Sunset of our shoe industry

Sunset of our shoe industry

The Indonesian shoe industry has suffered from a series of "tragedies" that have affected its production. First, the sudden increase in utility prices early this year. None of the shoe producers was ready for the shocking fact that they had already signed contracts with foreign buyers.

A loss was unavoidable! They had to accept a 10 percent loss (on the total value of contracts) due to increased production costs.

While the government's policy does not specifically support their business, the shoe producers have found that production costs have steadily been increasing. No wonder several shoe producers have gone bust, leaving thousands of workers jobless.

Now the U.S.-Iraq crisis has also threatened Indonesian shoes in the international market.

The most recent reports have said our (overseas) shoe contracts, which reached a total of US$750 million -- 60 percent lower than this year's target -- must be renegotiated, as shipping costs have risen due to the Iraq crisis.

Our shoe exports have been dropping from one year to the next, from US$1.672 billion in 2000 to an estimated $1.3 billion this year. China and Vietnam, with more qualified workers on better wages, have become serious competitors in the world market. The governments of China and Vietnam are also helpful in terms of taxation rulings and stability in politics.

Prayers alone will not be enough to deal with the impact of the Gulf crisis.

-- Bisnis Indonesia, Jakarta