Footwear exports to remain flat in 2002

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The country's footwear exports would remain stable at US$800 million in the first half of next year, similar to the same period this year despite the global economic slowdown, the Indonesian Footwear Association (Aprisindo) said.

Aprisindo's secretary general Djimanto said that export orders for the first six months of next year had already been secured even before the end of this year.

"This means that foreign buyers still have confidence in us," he told The Jakarta Post on Thursday.

Djimanto did not explain why foreign buyers were still purchasing the same amount, even though the U.S. economy was already in a recession and growth in European economies was also declining.

Analysts had earlier predicted that the country's shoe exports would continue to decline next year due to the impact of the global downturn, exacerbated by the Sept. 11 attacks on the U.S.

The global slump is already affecting Indonesia's economy this year, with non-oil and gas exports estimated to decline to $42 billion this year compared to $47.7 billion last year.

Elsewhere, Djimanto said that this year's footwear exports were expected to drop to about $1.6 billion from $2 billion a year earlier.

He said that in addition to the global economic slowdown, the country's footwear exports in the second half of next year would decline due to fiercer competition with China and Vietnam.

He said that China's recent entry into the World Trade Organization would make the country easier to enter the global market.

"We need better incentives and a more favorable economic condition than today to avoid the decline," he said.

He said for example, the industry hoped the domestic interest rate could be lowered to about 6 percent from the current 20 percent, and that insurance premium could return to 0.2 percent from the prevailing 3 percent to 5 percent of total payout.

Stable political and security conditions would also help the footwear industry to maintain export performance, Djimanto said.

He also expected the government not to raise labor wages amid the current difficult situation, saying that it would only put companies on the verge of bankruptcy and increase unemployment in the country.

He said total footwear exports in 2002 would be similar to this year's estimated export figure of $1.6 billion should all the conditions be met.

Otherwise, footwear exports might decline to about $1.36 billion, he added.

Some 40 percent of Indonesia's footwear exports go to the U.S. market and another 30 percent to Europe, and the remainder to African, Middleastern and South American countries.