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entral Java will soon become the next shoe production center in the country after East Java and Banten, following the planned establishment of a new Converse shoe factory in Salatiga by the end of this year, which is expected to provide jobs for thousands of local people.

The American branded shoes will be produced by PT Selalu Cinta Indonesia (SCI), a subsidiary of the Karet Murni Kencana (KMK) Group. It is currently building a new shoe factory in the Central Java town, with an investment of at least US$50 million. The construction, which has been underway since January, is scheduled for completion in October.

KMK Group vice president Erry Sunarli said the new factory could employ 3,000 to 5,000 workers, while the company’s five current factories in Banten employ about 17,000.

“The maximum capacity of the new factory is 1 million pairs of shoes per month. However, in the first phase, we only aim to produce about 300,000 to 500,000 pairs of shoes,” Erry said at one of the company’s factories in Banten recently.

Currently, the KMK Group produces 1.2 million pairs of Nike shoes per month, 300,000 pairs of Converse, 100,000 pairs of Hunter Boots and 100,000 pairs of Eagle through its subsidiaries.

Except for Eagle, almost all of those products have been exported to the US, Canada, South America, Australia, Europe and several Asian countries such as Japan, China and Taiwan. The annual export value reaches about $200 million.

Erry said the company’s plan to build the factory in Salatiga was intended to cut production costs, since there the regional minimum wage is only Rp 1.3 million ($99) a month, far below the Rp 3.1 million in Banten.

“We have been competing hard with Vietnam, where the production cost of a pair of shoes is $1.50 lower than here,” Erry said.

In 2015, Indonesia’s monthly average minimum wage was $123, higher than its competitors in labor-intensive manufacturing countries like Vietnam ($118), Bangladesh ($68) and India ($77).

Vietnam attributed 38 percent of its gross domestic product (GDP) growth between 1990 and 2013 to labor productivity growth, while Indonesia, over the same period, attributed 36 percent.

Marga Singgih, the head of domestic business development at the Indonesian Footwear Producers (Aprisindo), said that, indeed, shoemakers had started to expand their businesses to some regions in Central Java that had lower minimum wages.

As Salatiga was close to Tanjung Mas Port in Semarang, he said the KMK Group would find no trouble exporting its products overseas. Besides, he said the establishment of a new factory would excite the local economy in and around Salatiga.

“The locals could benefit from the new factory because thousands of its workers would at least need to buy lunches from local street traders. Workers from Banyumas or Kudus would also need to rent rooms in Salatiga,” he said of the multiplier impact of the operation of the factory on the local economy.

However, Erry also recognized some obstacles as the company needed to train new workers at the beginning before the factory could be fully utilized. Hence, he planned to collaborate with several colleges to prepare the human resources, including the Satya Wacana Christian University (UKSW) and the Yogyakarta Academy of Leather Technology (ATK).

Meanwhile, Industry Minister Saleh Husin said the government would fully support the expansion in order to foster employment in Central Java. He even planned to ban the export of raw leather, support the establishment of a raw material center in East Java and facilitate export financing through the Indonesian Export Financing Agency (LPEI).

According to the Industry Ministry, the export of footwear and other leather products totaled 469,257 items in May, a 2.91 percent increase year-on-year and a 3.37 percent increase month-to-month. (vps)