25 footwear manufacturers to invest $171 million, creating 47,000 jobs

Mustaqim Adamrah ,  The Jakarta Post ,  Jakarta   |  Wed, 10/08/2008 10:33 AM  |  Business

Up to 25 local and foreign companies plan to invest a total of US$171.6 million in the Indonesian footwear industry this year, by building new plants and expanding existing ones, says the Industry Ministry.

The companies registered their business plans with the ministry in the first semester.

Among them are foreign investors PT Parkland World Indonesia, PT Nikomas Gemilang and PT Ching Luh Indonesia, respectively planning to invest $51.9 million, $35 million and Rp 162 billion ($16.78 million).

Once realized, these projects are expected to absorb around 47,000 workers, according to the data, released Tuesday.

Of the 25 companies, 10 will expand existing capacity and the rest will set up new production facilities.

Budi Irmawan, the ministry's miscellaneous industry director, said Tuesday that the planned investments were the result of "a good investment climate" which the country has managed to create for the sector.

"Our labor costs are also more competitive than in Vietnam and China," he told reporters.

"In addition, we have abundant leather resources for raw material."

The investments bode well for planned efforts to boost the country's shoe exports, as 16 of the firms will focus on export markets.

The shoe industry has been on the rise since the European Union imposed in 2006 anti-dumping duties on leather shoe imports from China and Vietnam to protect European industries from low-priced imports, eventually boosting demand for shoes from Indonesia.

Sharing a similar view, Eddy Widjanarko, Indonesian Footwear Producer Association (Aprisindo) chairman, said the country still offered a good climate for the footwear industry.

He is upbeat that this year's footwear export target of $1.9 billion will be met.

"I'm optimistic that we'll be able to meet the export growth target of 20 percent this year from $1.6 billion last year. The plans by the 25 companies mean we are one step closer to meeting that goal."

"Indonesia comes fourth in global shoe production after China, Vietnam and India. We still have the chance to lead the world market," he added.

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