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Asia Minute: Shopping for Bargains in Indonesia

Janine / Flickr
Janine / Flickr

According to the commercial real estate company CBRE Hawaii, the stores at Ala Moana shopping mall take in nearly three-billion dollars a year. Many of those sales are luxury goods sold to people who live overseas. Now one Asian nation is taking steps to change some high-end shopping habits. HPR’s Bill Dorman explains in today’s Asia Minute.

Indonesia is cutting taxes on luxury goods to encourage wealthy citizens to spend their money at home rather than overseas.  The Jakarta Post says the items covered range from Louis Vuitton bags to Gucci shoes even surfboards. And there’s little doubt about where this is aimed: neighboring Singapore has targeted wealthy consumers from Indonesia and elsewhere for many years.  Indonesia’s Finance Minister told reporters “if we lower the tax, people will no longer shop in Singapore.” The government now says those taxes will be cut by 40% later this month.

Indonesian merchants are hoping the move will be enough to reverse a long term trend of consumers buying high end goods overseas.  Asian customers buying luxury products has long been an important part of the business for local stores in Hawai‘i, although sometimes there are different reasons for those purchases.  Luxury taxes can play a role, so can currency exchange rates.

For example, a weaker yen means Japanese shoppers no longer have quite the range of bargains they used to have at stores in Hawai‘i.  But then there are basic prices.  According to the French luxury company LVMH, a Louis Vuitton handbag is nearly a third more expensive in Beijing than it is in Paris, not to mention in Honolulu.

Bill Dorman has been the news director at Hawaiʻi Public Radio since 2011.
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