs and shifted to other business activities,” he said, adding that others had also been forced to reduce their output because they were unable to compete with cheaper Chinese light bulbs.

John blamed the free trade agreement between ASEAN member countries including Indonesia, and China for the predicament.

He said that although the ASEAN-China Free Trade Area (ACFTA) had been fully implemented in January this year but that the impact for local energy-saving light bulb producers had been felt as early as January 2009.

“An import tariff on energy-saving light bulbs was removed in January last year as part of the agreement. So since early last year, the local producers have been hard hit by cheaper Chinese bulbs,” he said.

He said on average Indonesian manufacturers of energy-saving light bulbs were outputting at 30 percent capacity.

John said before the implementation of the free trade agreement, the government had imposed a 10 percent import duty on imported light bulbs. Under this duty, local companies were still able to compete with foreign rival products, 90 percent of which are from China.

“Now with the zero percent import duty, it is almost impossible to compete,” John said. “This is the reason why many local light bulb producers have decided to halt production and shifted to other business activities,” he added.

He said the domestic industry had started to bloom after an energy-saving campaign kicked off by the government in 2006.

From 2007 to 2008, state electricity company PLN distributed about 51 million energy-saving light bulbs to household customers without charge.

In the first four months of this year, 54 million energy-saving lightbulbs were imported from China, comprising 16 million in January, 12 million in February, 10 million in March and 16 million in April.

He suggested the government use non-tariff barriers to curb the influx of cheaper imported light bulbs such as by strictly imposing mandatory national industrial standards on all imported light bulbs.

Meanwhile, Industry Minister M.S. Hidayat said the government would persuade foreign companies to establish a joint venture with local firms to produce products for the Indonesian market.

John supported the minister’s idea. He said the establishment of a joint venture would provide a win-win solution for both local and foreign producers.


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