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.