Indonesia

A Saturday morning stroll around any of the numerous malls in Jakarta illustrates one clear trend in the economy: Indonesians are spending money. The middle class is on the increase and with the increase in disposable income comes the increased demand for consumer goods.

In seeking to meet growing demand, companies such as LG Electronics Indonesia are positioning themselves to take full advantage of the situation while continuing their export activities from Indonesia.

After LG subsidiary company heads from Thailand, Vietnam and the Philippines gathered in Jakarta last year to set targets for the future and discuss strategies for 2003, Young H Kim, President Director of LG Electronics Indonesia, talks about his company's future plans.

"In Indonesia, we operate in an extremely competitive industry. LG Electronics Indonesia aims to provide customers with cheaper priced items and give them competitively priced products. We recognize the increased spending power of the middle class in Indonesia and are targeting this customer base," he says.
Young H. Kim, president director of LG Electronics Indonesia

Indeed, with a 20 percent market share in both televisions and refrigerators, LG Electronics Indonesia is gaining ground in both markets. The company intends to increase its refrigerator manufacturing facilities with a US$10 million investment and Kim expects production capacity to increase to 600,000 units per year.

While committed to Indonesia and the country's huge demand for LG products, Kim is equally dedicated to ensuring the company remains a strong export player on the global market.

"In August 2002, we announced our vision for the company," he continues. "We are aiming to become the number one electronics company in Indonesia while retaining our position as a competitive export base for certain products. For example, LG Electronics Indonesia is the only production base for television-video combination machines. We currently sell 500,000 units every year to the Japanese and European markets."

Kim is also enthusiastic about the advantages for his company once the Asean Free Trade Area (AFTA) takes effect in 2003: "With AFTA, we will be able to bring products over from LG subsidiaries in other countries with only 5 percent duty liable. We will be able to source components from other countries more easily and reduce material costs. I foresee LG Electronics Indonesia's export and domestic sales ratio to be equal in the not too distant future."

"There is no doubt that at the moment, there are some restrictions for investors looking at Indonesia and these unfavorable factors are not helping investor confidence." says Kim. "Nevertheless, LG Electronics Indonesia continues to be successful and I remain optimistic. You can find good opportunities everywhere and my opinion is that opportunities are plentiful in Indonesia."

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