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BOGOR, West Java : Strong private consumption in a huge domestic economy has helped Indonesia weather the global financial crisis better than other regional economies.
Indonesia's resilient footwear industry is one of the sectors that has helped country's economy stay on its feet.
A factory just outside capital Jakarta is busy meeting overseas orders for the coming Christmas season. Meanwhile, another one - smaller, but no less busy - is rushing to put out the latest model for the Muslim Eid celebration just round the corner.
These are the two sides of Indonesia's footwear industry, which employs close to half a million workers, second only to the textile industry which is the country's biggest employer.
Big factories stand side-by-side with thousands of small and medium enterprises to produce close to 600 million pairs of footwear annually.
Former model Yongki Komaladi, who started his business more than 10 years ago, has never looked back. He has 50 workshops located in greater Jakarta. The workshops produce some 18,000 pairs of shoes and sandals weekly, just for the domestic market - making him one of the leading producers in Indonesia.
Demand is expected to pick up again as Muslims in Indonesia begin to prepare for the Eidul Fitri with new pairs of shoes.
80 per cent of the footwear produced by Indonesia is for the huge domestic market. With only 1.25 shoes per capita, demand for footwear by the 220 million population was largely unaffected by the economic slowdown.
Yongki Komaladi, owner, Yongki Komaladi Shoes, said: "Indonesians ranked shoes as number one compared to clothing. Furthermore there is a huge demand. The population is big. They say as a developing country, we want to try something new. We also want to look good."
While domestic demand remained robust, producers for the export market did face some uncertainties caused by the weakening of rupiah, tighter credit facilities and slowing demand.
Binsar Marpaung, secretary-general, Indonesia Footwear Association, said: "The impact was really felt in the last quarter of last year and early this year. But a number of measures taken by the government managed to minimise the impact, including the time when the rupiah was sliding against the dollar."
The Indonesian government's timely intervention to stabilise the rupiah and introduce stimulus measures saved the industry from further damage. As the sixth contributor to the country's GDP for non-oil and gas, the industry is poised to continue on its growth path.
Yongki Komaladi, said: "The situation warrant us to be cautious. But I am confident there will be growth. It could be between 20-30 per cent."
Binsar Marpaung noted: "Orders are now flooding in, especially from Europe. There are a lot of European buyers who come here. In certain areas, the factories have begun to be selective. Some orders they take; others they reject."
But the footwear industry has lost some of its competitive edge over the years due to rigid labour laws and poor infrastructure. A number of foreign companies has moved their factories to other countries which are more business friendly.
The Yudhoyono administration has pledged to improve conditions and make the industry its star performer which once employed close to a million Indonesians. - CNA/ms
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