Indonesia footwear industry facing brighter prospects

Jakarta (ANTARA News) - Indonesian-made shoes are expected to get a bigger market share at home and abroad thanks to a decline in the influx of illegal shoe imports from China and an increase in demand for the commodity in Europe.

Local shoe makers` turnover is beginning to increase. "After we were stunned by Chinese shoes in the 2006-2008 period, this year we have begun receiving overseas orders," Azri Smak, chairman of a local shoe makers` association in Medan, North Sumatra, said.

He said the increase in the turnover of local producers was thanks to the government`s tight supervision on illegal shoe imports. The government has issued a decree reducing the gates of five imported commodities, including footwear, to only five seaports and airports in order to supervise the entry of illegal imports.

Besides winning a larger market share at home, Indonesian-made shoes are also expected to find more markets overseas. Indonesia`s shoe exports in the second quarter of 2009, for example, are expected to experience a five-percent growth.

"The potential to increase shoe exports now exists so that we can export more shoes to Europe," Eddy Widjanarko, chairman of the Indonesian Shoe Producers Association (Aprisindo) said.

He said that the shoe market in the European Union which absorbed 37 percent of Indonesia`s shoe exports, were now increasing their demand for shoes from Indonesia.

Thus, the country`s shoe exports in the second quarter were expected to increase.

"The market in Europe has been improving," he said.

Eddy predicted that the performance of the country`s shoe exports would improve next September, 2009. Besides the improvement in the world market, local shoes had also begun to take control over the domestic market, he said.

Aprisindo noted that since the issuance of the trade minister`s decree No.56/2008 on the import on certain commodities, illegal imports of shoes decreased by 30 percent in the first quarter of 2009.

In order to supervise illegal imports, the government through a trade minister`s decree No. 56 / 2008 has set five seaports and airports as the only entry gates for five commodities, which include footwear. The other commodities are garments, electronics, toys and food and drinks.

According to Eddy, local shoe sales would have experienced a significant increase in the first quarter of this year if there was no global financial crisis. "The market shares of local shoes have increased seven percent but it would likely be more than that if a global financial crisis had not taken place," he added.

So far, he said, imported shoes controlled 60 percent of the market or about Rp38.4 trillion of the total shoe sales at home worth Rp64 trillion.

In the meantime, according to data made available at the ministry of Industry, Indonesia`s shoe production reaches 1.2 billion pairs annually with an annual growth of 10 percent. Most of the local shoe production are sport shoes.

"Shoe production is dominated by sports shoes which account for about 800 million pairs," Corporate Secretary of PT Primarindo, Muhammad Al Hadi said in an expose.

Hadi said that national shoe consumption reached 235 million pairs. Abut 94 million pairs or about 40 percent of which were locally made and 141 million others or 60 percent were imported.

This means that only 94 million pairs of the 1.2 billion locally produced shoes are sold at home while the remaining ones are exported.

Indonesia`s shoe exports in 2006 reached 1.65 billion dollars. It increased slightly to 1.68 billion dollars in 2007 and 1.88 billion dollars in 2008.

According to Aprisindo chairman Eddy Widjanarko, in the first quarter of 2009, Indonesia`s shoe exports dropped four percent from 467.5 million dollars in the same period in 2008 to 448.8 million dollars.

Although there seems to be a good prospect for local shoes, shoe makers should continue to improve the quality of their products as Chinese shoes remain a threat to them.

China`s export destination countries are now being affected by global economic crisis so that China would turn to Indonesia to sell its unsold stocks with a lower price, or about 17-33 percent lower than the normal price.

Therefore, Director General for Textile, Metal, Machinery and Multifarious Industries Anshari Bukhari urged shoe makers at home to improve the quality of their products in order to compete with imported shoes.

The director general said that consumption at home was only about two pairs per person per year. But of the 230 million people in the country only about 50 percent are wearing shoes.

He admitted however that so far there had been an increase in the use of footwear made at home, particularly by civil servants. Even many consumers felt they had become more confident in using domestically made footwear.

"With a campaign on the use of local products, we set a target to increase locally produced shoe sales by 10 percent," he said.

Therefore, he was of the view that improving domestically made shoes was of vital importance so that the target to win 60 percent of the local market by national shoe industries could be achieved.

At present, footwear industries at home only controlled about 40 percent of the market. "We predict that in the coming three to five years the target of 60 percent would be achieved," he said. (*)