Chief Investment Minister Luhut Binsar Pandjaitan expressed confidence on Tuesday that Indonesia will soon surpass Vietnam as the biggest footwear manufacturer in Southeast Asia.
His remarks came after sportswear giant New Balance announced a new investment to operate a seventh athletic shoe factory in Indonesia.
“This is a good thing and we hope New Balance will increase investment here. We are now trailing behind Vietnam [in the global footwear industry] … but I was told [by a New Balance executive] that our numbers will overtake Vietnam in the near future,” Luhut said during an event hosted by New Balance in Jakarta.
Indonesia is currently the fourth-biggest footwear producer in the world after China, India, and Vietnam, according to the statistics website Statista.
New Balance said the value of its footwear export from Indonesia reached $500 million last year.
New Balance runs six factories in collaboration with local manufacturers and plans to open the seventh in the West Java town of Cirebon, about 200 kilometers east of Jakarta, with production expected to begin in August.
According to the company’s estimate, those factories provide 40,000 jobs across provinces in Indonesia’s most crowded island of Java.
Luhut, who became the keynote speaker at the two-day New Balance Materials Summit, said Indonesia has natural resource advantages such as raw rubber that becomes a key material in the footwear industry.
New Balance’s director of Materials Asia Vik Saran said the US company has taken careful considerations into Indonesia’s legal system and political situation before deciding to expand its operations here.
“A number of uncertain investors have gathered to ask questions about what the future will bring post the elections. The most common question is about the Job Creation Law and Mr. Luhut provided us with very good answers,” Saran said.
“There are many countries where we manufacture our footwear but we are particularly growing rapidly in Indonesia,” he added.
New Balance Country Manager Elmore Simorangkir said the adoption of the Job Creation Law became one of the key factors for the company to expand its Indonesian operations.
“The Job Creation Law helps boost investors’ confidence in Indonesia, where around 200 suppliers have arrived either to expand business or start a new one since the law was adopted,” Elmore said.
Investment Minister Bahlil Lahadalia said on Monday that New Balance’s fresh investment is valued at more than Rp1 trillion ($67.9 million).
Source : Jakarta Globe