About 100 shoemakers stop operations
About 100 shoemakers stop operations
Adianto P. Simamora, The Jakarta Post, Jakarta
About 100 local footwear manufacturers are believed to have
ceased or postponed operations in the last three years for
reasons which include labor disputes and rising production costs,
the Indonesian Footwear Association (Aprisindo) says.
Aprisindo head Anton J. Supit said suspicions that the 100
companies had stopped operating was based on the association's
data that it had only 90 "active" members, compared to 190 three
years ago.
The association's members include 50 large companies which
produce international brands such as Reebok, Adidas, Fila and
Nike.
Anton said production costs in the country had risen over the
past three years following the increase in electricity and fuel
costs and the minimum salaries for workers.
This has made Indonesian-made shoes more expensive than those
made in others countries. As such, many buyers have shifted their
orders to countries like China and Vietnam, which offer cheaper
prices.
Many of the local companies which have suspended their
operations are believed to have relocated their plants to those
countries due to cheaper labor and a more conducive climate for
investment, Anton said.
He warned that more footwear producers could stop operating
this year unless the government solved the problems confronting
the industry.
The country's footwear exports, which fell to US$1.6 billion
last year from $2 billion in 2000, could further decline to
US$1.5 billion this year.
Anton warned that the government-proposed bill on labor
protection and development, now being debated at the House of
Representatives, would further hurt the industry, unless the
legislators changed some clauses in the bill which are considered
as overly protective of labor interests.
"This is a serious problem. If the government and legislators
fail to issue favorable policies, I believe all local footwear
companies will shut down their factories in the next five years,"
Anton said.
The bill stipulates, among other points, that night-shift
workers will not be allowed to work more than 35 hours per week
and companies have to pay severance payments to workers who
voluntarily resign. It also obliges companies to pay workers's
salaries during a strike.