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Bata shoes factory closes, Apindo says labor-intensive industries face more difficulties

Tempo - May 9, 2024

Tempo.Co, Jakarta – Shinta Kamdani, chair of the Indonesian Employers Association or Apindo, said the closure of footwear manufacturer PT Sepatu Bata Tbk (BATA) was due to declining demand from exporters. Commenting on the closure, Shinta said that labor-intensive industries in Indonesia were becoming increasingly difficult.

"If we look at the incoming investments, they are starting to shift from labor-intensive to capital-intensive because it will be increasingly difficult for the labor-intensive sector from now on," she said at Apindo's office in Jakarta on Wednesday, May 8.

Shinta said that although Bata's shoe stores in Indonesia have been around for a long time, it is necessary to see how competitive they are.

"If we look at today's situation, the competition and everything else, maybe the company thinks it is no longer feasible to continue its business," she said.

Bata, a brand that has been operating in Indonesia since 1931, has officially closed its factory in Purwakarta, West Java. They made the announcement after its information disclosure report to the Indonesia Stock Exchange on May 2, 2024.

The management of PT Sepatu Bata Tbk said that the company has been suffering losses for four years since the pandemic. Based on the company's financial report as of December 31, 2023, Bata recorded net sales of Rp609.61 billion that year, down from Rp643.45 billion in 2022.

The closure of Bata's footwear business, Shinta said, cannot be separated from geopolitical factors affecting business in Indonesia. She mentioned the conflict between Middle Eastern countries, which has also caused the rupiah exchange rate to weaken and the Jakarta Composite Index to depreciate.

Shinta emphasized that the conditions that led to the closure of Bata's footwear business cannot be generalized to other industries, many of which are still under control. "However, we need to keep expansions alive," Shinta said.

Source: https://en.tempo.co/read/1865724/bata-shoes-factory-closes-apindo-says-labor-intensive-industries-face-more-difficultie