Govt urged to take action to save shoe industry<\/p>\n
JAKARTA (JP): Chairman of the Indonesian Association of Shoe
\nProducers Anton J. Supit yesterday urged the government to take
\nquick action to stop Indonesia's shoe industry from losing
\ncompetitiveness against neighboring countries.<\/p>\n
Anton said Indonesia's shoe industry could still compete
\nagainst shoe industries in countries that offer lower wages, such
\nas China and Vietnam, provided the government acts immediately to
\nimprove the industry's investment climate.<\/p>\n
He said import clearance and handling at seaports should be
\nexpedited to cut the cost of raw materials.<\/p>\n
The government should encourage investment in leather
\nprocessing by exempting shoe producers from the 10 percent value
\nadded tax on domestically processed leather, he said.<\/p>\n
"China also applies tax exemption to support its shoe
\nindustry," Anton said.<\/p>\n
He said the 10 percent value added tax burden had prompted
\nlocal footwear producers to buy imported rather than local
\nleather because it was cheaper.<\/p>\n
The country's shoe industry would be more cost efficient if it
\nwas supported by an efficient leather industry, he said.<\/p>\n
Increase<\/p>\n
The association reported that Indonesia increased its shoe
\nexports slightly to US$2.2 billion in 1996 from $2.05 billion in
\n1995.<\/p>\n
It said Vietnam, which started its shoe industry in 1994,
\nincreased its shoe exports from $338,000 in 1995 to $533,800 in
\n1996, while China exported $3.2 billion worth of shoes from the
\nGuangdong province alone and $2.4 billion through Hong Kong in
\n1996.<\/p>\n
Anton said the Indonesian shoe industry was less competitive
\nthan China's because Indonesian workers were less productive
\ndespite their higher wages.<\/p>\n
He said Indonesian workers produced 2.5 pairs of shoes in nine
\nhours with wages amounting to 17 percent of the price of a pair,
\nwhile China's workers made 3.8 pairs of shoes in nine hours with
\nwages representing only 11 percent of the price of a pair of
\nshoes.<\/p>\n
"If labor costs increase 20 percent in Indonesia, the shoe
\nindustry will collapse," Anton said.<\/p>\n
He called on the government to set up a standard to link wage
\nincreases to productivity increases.<\/p>\n
Companies should cooperate with the government to increase
\nlabor productivity, he said.<\/p>\n
The government needed to enforce strict regulations to
\ndiscipline workers, he said.<\/p>\n
The government, in its current drive to promote technology-
\nintensive industry, did not seem to have a clear policy on labor
\nintensive industry such as shoe manufacturing, he said.<\/p>\n
"We want to know, clearly, what the government's policy on
\nlabor intensive industry is. How long does the government want
\nthis industry to continue," he said. (jsk)<\/p>",
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"sponsor": "Okusi Associates",
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