Monday, October 11, 2010

High prices in Cambodia: a taxing problem

Photo by: Steve Finch
Traffic passes a Sunsimexco Ltd truck Wednesday advertising reduced price televisions close to Phnom Penh’s Olympic Stadium.
DEMAND for consumer electronics may have increased in the Kingdom over the past five years or so, but wholesalers say they are still struggling to keep prices down on goods, almost all of which are imported from Japan and South Korea.

Electronics importers in Cambodia – many of which are located on Phnom Penh’s Mao Tse- tung Boulevard – have seen sales rise dramatically with the expanding economy, says Hong Heng, head of Hong Heng Electronics in the capital, but he added that high import taxes have prevented prices from falling.

“Value-added tax in the Kingdom is 10 percent compared to just 7 percent in Singapore,” he said, recommending reductions on duties, particularly on items useful for the development of the country, such as personal computers and laptops, which have become noticeably more popular in the Kingdom in recent years.

“We want to propose that the government reduces taxes on imported electronic products to allow companies the chance to import more and to sell at a reasonable price to the public,” said Hong Heng, who also bemoaned the rate of value-added tax in Cambodia.

With a shift in buying habits, consumers in the Kingdom have developed a taste for quality products, as well as quantity, says Chi Vy, general manager of Eco Electronic Co, which imports household electric items from Singapore such as lighting fixtures.

Part of demand for such items has stemmed from a boom in housing, she added. 

However, enduring high taxes on imported electronic products have meant that importers have seen only minimal benefits derived from economies of scale that has come with the expanding market.

“I hope demand for such products in the home – all kinds of electronic products – will mean we can import more into Cambodia,” said Chi Vy, whose company sells products that sell for as much as US$10,000 each – a sign of burgeoning wealth in the Kingdom.

Tax on transportation represents another factor adding to high retail prices on electronics goods imported into Cambodia, which she also said sell at significantly higher retail prices than in other countries.

While high prices and the recent economic crisis could have been expected to dampen the rise in demand, Long Sokha, owner of Long Sokha Electronics Shop in Battambang, says that consumers have remained keen to buy consumer electronics products, at least in the provinces.

Selling televisions, CD, DVD and VCD players, air conditioners and refrigerators, Long Sokha says business is still good in Cambodia’s second-largest city.

“We have sold 100 television sets per month,” he said, adding that an improving electricity supply in the area certainly helped prop up demand.

Products that can be produced within the Kingdom, such as fans, are significantly cheaper than those that are imported, said Long Sokha, a sign of the extent to which the different taxes on imported goods all added up. But prices also depend on the brand and country in which they are made – there was, for example, typically a 15 percent difference in price between those manufactured in China and Singapore, he said.

Televisions made by JVC sold for between $120 and $200, he said, while Sony sets sell for between $250 and $300.

Sok Suy, a 38-year-old farmer who bought a JVC television three months ago, described his purchase as very expensive at $180, adding that it did not seem good value for money given that he considered the product second rate.

Other people in his village had in recent months also invested in electronics products including televisions, DVD and VCD players, and stereos, he said. 

And the high costs associated with electronic products did not end once the product had been paid for, he added – at 1,000 riels ($0.24) per kilowatt hour, the price of running electrical goods in the home remains yet another high cost for consumers in the Kingdom.

(source from thephnompenhpost newspaper, THURSDAY, 27 MAY 2010 15:01 SOEUN SAY)

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