Jakarta – Hunched over in brightly lit assembly lines, 300 women churn out 60,000 pairs of sports shoes a month at a factory in Tangerang, an hour's drive from Indonesia's capital.
By November, the women will be working overtime to produce 100,000 pairs a month, says Arifin Chen, the company's general affairs manager. "We will soon be reaching our full capacity, which is 150,000 pairs a month, a figure we haven't hit for more than a year," he told The Straits Times.
Indonesia's footwear industry – estimated to be worth US$2 billion (RM7 billion) – is slowly getting back on its feet after last year's global economic downturn stopped demand in its tracks.
Some 90 per cent of the 1.2 billion pairs of shoes produced here annually are exported, with the rest sold domestically.
The Indonesian Shoe Association said there was a 15 per cent decline in exports last year between July and December compared with a year earlier. Now it is bullish about future growth in both exports and local demand.
Said association secretary-general Binsar Marpaung: "Most of the gains are coming from Europe, which is our biggest export destination."
Local shoe producers are cheering the government's efforts in the past year to strictly limit cheap imports of a variety of goods – including shoes and textiles – from China. They believe that such a measure will help them increase their market share in the country from 40 to 60 per cent in the next five years.
All this is good news for the government of President Susilo Bambang Yudhoyono. Recently elected resoundingly for a second term, Yudhoyono has promised Indonesians higher economic growth of 7 per cent by 2014, up from the estimated 4.3 per cent that it expects to hit this year.
To meet that target, he will need to push what economists have called Indonesia's three main drivers of growth – domestic consumption, commodities and infrastructure development.
World Bank economist Shubham Chauduri said in his outlook for the Indonesian economy earlier this month: "Domestic demand is likely to continue as the main driver of growth, as the government continues to disburse its stimulus, and in 2010, investors will regain confidence."
He was referring to the 73.3 trillion rupiah (RM25.7 billion) the government had set aside this year to fund tax incentives for individuals and firms, fuel and electricity price cuts and infrastructure projects, in a bid to sustain consumer spending and create jobs.
With a population of 234 million, two-thirds of Indonesia's gross domestic product (GDP) comes from household consumption.
Most recent economic figures suggest the stimulus, plus growing confidence in the Yudhoyono government, has worked somewhat to keep people spending at previous levels. The economy grew 4 per cent in the second quarter of the year, a sign that it will likely hit its 4.3 per cent target by the year end.
The economy has also been shielded by its relatively low dependence on export receipts – which contribute only around a quarter of GDP – compared with its export-dependent neighbours such as Malaysia and Singapore.
Also, Indonesia's exports are dominated by commodities such as crude palm oil, coal and rubber. Prices took a hit late last year but have since regained some strength, helping to boost rural incomes. Prices are expected to rise as the world population grows.
Analysts are now placing more stress on infrastructure development – better toll roads, harbours, airports and power plants – to woo investors, improve business costs and expand manufacturing activities, among other things.
Fortis Bank's head of equity Alvin Pattisahusiwa told Reuters: "In order to achieve a much higher economic growth, (Indonesia) cannot depend solely on domestic consumption... To achieve 7 to 8 per cent economic growth, of course, investment and exports should have more weighting."
The government has also done its part to make the country more conducive to further investment and growth. It has made some headway in boosting laws to protect businesses, simplifying regulations and reforming the tangled bureaucracy, and has promised to do more going forward.
The positive sentiment is palpable. Notwithstanding the threat of terror, both the stock market and rupiah have rallied in the past few months. The rupiah is Asia's best-performing currency this year, with a nearly 13 per cent gain against the US dollar.
"We have already seen the signs of recovery this year and are looking forward to more improvement," said Rexon B. Jons, who manages a shoe factory. "Our buyers have told us that next year will be better."