The Indonesian Footwear Association (Aprisindo) has asked the government to facilitate local and foreign investors to produce leather raw materials for the industry, in an effort to stay competitive globally.
Sutan R.P. Siregar, chairman of Aprisindo's provincial branch, said shoe factories and home industries that employed 147,000 workers in East Java were capable of producing cheap but high quality products, if cheap raw materials, both genuine and synthetic leather, were widely available domestically, rather than an expensive import.
"Our products cannot compete with the cheap Chinese products because more than 50 percent of our raw materials are imported from Taiwan and China, prompting producers to raise their prices," Sutan told The Jakarta Post on Tuesday.
He also called on the government to revise the import policy and other regulations that have burdened shoe and sports equipment producers at home, saying it was important to balance the antidumping policy imposed by the EU on Chinese and Vietnamese footwear products.
Sutan also questioned the real reasons for the government's decision not to respond to a request by foreign investors seeking to fund the production of leather raw materials in the province. He said the investors had readied their capital, including the construction of factories running on biofuel, due to the lack of a power supply guarantee from state utilities firm PLN, but no positive response had been given by the provincial administration.
"The request came from the Taiwanese Footwear Association, because their investors are interested in producing leather due to the adequate supply of raw materials in the province," he said.
Data from the provincial trade and industry office shows there are 140 shoe factories and 1,100 home industries in East Java, producing fashion shoes and school shoes under a wide range of brands, including Rotteli, Spalding, Kickers, Rohde and Lotto for the European market, and Yonex and Puma for the Asian market.
Sutan said the industry's main customers were Germany, the UK, Italy, Canada, Japan, the Netherlands and France.
Indonesia is the world's number two shoe producer, behind China and ahead of India, and is also third largest footwear producer after China and Vietnam.
The province had targeted US$200 million in exports this fiscal year, with the global economic downturn expected to hit the country's footwear industry.
Each year, East Java imports around 50 containers or 1,000 tons of leather annually, with prices ranging from 70 US cents to $3 dollar per kilogram, and produces between 165 million and 200 million pair of shoes.
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