Shoe makers may have to suspend operation

Sari P. Setiogi, The Jakarta Post, Jakarta

A number of leather shoe producers may be forced to suspend operations due to a shortage of leather, caused by a move taken by the government on Oct. 5 to ban leather imports from China.

"About 13 manufacturers are highly dependent on leather imports from China. If the ban continues, production might have to be suspended," secretary-general of the Indonesian Footwear Association (Aprisindo), Yudhi Komarudin, told The Jakarta Post on Monday.

Most of the manufacturers are located in the Greater Jakarta Area and East Java, while about 24,000 workers are employed in the sector.

About 60 percent of imported leather used by the industry here is from China, said Yudhi.

The Ministry of Agriculture has placed an indefinite ban on leather imports from China over concerns about foot and mouth disease, as China has not issued a country report on the disease for years.

As a result, many of the imported leather materials are being held at the customs and excise office, Yudhi said.

The ministry temporarily lifted the ban in mid October, but only one shipment per importer for the next three months.

"The shoe industry cannot operate like that. We cannot stock leather for the coming months as orders might vary in pattern and color. If we do so, we may suffer losses," said Yudhi.

He also said the three-month policy was irrational, "What will happen in the following months?".

Yudhi said some foreign buyers might also cancel their orders if the situation continued. "In the shoe industry, if a buyer orders shoes made from leather from China, then it could not be exchanged with leather from another country."

He was worried the government policy could affect the leather shoe exports from Indonesia.

Earlier, chairman of the association, Anton Supit, predicted this year's footwear export value would drop to below US$1 billion due to various factors including security and labor issues, as well as rising production costs here.

In 2002, shoe exports reached about $1.2 billion, decreasing from $1.6 billion in 2001 and $2 billion in 2000.

About 40 percent of Indonesian footwear exports go to the United States, 33 percent to Europe and the remainder to African, Middle Eastern and South American countries.