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Indonesia's footwear export forecast to drop by 40 pct

Jakarta Globe - April 3, 2023

Investor Daily, Jakarta – Indonesia's footwear export is forecast to drop between 35 and 40 percent from $7.74 billion in 2022 to $4.64 billion this year, according to the Indonesian Footwear Association (Aprisindo).

Orders from main export destinations, such the US and Europe, have already been witnessing a sharp decline since early 2023.

Aprisindo executive director Firman Bakri said footwear export was thriving throughout the Covid-19 pandemic. Exports rose 8.96 percent to $4.8 billion in 2020, and later jumped 28.76 percent to $6.18 billion a year later. Indonesia also exported $7.74 billion worth of footwear in 2022, marking a 25.15 percent increase from the previous year.

"We saw quite tremendous growth last year. [...] But buyers' orders started to drop in mid-2022. We initially expected a higher growth [in 2022]," Firman was quoted as saying in Monday's edition of business newspaper Investor Daily.

The decline in orders is expected to last until 2024. The industry cannot use the domestic market as a substitute for exports, as they differ in characteristics.

"Our exports are premium products, whereas the domestic market is non-premium products, so they cater to different segments," Firman said.

According to Firman, today's trend can encourage Indonesian youths to come up with new footwear brands for the domestic market. They can also sell the products be it by offline or online means.

"Indonesians are now more aware of local products. There are even local brands that are already on par with global brands," Firman said, adding that Indonesia could also compete from a quality standpoint.

According to Firman, the mid-lower segment has many local well-established brands such as Fladeo, Yongki Komaladi, and Carvil. Well-known local brands in the mid-upper class segment include Buccheri.

Making the industry more resilient

Government data shows that footwear small-medium industries absorb a total of 159,400 workers, and the Industry Ministry has prepared some initiatives to make these enterprises more resilient. For instance, product development programs that encompass technology development and export market access promotion.

The Industry Ministry also helps facilitate the small and medium industries to import certain raw materials for export products.

"As well as an integrated licensing process for business identification numbers, a faster and easier National Industrial Information System [Siinas] processes, including cross-sectoral licensing via industry assistance," Reni Yanita, the ministry's director-general for small and medium scale industries, said, not long ago.

Source: https://jakartaglobe.id/business/indonesias-footwear-export-forecast-to-drop-by-40-pc