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Jakarta Post

Local producers expect rebound in exports this year

After recording weak export growth last year, local footwear makers are hoping for a brighter outlook this year and expect outbound shipments to expand more quickly

Stefani Ribka (The Jakarta Post)
Mojokerto/Jakarta
Tue, March 21, 2017

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Local producers expect rebound in exports this year

After recording weak export growth last year, local footwear makers are hoping for a brighter outlook this year and expect outbound shipments to expand more quickly.

Indonesian Footwear Association (Aprisindo) head Eddy Widjanarko said overseas sales of footwear would likely rise between 5 percent and 10 percent this year on an annual basis, particularly after the withdrawal of the United States, Indonesia’s major footwear buyer, from the Trans-Pacific Partnership (TPP) in late January.

Even before the TPP was inked, Indonesian shoemakers had felt its impact as American buyers purchased more goods from Vietnamnese producers, driven by long-term business prospects with lower import duties to pay in the future.

With reduced preferential duties for Vietnam’s exports, local footwear manufacturers might enjoy a better competitive edge in the huge US market, Eddy said.

“Vietnamese footwear exports will be charged import taxes of between 7 percent and 9 percent, similar with us,” he recently told The Jakarta Post.

Eddy further said that another factor that could enable local shoemakers to grow their exports would be the popularity of foreign brands under which they operated and recent rampant factory closures in China.

Along with textiles and garments, footwear has traditionally been a key manufactured good that Indonesia ships overseas.

Outbound shipment of footwear surged by 8.06 percent on average from US$3.3 billion in 2011 to $4.5 billion in 2015, according to data from the Trade Ministry.

Exports expanded modestly by 3.01 percent to $3.77 billion in the first three quarters of last year from the same period in 2015, the latest data available from the ministry reveals.

Separate preliminary statistics from the Association of Indonesian Retailers (Aprindo) show that exports rose 6 percent to $4.8 billion last year from 2015.

Despite the moderate gains anticipated by the overall footwear industry, some local players are more optimistic about their export prospects this year.

This rings true in the case of East Java-based shoemaker PT Dwi Prima Sentosa (DPM), a long-time player that in the past controlled a significant share in the domestic market through its Diadora and Kasogi brands.

DPM director Lily, who goes by only one name, said the firm expected its exports to climb by 40 percent to 2.5 million pairs this year on the back of a more aggressive approach to potential buyers. “To date, [the slow global demand growth] has yet to affect the business. Our [sales] are safe so we aim for 40 percent by approaching clients more,” Lily to told the Post recently in Mojokerto, East Java.

Running two factories in Mojokerto and Ngawi, DPM sells 70 percent of its output to foreign markets.

It exports most of its shoes made in the Mojokerto factory to Japan under the Superstar and Moonstar brands and a small proportion to South Korea and Germany. The company ships footwear from the Ngawi factory to France under its Decathlon brand.

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