South Korean shoemaker Chang Shin has commenced the operation of the company’s newly-built factory in Karawang, West Java.
Ansari Bukhari, the secretary general of the Industry Ministry said the Korean company had invested up to US$25 million in the Karawang factory, which has 8 production lines.
“All shoes produced at the factory would be exported,” Ansari told reporters on the sidelines of the inauguration of the new production plant on Tuesday.
“The factory employs around 5,000 workers, and that number could increase to about 15,000 when it begins full operation,” he said as quoted by detik.com.
He said that Chang Shin’s investment marked the success of the government in improving Indonesia’s investment climate. Currently, 388 footwear companies operate in the country, employing a total of 454,359 workers, he added.
According to the ministry’s data, in 2010 the value of Indonesia’s footwear production reached $3.27 billion, utilizing only around 67 percent of the available production capacity. The country also recorded a total export value of $2.13 billion last year from only $1.72 billion in 2009.
“In 2010, Indonesia’s shoe products had successfully gained 3.99 percent of market share in the global market,” Ansari said.
The Indonesian Footwear Association (Aprisindo) said in earlier reports that, given recent convincing global and domestic investment trends, it expected that by the end of 2011 Indonesia could attract at least 20 major footwear companies to relocate their factories to Indonesia.
Footwear industry stakeholders are also upbeat that Indonesia will potentially overtake Vietnam and become the second-largest footwear exporter in the world after China in two years.
Prior to Chang Shin, two giant Korean companies, steel producer Pohang Steel and Iron Corporation (Posco) and tire maker Hankook, had officially announced their plans to pour capital into the country with a total investment of more than $7 billion in several years to come.
Last year, Korea was the ninth largest investor in the country with a total investment of $328 million, Investment Coordinating Board’s (BKPM) data says.