U.S. economic slowdown hits RI shoe exports

JAKARTA (JP): The slowdown in the U.S. economy could pose a major blow to Indonesia's shoe exports, which last year reached a total of US$2 billion in value, according to the Association of Indonesian Footwear Producers (Aprisindo).

The association's chairman, Anton J. Supit, announced on Wednesday that exports started to decline last December due to lower demand from the United States, the main buyer of Indonesia's shoes.

He estimated that the lower demand from the United States would cause a decline in the country's total shoe exports by at least 10 percent to about $1.8 billion this year.

"In the current situation, it will be difficult for Indonesia to achieve this year's target of $2.2 billion from shoe exports," Anton said.

According to him, the fall in demand from the United States generally affected sports shoes of well-known brands such as Adidas, Nike, Reebok, and Fila.

As more than 65 percent of the country's footwear exported to the United States comprised of these types of sports shoes, a decline in demand from the country will severely affect the local shoe industry.

The United States is one of Indonesia's largest shoe importers and buys about 35 percent of the country's footwear exports. Europe takes 30 percent, while the rest goes to other parts of the world.

Analysts have predicted that the contraction in the U.S. economy could trigger a global economic downturn, which in turn would also impact on Indonesia's exports.

However, last month, the Indonesian Minister of Trade and Industry, Luhut Pandjaitan, played down the impact of the U.S. economic slowdown, arguing that most of Indonesia's goods exported to the country comprised primary consumption products such as textiles, garments, and shoes.

If it happened, the impact of the U.S. economic slowdown would be minimal, Luhut said.

According to Anton, Indonesian footwear exports to the United States are not categorized as primary consumer products because 80 percent of them consist of sports shoes.

Separately, Djimanto, secretary-general of the association said local shoe-makers should diversify their market in a bid to minimize any impact from the U.S. economic slowdown.

Djimanto revealed the United States Agency for International Development (USAID) had agreed, through its global market network, to help association members market their products worldwide.

"It's a good opportunity for us to net new buyers," he said.

However, Djimanto said political uncertainty and Indonesia's high risk nation status remained the largest problems which could hamper the effort.

"New buyers will favor orders from other footwear-producing countries such as China, Thailand, or Vietnam which have relatively stable political conditions, to ensure reliable delivery, rather than Indonesia," Djimanto said.

Aprisindo currently has 91 active members, of which 50 are considered large companies and produce high quality shoes for brands such as Nike, Reebok, Fila, and Adidas. (03)