Korean shoemaker commits $30m of investment, others to follow

The Jakarta Post, Jakarta

Korean footwear manufacturer Poong Won, which produces for German sportswear brand Adidas, will invest US$30 million in Indonesia later this year as part of its global strategy to relocate production outside China, the Ministry of Trade says.

"The investment is part of Adidas plan to relocate 24 percent of its production from China to Indonesia and Vietnam," the ministry said in a statement received on Wednesday.

The commitment was announced after a delegation led by Minister of Trade Mari E. Pangestu met with Korean footwear industry players, including Poong Won, Dong Sung NSC, Sung Shin and Baik San, during her visit to Korea earlier this week.

The investment would begin in October, when Poong Won is scheduled to install seven production lines (WHERE?). The new factories are expected to provide 7,000 jobs.

The ministry hopes Poong Won's commitment to Indonesia will encourage supporting Korean industries to also relocate. These would include mid-sole maker Sung Shin and glue producers Dong Sung SNC and Baik San.

"They (the supporting industries) have presented their plans for expansion and new investment in Indonesia to support the operation of Poong Won and other footwear manufacturers in the country," the ministry said.

During the meeting, Korean investors asked for regulatory certainty in investment, customs, taxation, labor and immigration in the country.

The minister was accompanied by a team of representatives from the Investment Coordinating Board (BKPM), the Taxation office, the Customs and Excise office and the Ministry of Manpower and Transmigration.

The Indonesian Footwear Association (Aprisindo) expects this year's exports to reach $1.6 billion from last year's $1.35 billion, and with the new investments, exports are projected to exceed $2 billion next year and $4 billion in 2010.