Producers not waiting for other shoe to drop on Asian dumping
JAKARTA (JP): The Indonesian Footwear Manufacturers Association (Aprisindo) are drawing the battle lines to defend their foreign market share.
Aprisindo Chairman Franky Welirang told a press conference yesterday that new marketing efforts will be one of the issues to be discussed at the association's conference on Tuesday.
He said that proactive steps, such as strong lobbies and better-organized promotions overseas, are urgently needed since Indonesia is a newcomer to the international footwear market.
"Our industry started to develop only in the mid 1980's and began to play an important role on the international market over the last five years," he said.
Franky said the high increase in Indonesian exports has caused domestic producers in several importing countries to call for protectionist measures.
New import restrictions were imposed on leading footwear exporters last year, especially those from the Asia Pacific region, and manufacturers of brand name products were advised to relocate their factories in this region to other areas such as Mexico and Europe, he said.
Franky said the Mexican government last year placed restrictions on imports from China in retaliation for that nation's trade practices, which the Mexican's claim include dumping.
Dumping is the practice of selling a product in a foreign market below cost, in order to drive local competition out of existence.
Franky is afraid that Indonesia and other low-cost footwear producers will encounter similar import restrictions in Mexico.
He said the punitive tariffs slapped by Mexico on Chinese products were as high as 1,150 percent.
Duties
The association of footwear manufacturers of the European Union (EU) has also proposed heavy duties be imposed on Chinese, Thai and Indonesian footwear exports.
He said the EU would likely recommend investigations into dumping by these three countries.
He explained that Argentina has imposed new tariffs for all imported footwear products and Brazil may consider restricting the volume of imports.
Canada has levied an anti-dumping penalty on products from China and Taiwan, which may be followed by a similar fine on other countries including Indonesia.
"We have to prevent these threats from happening before it is too late," Franky said.
Indonesia's footwear exports to Canada rose slightly from US$32.19 million in 1992 to $32.82 million last year. But in Mexico they doubled from $11.3 million to $26.5 million during the same period.
In Brazil they rose from $740,000 in 1992 to $5.3 million in 1993, in Argentina from $3 million to $10 million and in Europe from $428.5 million to $631.2 million.
Franky said the association's meeting will also discuss post- GATT (General Agreement on Tariffs and Trade) "protectionist" measures which may be faced by association members, such as issues related to the environment and human rights.
"We will try to seek new processing techniques to reduce environmental impacts caused by the chemicals used in our industry," he said.
However, Franky also sees the new GATT regulations as conducive for opening the international market. He said Indonesia currently exports footwear to 108 countries and expects to expand the export market to 114 countries this year.
Deregulation
"What we urgently need is more deregulation to ease the import of raw materials for our products," Franky said.
Footwear exports reached $220.38 million in 1989 and rose to $569.5 million in 1990, $994.08 in 1991, $1.32 billion in 1992 and $1.6 billion last year, making it Indonesia's third largest export commodity in the non-oil product category.
He said the target for footwear exports this year was $2 billion, or a 30-percent increase from last year's target of $1.5 billion.
There are currently 356 large and medium-scale footwear factories operating in the country, producing various sports, leather, industrial shoes, sandals and slippers.
Of this total, 151 are domestic companies with Rp 1.83 trillion in investments and 64 are foreign firms with $409.5 million. The remaining 141 are small-scale and home industries.
The industry produces about 800 million pairs of shoes per year and employs more than one million workers.(10)