Nine footwear manufacturers have so far been declared eligible by the Industry Ministry to receive government aid to modernize industrial machinery to help boost efficiency and productivity.
Under the aid program, the government will help finance 10 percent of new machinery purchases, having allocated a total of Rp 55 billion (about US$5.1 million) for this purpose for the year.
For the nine shoe companies, the ministry will hand over Rp 4.2 billion.
“The aid is given as part of the government scheme to boost Indonesian industries’ capacities,” added Singgih Witarsa, the executive director of the Indonesian Footwear Manufacturers Association (Aprisindo).
The government has decided that the country’s footwear industry is eligible for the machinery renewal fund since most of the machinery now used by footwear companies
is very old.
Such assistance is also being extended by the government to the textile industry and sugar factories.
According to Singgih there are 15 companies already applying for such support, which is actually below the government target to help at least 30 companies this way.
“It’s still a small number of applicants because the government has required each applicant to invest at least Rp 500 million for the purchase of new machinery,” said Singgih.
Such a large investment is considered too high for many, if not most, footwear companies in the country since the majority are only small and medium enterprises (SMEs).
“Aprisindo is still trying to find a way for SMEs to access the machinery aid despite their being below the purchase requirement threshold for machinery investment,” said Singgih.
Other than the high investment commitment required, many footwear companies are of the opinion that this year is not the perfect time to refurbish their machinery, Singgih said.
“The companies are still worried about the economic slowdown. There are many footwear companies that have sold their products overseas, but footwear exports have declined continuously,” Singgih said.
Anshari Buchari, the Industry Ministry’s director general of machinery, metal and textile industries, said that the government was still willing to receive footwear machinery investment applications up until 30 July.
Starting in July, the aid can also be mobilized if the companies prove that they have already purchased and received the new machines, said Ansari.
According to Aprisindo, about 35 percent of Indonesian footwear industry products are exported.
Despite the companies’ wariness, the footwear industry has shown resilience. This year first quarter footwear exports only declined one percent compared to the same period last year, said Singgih.
The association has forecast that this year’s total exports are expected to reach $1.8 billion, only slightly down from $1.85 billion last year. (mrs)
