Lebak, Banten – A footwear factory operated by Parkland World Indonesia in Lebak Regency, Banten, has shut down, affecting approximately 1,100 workers, local authorities said Sunday.

The closure of Parkland World Indonesia's Plant 6 followed the expiration of its building lease this month, which the company decided not to renew, according to Rully Chaeruliyanto, secretary of the Lebak Manpower Office.

The factory produced athletic footwear for export markets.

"Based on the information they provided, there were no other issues. They told us that the building lease had expired and would not be renewed," Rully said.

He said the local administration had not received any information about whether the company planned to relocate its operations to another region.

Authorities were also unaware of any prospective tenant or company planning to take over the vacated factory premises.

Regarding workers' rights, Rully said the Lebak administration had received no complaints from labor unions over severance payments.

Based on information available to his office, the company had paid severance compensation to the affected employees.

Footwear industry faces closures and relocations

The latest closure in Lebak highlights the continuing employment challenges facing Indonesia's labor-intensive footwear industry, even as manufacturers seek more competitive production locations.

The closure comes amid broader changes in Indonesia's footwear manufacturing industry, with several major producers relocating operations from West Java and Banten to Central Java and East Java since 2023.

Lower minimum wages in the destination provinces have been among the factors encouraging manufacturers to move production facilities.

Other footwear factories have shut down permanently amid declining orders from major international brands, including Nike and Adidas, profitability challenges, and rising operating costs.

Among the affected manufacturers are PT Dean Shoes and PT Besco Indonesia, both based in Karawang, West Java.

Dean Shoes employed approximately 3,500 workers, while Besco Indonesia had around 4,000 employees, bringing the combined workforce of the two companies to approximately 7,500.

Source: https://jakartaglobe.id/business/footwear-factory-in-banten-shuts-down-affecting-1100-worker