Shoe producers blame govt for their inefficiency

Shoe producers blame govt for their inefficiency

JAKARTA (JP): Indonesian shoe producers have blamed the
government for their production inefficiency and uncompetitive
products.

They said the government had failed to create a business
atmosphere that could support the sector's growth and increase
its competitiveness on a global level.

Chairman of the Indonesian Footwear Association (Aprisindo),
Anton J. Supit, over the weekend asked the government to set up a
special board to smooth out all export-related matters to solve
the efficiency and investment problem.

He said lack of coordination between government offices made
it difficult for exporters to maximize their earnings.

He said the government's recent decision to increase the
minimum wage was an example.

"The Ministry of Trade and Industry sets our (export) target,
but the Ministry of Manpower suddenly pushes up wages while the
Ministry of Finance does not provide any breakthroughs. This
makes it practically impossible for us to reach target," he said.

Anton, who was accompanied by Aprisindo Secretary General Edi
Widjanarko and Secretary Then Ngim Fu, said the footwear
manufacturing industry had very bright prospects.

"It would be a pity not to grab an opportunity like that," he
said.

From the world's footwear export market worth US$45 billion
last year, Indonesia managed to contribute only $2.1 billion, or
less than 5 percent of the world's exports.

Anton said he was convinced Indonesia could increase its
contribution to the export market to 10 percent before the ASEAN
Free Trade Area (AFTA) in 2003.

He said Indonesia's small share in the export market was
caused by the low competitiveness of Indonesian footwear
manufacturers.

"This, in turn, is caused by the poor condition of the
supporting industries that provide raw material supplies," he
said.

Anton said the situation was worse with the development of new
competitors in the region, such as Vietnam and China. Both
countries, he said, had attractive investment policies and a
competitive business climate.

Anton said about 60 percent of the raw material used in
Indonesia's footwear industry was imported, particularly from
South Korea and Taiwan.

"So although our footwear exports each year continue to
increase, it is always followed by an increase in raw material
imports," he said.

He insisted that if more raw material components were produced
domestically, footwear manufacturers would stop getting their
supplies from overseas.

"Even if the imports and domestic products have the same
price, we would opt for local products. But currently imports are
much cheaper, so we have no choice," he said.

Minister of Trade and Industry Tunky Ariwibowo said last week
that leather product exports, which included shoes, rose 4.6
percent last year to $2.4 billion. Leather products are among the
10 leading export commodities stipulated by the government.

Anton said the proposed establishment of a special "export
planning board" consisting of government officials and
businessmen could eliminate all the red tape barriers that
obstructed the flow of exports.

"If necessary, this board should restructure the whole
industry... A revolution is needed to strengthen it," he added.

He suggested the government provide incentives to
manufacturers who efficiently use raw material.

Currently imports of raw material for export-oriented footwear
producers may get import duty and value-added tax drawbacks
through the Export Service Facilitating Agency.

Any raw material leftovers must be reported to the agency to
have their import duty drawbacks paid.

"But most of the time, the leftovers are a result efficiency
rather than miscalculations on the part of the manufacturer,"
Anton said.

He said the government should reward this by exempting
manufacturers from paying the drawbacks.

Aprisindo currently consists of more than 200 footwear
manufacturing companies and is dominated by producers of sports
shoes.

About 70 percent of Indonesia's sport shoe exports consist of
four international brand names: Nike, Fila, Reebok and Adidas.

Aprisindo is scheduled to have its national convention, on
April 16, opened here by Minister of Industry and Trade Tunky
Ariwibowo. (pwn)