Wed, 24 Mar 2010

From: The Jakarta Post

By Mustaqim Adamrah, The Jakarta Post, Jakarta
A big increase in exports is expected for Indonesian footwear firms this year, with a projected surge in orders from EU and non-traditional markets, a shoe producers’ association spokesman has said.

Indonesian Footwear Industry Association (Aprisindo) secretary-general Binsar Marpaung said in
Jakarta Tuesday that with the expected increase in orders, the country’s footwear exports might increase by 17.5 percent to about US$2 billion this year, from about $1.7 billion in 2009.

“We are hoping that our exports will reach at least $2 billion this year as orders from Europe are starting to increase. We also expect additional orders from non-traditional markets,” Binsar said.

He was speaking on the sidelines of a ceremony on the launching of the machinery revitalization program for the textile, footwear and leather industries, as well as sugar mills, at the Industry Ministry.

He said that orders from the EU were estimated to increase this year by 10 percent compared to last year. Indonesia’s footwear exports to the EU account for around 10 percent of total Indonesian exports annually, according to Binsar.

The country’s footwear exports fell slightly to $1.7 billion last year reflecting only a minor negative impact from the global financial crisis and economic downturn which hit many parts of the world much harder during the year, Binsar said.

Footwear exports rose to $1.93 billion in 2008 from $1.66 billion in 2007, according to data published recently by the textile research centre Indotextiles.

Indonesia is the third biggest sport shoe producing country after China and Vietnam. For leather shoes, Indonesia is believed to be the fourth largest producer after China , Vietnam, and India.

Indonesia produces about 1.2 billion pairs of shoes annually with an annual growth in the sector
of 10 percent. Most of the local shoe production is made up of sports shoes Binsar said orders from the EU were increasing although the region had yet to fully recover from the crisis. “In Europe, each person usually has an average of six pairs of shoes. [Because of the crisis] the number will probably have declined to five,” he said.

“Moreover, the crisis in Europe is not as bad as that in the US,” he added.

Binsar said Indonesian footwear producers were also aiming at “non-traditional markets”, such as Northern and Eastern Europe including Sweden and Russia as well as Africa and the Middle East.

“Northern European countries have specific needs. They want water-proof leather shoes to use during the winter,” he said.

“We will need a special machine to produce these kind of shoes. But we can use the facilities provided in the machinery revitalization program [to buy such machines],” he added, referring to the government-supported program.

Binsar said Indonesia had actually penetrated these “non-traditional markets” long ago. “But in a very limited way.”

He said the main obstacle in penetrating “non-traditional markets” was the incompatibility of banking systems in those countries in relation to the one in Indonesia.

“We are working out each other’s systems. There are lots of [export financing] schemes,” he said.

According to the data issued by the Central Statistics Agency (BPS), Indonesia’s total exports dropped 14.98 percent last year to $116.49 billion in 2009 from $137.02 billion in the previous year.

During 2009, non-oil and gas exports totaled only $97.47 billion, declining 9.66 percent from the previous year.

Last year, Indonesia mostly exported industrial products, which accounted for 63.03 percent of all products shipped abroad. The rest were mining products (16.89 percent of total exports), oil and gas products (16.33 percent) and agricultural products (3.75 percent).