Jakarta – Indonesia's shoe exports could reach US$3 billion per year in the next three years thanks to the recent relocation of several branded footwear factories from other Asian locations into Indonesia, a senior government official has said.
The director general of the metal, machinery, textile and multifarious industries in the Industry Ministry Ansari Buchari said in Jakarta on Monday that the relocation of a number of shoe factories from Vietnam and China had already contributed to higher export growth in the first quarter.
He said that Indonesia's total footwear sales rose by about 10 percent to Rp 4.6 trillion ($510 million) in the first quarter of this year from Rp 4.14 trillion in the fourth quarter last year.
No export figures are available for the three month period. But the Indonesian Footwear Association (Aprisindo) said that footwear exports rose by 25 percent to $160 million in January up from the same month, last year.
Ansari believed that footwear export growth could go even higher in the coming months as orders from overseas buyers were also on the rise. "With this trend, our footwear exports could reach $3 billion by 2014," he said.
This year, footwear exports are projected to increase by 16 percent to $2 billion from $1.72 billion last year. Aprisindo attributed the high exports to new factories relocated from China and Vietnam, in addition to expansion of existing factories.
Ansari said however, that Indonesian shoe producers were still unable to dominate the domestic footwear market despite the rise in exports. According to him, local producers only controlled less than 50 percent of domestic sales.
"We hope local shoe makers could control at least 60 percent of the domestic shoe market," he told a press conference on the 2010 Indonesian Footwear, Leather and Leather Goods Exhibition held at the Jakarta Convention Hall starting Thursday.
Ansari said that local producers were still unable to compete especially in the branded shoe market in the country because most of the raw materials for the shoe production industry were still imported.
The chairman of the Indonesian Tanners Association (APKI) Senjaya acknowledged the local shoe industries still relied on imported raw materials. The government's policy of imposing an export tax of between 15 and 25 percent on leather products in order to support local shoe producers was not effective, he said.
Senjaya hoped that the government would instead facilitate more imports of raw materials to help cope with the lack of raw material supply.
According to him, Tong Hong, a leather tanning company based in Taiwan had recently relocated its factories in China and Vietnam to Indonesia to produce leather raw materials for the local shoe production industry.
The company has built a factory in Serang, Banten representing a total investment of between $10 million and $15 million. Two tanning companies from Taiwan and another one from Hong Kong had also expressed their willingness to open factories in Indonesia, he said. "But they have not made any decision yet," he added. (ebf)