Shoe exporters to suffer another bad year in 2003

Rendi A. Witular, The Jakarta Post, Jakarta

Indonesia's footwear export is feared to continue to decline next year as foreign buyers shift their shoe orders to other countries amid lingering security problems and labor disputes here.

Chairman of the Indonesian Footwear Association (Aprisindo) Anton Supit predicted that next year's footwear export value was estimated to drop to below US$1 billion compared to this year's estimate of about $1.3 billion.

"In 2003, this labor-incentive industry is going to be locked up in its gloomiest year ever. We'll be grateful if export value should reach $1 billion," Anton told The Jakarta Post on Tuesday.

In 2000, Indonesia's footwear export totaled $2 billion, then dropped to $1.6 billion in 2001.

Anton explained that the security and labor issues had created fears among foreign buyers that local shoe manufacturers could not meet product delivery on time, prompting the buyers to seek alternative suppliers in other countries like China and Vietnam.

He added that rising production costs following the increase in electricity tariffs, fuel prices and labor wages was hurting the competitiveness of local shoe products.

Many of the joint-venture footwear manufacturers which have suspended their operations in Indonesia are believed to have relocated their businesses to other countries in the region that offer a better investment climate.

According to data from the association, some 100 shoe makers have ceased their operations during the past three years.

Anton said he could not expect much from the government to provide immediate assistance to the ailing shoe industry, as in 2003 and 2004, nearly all government officials would be fully occupied with preparations for the 2004 general elections.

In regards the recent move made by the European Commission to drop dumping charges against footwear products from Indonesia and China, secretary general of Aprisindo Djimanto said the move would have little effect on the local industry.

He pointed out that the European Commission had imposed a 41 percent anti-dumping duty against shoes made in China, and a 14 percent duty against Indonesia-made shoes. If these duties were to be revoked, Chinese manufacturers could cut down the prices of their shoes by up to 41 percent.

"The gap in price range is so wide, we surely cannot compete (with China) in the European market," said Djimanto.

Some 40 percent of Indonesia's footwear exports go to the U.S. market and another 33 percent to Europe, with the remainder exported to African, Middle Eastern and South American countries.