World Footwear Voices: interview with Eddy Widjanarko from APRISINDO
Today we bring you a conversation with Eddy Widjanarko from APRISINDO, the Indonesian Footwear Association. Watch the new episode of the World Footwear Voices
World Footwear: We are here at UITIC Congress with Eddy Widjanarko from Aprisindo, the Indonesian Footwear Association and we're going to be talking about the current state of the industry.
Eddy, what can you tell us about the Indonesian footwear industry?
Eddy, what can you tell us about the Indonesian footwear industry?
Eddy Widjanarko: Indonesia is very popular in the production of sports shoes and our industry started the export process 42 years ago. International brands such as Nike, Reebok, and adidas have made huge investments in Indonesia and we are considered the number three producer of sports shoes, in the world, after China and Vietnam. I believe, in a way, such brands prefer Indonesia because, in terms of quality and workmanship, the Indonesian production offer is more stable. We do not have the same productivity as China, where one worker can maybe produce seven pairs while in Indonesia, we just produce three or four pairs – there’s a very huge productivity gap. However, I think that when we are producing very fast the quality is not very good. But, in Indonesia, although we are a little bit slower, the quality is always very stable. That's why brands like Nike, Rebook and adidas consider Indonesia the best place for them to invest. Last year, during the COVID-19 period, when China and Vietnam locked down, Indonesia found a way to keep producing. So, last year the increase in exports was around 28%-32%, but this year with the market being overstocked, our exports until June 2023 were on a decrease mode, something like -18% compared with last year. However, this compares to the last two years, when we did very good. So, this is the situation.
World Footwear: What is the importance of foreign investment for the footwear industry in Indonesia?
Eddy Widjanarko: Oh yes, this is a very important thing as I said before, with the investments of brands like Nike, Reebok and adidas. And we have already proved for more than 40 years that we can do it very well. We also somehow benefitted from some shift of production from China, maybe because of the trade war with America and the sudden decline of exports to America. This resulted in a movement to other countries for investment. And also the Taiwanese, the Korean, are all doing the same. So, in the last three years we had 78 big companies coming to Indonesia for investment. In Indonesia we have more than 27 islands, the big island being Java. And in Java we have a minimum wage for the production workers. Now, our government is trying to relocate from the first area in Jakarta or in Surabaya, in east of Java to the middle of Java. So now the investment is quite huge. And of course, we are thinking that maybe if the recession is over, then our capacity will be doubled from now.
Eddy Widjanarko: Oh yes, this is a very important thing as I said before, with the investments of brands like Nike, Reebok and adidas. And we have already proved for more than 40 years that we can do it very well. We also somehow benefitted from some shift of production from China, maybe because of the trade war with America and the sudden decline of exports to America. This resulted in a movement to other countries for investment. And also the Taiwanese, the Korean, are all doing the same. So, in the last three years we had 78 big companies coming to Indonesia for investment. In Indonesia we have more than 27 islands, the big island being Java. And in Java we have a minimum wage for the production workers. Now, our government is trying to relocate from the first area in Jakarta or in Surabaya, in east of Java to the middle of Java. So now the investment is quite huge. And of course, we are thinking that maybe if the recession is over, then our capacity will be doubled from now.
World Footwear: In terms of challenges for the industry, what would you say are the main challenges for the Indonesian footwear industry?
Eddy Widjanarko: There are two challenges. One relates to a government regulation applied to the imports of materials which would be applied a 0% import duty if resulting in exports. With this regulation, the supporting industry for the footwear industry is not very strong in Indonesia. So, until now we had to import the materials from China, from India, and many other partner countries. This is also one of the big problems, and if we do export a lot, we also import a lot as well. And our government is trying to change the situation and change the regulation, meaning that from now on the imported material will have to pay a certain percentage of import duty. And then later one can ask for the restitution of the import duty after the export of the final product takes place. With this, there is an attempt to encourage the supporting industry to develop and invest in Indonesia. The second thing we see happening is that there are a lot of compliance requirements, meaning that we have to comply with many rules for sustainability. So, we have to follow certain standards which are already a given in Europe and America. But for us to follow them is also quite a difficult situation for us, as the industry needs to adapt to comply. So maybe these two things are a little bit challenging for us at the moment.
World Footwear: One of the challenges that many countries refer to is related to the workforce. You have a young population; I'm guessing you have a lot of people willing to work for the footwear industry or is that an issue as well? And the second part of the question would be, what kind of challenges do you face in that area? If any?
Eddy Widjanarko: Yes, we have a 265 million population and 70% is in the age group between 25 to 45. So, this means they are in a productive age. Of course, because of this when we do relocation of the industry, it's very easy to find the workers. The only problem is that we must do the training all the time because people who have been working in the industry for 40 years are trained but the new generation is new to all. So, we have to train them. Also, by relocating to the middle of Java, which is not an industrial area, but an agricultural area, there is the need to switch the mentality from agriculture to industry. Also there are other things to do. But we are trying very hard to do all the training, technicians from Italy and many other countries are coming to Indonesia to do things and help them change their minds and understand what kind of work is involved in the footwear industry. Because of all of this, I think there will be a good prospect for the shoe industry in the future.
Eddy Widjanarko: Yes, we have a 265 million population and 70% is in the age group between 25 to 45. So, this means they are in a productive age. Of course, because of this when we do relocation of the industry, it's very easy to find the workers. The only problem is that we must do the training all the time because people who have been working in the industry for 40 years are trained but the new generation is new to all. So, we have to train them. Also, by relocating to the middle of Java, which is not an industrial area, but an agricultural area, there is the need to switch the mentality from agriculture to industry. Also there are other things to do. But we are trying very hard to do all the training, technicians from Italy and many other countries are coming to Indonesia to do things and help them change their minds and understand what kind of work is involved in the footwear industry. Because of all of this, I think there will be a good prospect for the shoe industry in the future.
World Footwear: My final question and because we are here at the UITIC Congress is related to the theme of this congress, which gathers two strong challenges for the industry, innovation and sustainability. And I think during these two days, what people will try to do is to reflect on how innovation and technology can help us all towards sustainability and to address all the issues. What is your view on that? And how do you think technology and innovation can help the footwear industry to be more sustainable?
Eddy Widjanarko: I think this is a very good question and I try to discuss it with many players. First, of course, we see that there are so many robots doing all things, but many experts are saying that maybe using the machinery in the footwear industry will be quite difficult because this industry is like a craft, you have to be able to do some art. Maybe you can automate some parts. But for others a lot of workers are more involved and we need to be patient. Of course, there's a lot of innovations going on and digitalization is taking place. But most of the of the issues now are very related to sustainability. For example, before if we were wearing shoes for some time, we would just throw them away in the end. But now we can do some recycling, like what Taiwan is trying to do: to find an alternative way to throwing the shoes away, but instead just put them inside the land and wait for one or two years and the shoes will have disappeared and there will be nothing. So something like this is very environment friendly.
Eddy Widjanarko: I think this is a very good question and I try to discuss it with many players. First, of course, we see that there are so many robots doing all things, but many experts are saying that maybe using the machinery in the footwear industry will be quite difficult because this industry is like a craft, you have to be able to do some art. Maybe you can automate some parts. But for others a lot of workers are more involved and we need to be patient. Of course, there's a lot of innovations going on and digitalization is taking place. But most of the of the issues now are very related to sustainability. For example, before if we were wearing shoes for some time, we would just throw them away in the end. But now we can do some recycling, like what Taiwan is trying to do: to find an alternative way to throwing the shoes away, but instead just put them inside the land and wait for one or two years and the shoes will have disappeared and there will be nothing. So something like this is very environment friendly.
World Footwear: Yeah. Thank you, Eddy. These were some of the main insights of the Indonesian footwear industry. continue to follow the world of footwear for more updates.
This interview was conducted in Milan in September 2023 during the UITIC Congress
