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August 10, 2008

Indonesia: Korean firms seen pouring $200m into shoes industry
Three unnamed South Korean shoemakers are set to invest $200 million in Indonesia, with two planning to build new factories and the third to expand output of Adidas shoes at its existing site, said a report in The Jakarta Post Saturday.

The local daily quoted Eddy Widjanarko, chairman of the Indonesian Shoemakers Association, as saying Friday the two new factories would be in Tangerang, Banten and Surabaya, East Java, and that the one set to undergo expansion was in Sukabumi, West Java.

"All the companies have already obtained principle licenses from the BKPM (Investment Coordinating Board)," he said at the Industry Ministry during a press conference on the Indo Leather and Footwear exhibition that will take place next Tuesday through Friday.

"They said they chose Indonesia because its (economy) was growing well."

The three companies will reach a full production capacity of up to 1.4 million pairs of shoes per month between the end of this year and mid next year.

Indonesia has two other factories producing shoes for Adidas, the world's second-largest sports apparel company, both with monthly outputs of 600,000 pairs of shoes.

"With the factory in Sukabumi producing 1 million pairs per month alone, the three factories will yield 1.4 million pairs of shoes per month combined, exceeding both PT HASI and PT NASA's outputs of 600,000 pairs per month," Eddy said.

NASA -- PT Naga Parama Shoes Industry -- and HASI -- PT Hardaya Aneka Shoes Industry -- produces shoes for American athletic apparel company Nike.

Eddy said the three companies had not engaged local businesses in running the planned factories.

"The two factories are completely new and will be self-sufficient; from the raw material process through to distribution," he said.

"Meanwhile, the factory in Sukabumi will actually undergo a huge expansion that will see its production triple."

The country's shoe industry has been on the rise since the European Union in 2006 began imposing anti-dumping duties on leather shoe imports from China and Vietnam as a way to protect European industries from low-priced imports.

The industry recorded shoe export revenue of more than $400 million in the first half of this year, 8.6 percent higher than the $396 million recorded at the same time last year, Eddy said.

At least 20 Chinese shoemakers are currently looking to open factories in Indonesia to evade the duties.

"Those 20 companies are big, employing between 30,000 and 60,000 workers," he said.

"Taiwanese companies have also expressed their interests in investing in and developing a shoe hub in Indonesia."

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