Shoe association renews call for govt help

Shoe association renews call for govt help

Adianto P. Simamora, The Jakarta Post, Jakarta

The footwear producers' association has renewed calls for the
government to help the industry, warning of more bankruptcies
next year unless concrete measures were taken to boost its
competitiveness.

Djimanto, secretary genereal of the Indonesian Footwear
Association (Aprisindo), said the industry was facing a host of
problems that left it unable to compete with producers from other
countries, such as China and Vietnam.

"The price of Indonesia-made products are 10 percent higher
than those produced in China and Vietnam. How can we compete with
them?" Djimanto told The Jakarta Post on Thursday.

He made the statement amid reports of the closure of several
shoe producers due to the termination of their supply contracts
with foreign buyers.

Public awareness about the plight of the industry has been
heightened following a massive rally by thousands of workers from
PT Doson Indonesia on Tuesday. The workers demanded severance pay
from the South Korean company, which claimed it had been forced
to close down its operation due to the ending of its supply
contract with U.S. shoe producer Nike Inc.

Djimanto's statement also came against the background of the
government's plan to provide a Rp 10.5 trillion financial
stimulus to help kick start the country's economy next year. The
stimulus would be allocated for infrastructural development,
which would be labor intensive.

Djimanto said the industry was not seeking a cut of the
financial stimulus package.

"The package is good for our economy but our main concern now
is government support to boost our competitiveness," Djimanto
explained.

He said the industry has lost its competitiveness due to
rising production costs over the past three years, caused by,
among other things, the increases in electricity, fuel and salary
costs.

High interest rates and rampant illegal fees collected by
corrupt officials also contributed to the high cost environment,
he said.

Workers in China and Vietnam were also more productive as they
could produce three to four shoes every day compared to only in
Indonesia, he said.

This had led to many foreign buyers shifting their orders to
such countries, he said, adding that new buyers were also afraid
to place orders here over fears about certainty of delivery.

Djimanto said that about 100 local footwear firms had stopped
operating in the last three years, reducing the number of
Aprisindo members to 95.

He predicted that the country's footwear exports would decline
to US$1.4 billion this year, from $1.6 billion last year.