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Indonesia's footwear exports failed to meet last year's 16
percent growth target despite greater opportunities resulting from the
imposition of antidumping penalties by the United States and European
Union on China and Vietnam.
Indonesian Footwear Association (Aprisindo) chairman Eddy Widjanarko
said Wednesday in Jakarta that most local shoe producers had been
unable to benefit from the two-year export restrictions imposed by the
U.S. and Europe on China and Vietnam due to a "lack of the government
support".
Last year, the value of Indonesian footwear exports rose by 12.3
percent to US$1.6 billion from $1.4 billion in 2005. In volume terms,
exports increase by 12.1 percent to 176 million pairs last year from
157 million in 2005.
"That was not the increase we were hoping for. The value of our exports
could have actually reached the targeted $1.8 billion," he told
reporters during a press briefing.
"Indonesia, unlike India, Thailand, Bangladesh and Pakistan, is not
benefiting enough from the antidumping restrictions imposed on the two
countries between 2006 and 2008," he said.
India, for example, succeeded in doubling its footwear exports from
$1.5 billion in 2005 to $3 billion last year.
Eddy said that in order to be able to compete on the global market, the
footwear industry needed government support in the form of improved
infrastructure.
"Besides the absolutely essential revision of the labor legislation,
the government also needs to accelerate the rehabilitation of the road
infrastructure leading to the port -- the Cakung-Cilincing route --
which was damaged by the recent floods," he said.
Eddy said that the government's target of increasing exports by 20
percent to $1.9 billion this year was too optimistic given the
obstacles faced. "I can only see an increase to $1.8 billion in our
footwear exports this year," he said.
The U.S. is the largest destination for Indonesia's footwear exports,
taking 28.9 percent, followed by Britain on 8.3 percent, Germany on 8
percent, the Netherlands and Belgium on 7.3 percent each, and Japan on
6.2 percent.
Eddy said the country's footwear production actually dropped by 8.7
percent in volume terms to 504 million pairs in 2006 from 552 million
in 2005, and by 10 percent in value terms to Rp 27.9 trillion from Rp
31 trillion.
"Last year's closure of three footwear factories -- PT Dong Joe, PT
Spotec and PT Tong Yang Indonesia -- was responsible for production
losses of about $120 million," Eddy added.
There are over 200 footwear factories in Indonesia, directly employing
about 360,000 workers, with some 3 million others making their living
indirectly from the industry.
According to Eddy, as the result of a 3.5 percent increase in
production costs, the country's low-grade footwear products were unable
to compete with imports, especially those from China.
"Many manufacturing firms have either shut down or turned to marketing
cheap products imported from China," he explained.
He said that last year about 100 million pairs of footwear were
imported, as compared to about 80 million in 2005.
"There was a decrease in domestic buying power. Rampant imports from
China, both legal and illegal, accounted for about 70 percent of the
cheap products on sale at low-end markets, like Jatinegara and Mangga
Dua in Jakarta," he added.
Last year, domestic footwear prices dropped to an average of Rp 31,000
per pair from Rp 41,000 in 2005 as domestic footwear demand fell by
30.5 percent to Rp 12.3 trillion from Rp 17.7 trillion in 2005, or by
8.5 percent in volume terms to 353 million pairs from 386 million the
previous year.
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