Shoemakers more reluctant to expand RI investments

JAKARTA (JP): Foreign-owned footwear companies are becoming more reluctant to expand their Indonesian operations due to concern over growing labor disputes, a local official said.

However, the secretary-general of the Indonesian Footwear Association (Aprisindo), Djimanto, said over the weekend that although most of the foreign shoemakers were no longer interested in making new investments, they would continue to maintain their existing factories.

"The foreign shoemakers will continue to operate their factories here to meet existing orders," he said, adding that many of the foreign shoemakers had opened new factories in other countries to fill new orders.

New buyers are afraid to place orders with Indonesian-based shoe producers due to uncertainty in delivery, Djimanto said.

The unstable political situation and increasing labor disputes have forced several large companies to take their expansion projects out of the country, Djimanto said, mentioning Thailand, China and Vietnam as countries favored by these companies.

While declining to name the companies, he said some had already purchased land in Vietnam and others were looking for appropriate sites for their factories.

"They (the companies) are not relocating their factories, just building new factories to cater to new orders from new buyers," Djimanto said.

Indonesia could lose about US$480 million a year, or about 37 million pairs of shoes in potential new orders as a result, he said.

Workers in Thailand, China and Vietnam are seen as more disciplined, Djimanto explained, adding that there were few workers' strikes in those countries.

"Additionally, since our market is largely in the United States and Europe, the companies would not need to pay antidumping duties when exporting from Vietnam," he said.

It is feared that acts of violence by striking workers demanding higher pay will disrupt the fulfillment of orders, Djimanto said.

"The actions committed by the laborers are totally against the law. They don't inform the management of the strike, they don't negotiate first before going on strike, they blockade the factories and they force other workers to join the strike," he said.

Djimanto said that officials in the field were too frightened to handle the labor problems seriously.

"Even the minister (of manpower and transmigration) is afraid of the people-power represented by the laborers," he said.

Djimanto said it was not too late for the government to address the problem of labor disputes, and to take action against those strikers who break the law.

He said that if foreign footwear companies saw that the government was serious in tackling the problem they would be likely to resume their expansion projects in Indonesia.

"After all, it is easier to install new production lines than to construct a whole new factory," Djimanto said.

Aprisindo currently has 91 active members, of which 50 are considered large companies and produce top-line models such as Nike, Reebok, Fila and Adidas.

The association recorded exports of about 154 million pairs of shoes worth $2 billion last year, compared to $1.7 billion in 1999. It expects exports to reach $2.2 billion this year. (tnt)