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Shortage of raw materials threatens Indonesian footwear industry

Dec 3, 2021 Indonesia

The footwear industry fears a raw materials’ crisis due to the ongoing energy crisis in China, which is causing a delay in deliveries. The sector remains very dependent on Chinese products

Firman Bakrie, Executive Director of the Indonesian Shoe Association (Aprisindo), has said to CNBC Indonesia that at the moment 60% of the raw materials for footwear can be produced domestically. This means that Indonesia relies on China (but also Vietnam and Europe) to source the remaining raw materials, which is becoming progressively difficult due to the ongoing energy crisis in China.

Mr. Bakrie has pointed out that the shortage of raw materials started as soon as the energy crisis began to take place. Although the energy crisis did not affect Chinese households, it led to production disruptions in many factories. At the same time, prices have increased: China's producer price index rose by 13.5% in November, on a comparable basis to the same period last year, following the jump of 10.7% in September, which had then been considered a record. The new wave of the COVID-19 pandemic in China is also raising concern.

Nonetheless, the Executive Director of Aprisindo has expressed some optimism regarding the future of the industry. As more raw materials investors continue entering Indonesia, the more it is expected that the reliance on imported raw materials will decrease: “We hope that we will no longer depend on imports. I hope that we will open up incentives for raw materials because we need domestic raw materials”.

Image Credits: dezeen.com

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