Tuesday, July 31, 2007

Tanners urge ban on raw leather exports to support shoe industry

Friday, July 27, 2007
The Jakarta Post, Jakarta

The government should completely ban the export of raw leather rather than just imposing a high export duty in order to prevent a shortage on the domestic market and to increase the utilization of local materials by the domestic footwear industry, says an association representing the country's tanners.

Indonesian Tanners Association (APKI) chairman Diyono Hening Sasmito said Wednesday that the tanning industry had suffered during the economic crisis as the government had failed to support the sector. This resulted in firms opting to export wet blue leather rather than finished leather.

This situation had effectively edged out local tanneries from the local downstream leather industry, Dinoyo said during the launching of a new trade publication, the Indonesian Leather Specification Profile 2007.

"Before the crisis, although there was no specific regulation on the leather trade, there was an export duty to discourage the export of wet blue leather. Exports of finished leather and leather goods used to be in third position among non-oil and gas exports, but they are now in 12th position," said Diyono.

He said that the current national production of leather stood at only 110 million square feet per year, much lower than the industry's installed capacity of 240 million square feet.

"Only 30 percent of the 110 million square feet is purchased by domestic industry, and that's not only for the production of shoes, but also for garments, gloves, furniture, leather goods and handbags," he said.

In an attempt to bridge the gap between the upstream and downstream sectors of the leather industry, APKI and the Indonesian Footwear Producers Association (Aprisindo), in collaboration with USAID, have launched the Indonesian Leather Specification Profile 2007.

Hery Kameswara, an industry advisor with USAID's SENADA Indonesia Competitiveness Program, said that the research and analyses undertaken by SENADA showed that there was a communications gap between the leather tanneries and footwear manufacturers regarding the types, quality and volumes of leather needed for footwear production.

"This profile should facilitate information exchanges and lead to increased business transactions between domestic leather tanneries and footwear manufacturers," he said.

The profile provides contact details, capacities and product specifications of 152 tanneries, which are concentrated on Java island.

Eddy Widjanarko, Aprisindo chairman, said that the government should draw up strategies for the development of the upstream and downstream industries, and review the regulations on leather imports, which he claimed had been hampering the downstream sector.

"This cooperation will help the footwear industry reduce sourcing costs, particularly the high cost of importing leather," said Eddy. (02)

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