Indonesia poses a threat
17/11/2008
Indonesia is emerging as a rival to Vietnam in leather and shoe exports, with many Taiwanese and Hong Kong investors moving their factories there from China, the Vietnam Trade Office in Indonesia has warned. Other factories have relocated from China to Vietnam and the government in Hanoi would like more investment of this kind to come its way.
The trade office in Jakarta, however, has reported that so far this year 22 shoe factories have moved to Indonesia instead, investing $700 million. Footwear manufacturers have moved from China to Indonesia to avoid rising production costs in China and tightened regulations on environmental protection.
The Vietnamese trade office has also reported that although the rival country’s earnings from leather and footwear exports last year were $1.8 billion, compared to Vietnam’s $4 billion, Indonesia has made considerable efforts to boost this by offering incentives to manufacturers.
With a population of 250 million, Indonesia has an advantage over Vietnam and some other countries in Southeast Asia in terms of availability of labour.
Diep Thanh Kiet, vice chairman of the Ho Chi Minh City Leather and Footwear Association, has said that Indonesia has also benefited from his association’s leather footwear production being subject to a duty of 10% if exported to the European Union, which has imposed anti-dumping measures on Vietnamese and Chinese shoes with leather uppers.
He said Indonesia was likely to become a bigger threat to Vietnamese leather and footwear producers in the near future.
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