Shoemakers more reluctant to expand RI investments

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)