Indonesian footwear producers in life or death struggle

Indonesian footwear producers in life or death struggle

Eva C. Komandjaja, The Jakarta Post, Jakarta

Indonesian footwear producers are struggling to maintain their
existence, which has been threatened by political instability,
high production costs and other problems such as worker strikes.

Indonesian Footwear Association (Aprisindo) chairman Harijanto
said on Monday that many producers had closed down their
factories in Indonesia and relocated to other Asian countries
such as Vietnam, Thailand or China.

He added that, at present, there were only about 20 factories
producing brand-name shoes left in the country.

"This is because the Indonesian government has failed to
provide a supportive business environment," he said.

He cited as an example that the government encouraged
companies to boost their exports without improving the
infrastructure or efficiency.

He also stressed the importance of assisting small- and
medium-sized enterprises (SMEs) such as footwear-supporting
industries, like shoe-lace producers, because these companies
could easily relocate their businesses (outside the country) if
they felt the environment was not supportive enough.

"If we do not have them (support businesses) here anymore, we
will have to import all shoe materials, which would drive the
production costs up even higher and make our products lose their
competitiveness compared to products from China," said Harijanto.

He added that only 40 percent of shoe materials were currently
being imported.

He said that before the monetary crisis in 1997, Aprisindo had
a total of 170 member companies, ranging from brand-name shoe
producers to footwear-supporting firms. Currently, there are only
120.

"However, even with the decrease, we are still in third place
in the U.S. market, right after China in first place and Brazil.
But our market share was only 3.77 percent in 2002 compared to
China's 78.64 percent," said Harijanto.

He noted that this year's footwear exports to the U.S. were
valued at US$1.2 million, contributing to approximately 41
percent of Indonesia's total footwear export earnings.

Responding to the robust U.S. economy, which recorded a growth
of 8.2 percent of Gross Domestic Product (GDP) this year,
Harijanto was a bit pessimistic, saying that it would not
immediately affect Indonesia's footwear exports.

He was more concerned about the political instability that
might happen during the elections here in 2004. He hoped that it
would not bring other problems, such as worker strikes.

Harijanto said that the current Aprisindo target was to
encourage SMEs that produce other kinds of footwear, such as
sandals, slippers and dress shoes for people in the lower-income
brackets, because the market could still expand compared to the
brand-name shoe market, which was stagnant.