Footwear manufacturers eye machinery revamp

The Jakarta Post ,  Jakarta   |  Mon, 07/30/2007 12:14 PM  |  Business

The Jakarta Post, Jakarta

Following in the footsteps of the textile industry, footwear manufacturers have requested financial support from the government for machinery upgrades to enable them to be more competitive in the global market.

Eddy Widjanarko, head of the Indonesian Footwear Association (Aprisindo), said during a two day exhibition and seminar last week the industry would need at least Rp 500 billion (US$55 million) to upgrade machinery in 70 out of the country's 200 footwear factories.

The government could play a part by subsidizing interest rates charged by banks, Eddy said.

""These companies, mostly established between 1987 and 1988, are using 20-year-old machines. They need help to upgrade them,"" he said.

He is hopeful the government will allocate funding from its 2008 state budget and allow both local and foreign-owned footwear firms to apply for financial support.

In response, the Industry Ministry's director general for metal, machinery, textiles and miscellaneous industries, Anshari Bukhari, said a machinery upgrade was important if footwear manufacturers in Indonesia were to compete against China and India.

He said the government was prepared to support footwear manufacturers in a similar way to how it supports the textile industry by subsidizing loan interest rates.

However, he said because Indonesia's footwear industry is not as big as its textile industry, the subsidy offered would be smaller.

Last week's workshop, a collaborative project between the Italian Trade Commission, the Italian Footwear, Leather Goods and Tanning Machinery Manufacturers Association (Assomac) and Aprisindo, was aimed at improving the quality of footwear produced in Indonesia.

In 2006, Italy was Indonesia's sixth largest destination for footwear exports, while Indonesia was Italy's eighth largest footwear exporter.

Indonesia currently controls a three percent share of the global footwear market. The industry hopes its exports can increase to $1.8 billion this year from $1.6 billion last year.

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