Investments range from about $3 million for a two-line plant to $50 million from Korea.As the facilities have only to be reopened rather than rebuilt, production can get under way quickly, taking advantage of the limited window afforded by the EU ruling.
It is estimated that in 2006-2007 period, there were at least nine new companies coming to Indonesia to invest in the shoe manufacturing business, five of which came from South Korea, namely PT Poongwon Indonesia, PT Pratama Abadi Industri, PT Korin Technomic, PT Vision Indonesia and PT Mikwang Prima Indo.
The others were one from Britain (PT Sepatu Mas Idaman) located in Bogor, one from Taiwan (PT Karunia Fajar Mellenia) in Tangerang, one local company (PT Berkat Ganda Sentosa) in Pasuruan and one joint venture (PT Nikomas Gemilang) in Serang. However, between 2003-06 six companies closed their business. The six companies had a combined production capacity of 44 million pairs of shoes per year and employed 24,996 workers.
The BKPM chief said there were now 15-20 large shoe factories with more than 5,000 workers and another 100 medium and small scale firms. Indonesia exported 146 million pairs of shoes in 2006 worth US$1.6 billion. A total of 50-60 million pairs were exported for Nike, worth about 600-700 million dollars, with the number of workers employed reaching 80,000.
Footwear manufacturers have requested financial support from the government for machinery upgrades to enable them to be more competitive in the global market. Eddy Widjanarko, head of the Indonesian Footwear Association (Aprisindo), said the industry would need at least Rp500 billion (US$55 million) to upgrade machinery in 70 out of the country’s 200 footwear factories. Indonesia currently controls a 3% share of the global footwear market.