RI 'may become' a major suppliers of shoes to U.S.
JAKARTA (JP): An association of American retailers and distributors of footwear said on Tuesday that Indonesia has the potential to become a major supplier of shoes to the United States.
The president of the Footwear Distributors and Retailers of America (FDRA), Peter T. Mangione, said the sharp depreciation of the rupiah against the U.S. dollar had made shoes manufactured in Indonesia much more competitive.
He said that Indonesia could not maximize the benefits from the rupiah's sharp depreciation if there was no certainty over production and deliveries.
"Indonesia is important to U.S. buyers, we want to stay here," Mangione told reporters after meeting Minister of Industry and Trade Rahardi Ramelan.
"But we need the support of the government to ensure stability, guarantee trade financing and to provide the necessary infrastructure for local shoe manufacturers," he said.
He said the rupiah's 75 percent fall in value against the U.S. dollar should help to make Indonesia a major exporter of shoes to the United States.
The American shoe industry imports virtually all of its shoes, but Indonesia's contribution to is only 5 percent of the non- rubber shoe market and 4 percent of the rubber shoe market, compared to China which supplies 68 percent and 67 percent of the two markets respectively.
Mangione, who visited a number of shoe manufacturing plants during his visit here, said American shoe orders placed in Indonesia had declined in the last few years because of a downturn in the global shoe business, especially in the sports shoes market.
"The branded athletic sector in the U.S. has not been so great, even Nike has reported declining sales and reduced profits," he said.
Indonesia's supply to the U.S. in the first half of this year dropped by 14.4 percent on last year to 31.6 billion pairs of shoes worth US$315.3 billion.
Mangione said he was convinced that orders would pick up by next year.
"As we pull through 1998, our inventory will clean up and new products will be needed."
He said the May riots had resulted in a slight drop in orders placed by American companies, adding that none had pulled out of Indonesia altogether.
"No buyers have pulled out of Indonesia because of the riots, although some have moved their orders to China over the last few years because prices there were more competitive prior to the economic crisis," he said.
But since the rupiah dropped significantly in value, the price of shoes made in Indonesia has become more competitive, he said.
Mangione said that stability remained a very important issue to American buyers, but maintained that anti-government protests staged by various groups in Indonesia had not discouraged buyers.
"Demonstrations don't bother Americans, it's a reflection of a vibrant democracy and freedom of expression. What we're concerned with is the fact that the government overreacts to it," he said.
In May, the shooting to death of four demonstrating students led to massive rioting in the capital and other cities in the country. The unrest and the death it caused eventually forced then president Soeharto to resign.
Mangione said he saw no evidence that workers' basic rights were violated or that existing labor laws breached during his visits to local shoe factories.
FDRA groups major footwear distributors and retail companies which operate approximately 20,000 retail outlets and account for approximately three quarters of the shoes sold annually in the U.S.
Members include Nike, Inc.; Reebok International; Adidas America; FILA USA, Inc.; and the retailers Foot Locker; J.C. Penney Company; Nine West Group; Payless ShoeSource; Vans, Inc; and Sears, Roebuck & Company. (das)