About 100 shoemakers stop operations
About 100 shoemakers stop operations
Adianto P. Simamora
The Jakarta Post
Jakarta
About 100 local footwear producers are believed to have
stopped operation or been in limbo over the past several years
due to various reasons, including labor disputes and rising
production costs, an association said.
Head of the Indonesian Footwear Association (Aprisindo) Anton
J. Supit said suspicions that the 100 companies had stopped
operation was based on the association's data that there were now
only 90 "active" members of the association, compared to 190
three years ago.
The association's members include 50 large companies which
produces 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 Indonesia-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.
And many of the local companies which have suspended their
operations are believed to have relocated their plants to those
countries due to their cheaper labor and more conducive climate
for investment, according to Anton.
He warned that more footwear producers could stop operations
this year unless the government takes effective measures to solve
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 interest.
"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 warned.
The bill stipulates among others 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 the workers's salary during a
strike.