Indonesia eyes $2 billion from shoe exports this year

Indonesia eyes $2 billion from shoe exports this year

JAKARTA (JP): Indonesia will likely earn US$2 billion from
exports of shoes this year, up from $1.7 billion in 1999, thanks
to improving political climate in the country, the Indonesian
Footwear Association (Aprisindo) said on Tuesday.

Aprisindo secretary-general Djimanto said foreign buyers were
now more confident about Indonesia following the election of
President Abdurrahman Wahid's government in October.

They can see that security has improved and the President's
extensive overseas travel has helped regain their trust. This
government is better than the last one, Djimanto said.

Shoe exports slumped following the financial and political
crises in Indonesia, from a peak of $2.2 billion in 1996 to
$1.6 billion in 1997 and to $1.2 billion in 1998.

Djimanto said trade financing remained a major problem for
some producers because locally issued letters of credit were
still rejected by foreign banks due to the erosion of confidence
in the Indonesian banking system.

Most companies circumvented the problem by opening an escrow
account and using telegraphic transfers. "Of course this depends
largely on trust and the company's track record," he said.

Aprisindo's 91 active members currently have orders for 35.8
million pairs for the first six months of 2000 and Djimanto is
optimistic orders will reach 130 million by the end of the year.

The association's 87 active members produced 100.81 million
pairs in 1999, including top line models such as Nike, Reebok,
Fila, and Adidas.

Djimanto said that about 10 percent of the association's
active members, mostly small producers in the Greater Jakarta
area, would likely apply for exemption from the official minimum
wage rule when the government hikes the levels beginning April 1.

Official minimum wages will increase between 15 and 55
percent. In Jakarta, the monthly minimum wage will rise to Rp
286,000 ($38) from Rp 231,000.

Companies unable to pay the minimum wages could apply for
exemption, but they have to open their books to government
scrutiny.

Djimanto has appealed to members to intensify communication
with their employees to minimize the likelihood of disputes. (10)