Mustaqim Adamrah, Jakarta – The global economic downturn has affected more than 1,200 workers in the large-scale and home-based leather industry since late 2008.

Indonesian Tanners Association (APKI) chairman Senjaya Herina said Thursday that three large-scale firms and 60 small-scale home-based leather enterprises had fallen bankrupt or terminated operations due to slumping demand, both for domestic and global markets.

He said that production levels of tanners had evidently declined since early in the first quarter of this year.

"In general, each company has suffered a decline in business orders of up to 40 percent in the first quarter this year, compared to the same quarter last year," he said.

However, he could not detail the value of orders for both periods. Tanned leather is used as a raw material in the production of footwear, garments and leather bags.

Indonesian Footwear Association (Aprisindo) data shows that footwear exports declined by 3 percent to US$158.3 million in January this year, compared to $163.2 million booked in the same month last year.

With a downturn in demand, Senjaya said, large-scale and small-scale tanners had been forced to promptly lay off workers.

"There are at least 300 [laid-off]workers from the three [large] firms and another 900 workers from 60 home-scale enterprises," he said, adding that the big companies are in Jakarta and Banten.

One of the big companies produced 80,000 square feet of tanned leather every month, (7,430 square meters) while the other two firms each produced 25,000 square feet, he added.

He said the 60 home based small enterprises affected were based in Garut, West Java, in Yogyakarta and in Magetan, East Java. According to APKI data, there are 70 middle-sized and large-scale tanners in the country and 400 small-scale home-based ones, with a total production of 150 million square feet of tanned buffalo, sheep and goat leathers per annum.

Every year, local tanners export 25 percent of total annual production although they cannot meet the annual demand in the domestic market, which totals almost 250 million square feet.

Tanners, he said, were also lobbying the government to open up the market to wider sources of raw and treated leather from Myanmar, Brunei Darussalam and countries in Africa, so as to boost production to meet local demand.

Senjaya said that, as the government had issued policies supporting the consumption of local products, he expected sales (of hides) would reach "at least Rp 1.8 trillion ($167.44 million) by the end of this year - the same as that of last year."

APKI secretary-general Agit Punto Yuwono previously said slaughter houses in the country had an annual production capacity of 20 million goat and sheep hides, but was only able to produce 5 million.

He said the government had limited the number of countries supplying raw and treated leathers because of foot and mouth disease.