Foreign Investors Canceled Plans for 16 Footwear Factories in Indonesia

FEBRUARY 09, 2015

Jakarta. Foreign investors, mostly South Korean and Japanese, last year canceled the construction of sixteen footwear factories worth a total Rp 4.8 trillion ($379 million), due to uncertainty over Indonesia's minimum wage policy.

Minimum wage increases have fluctuated greatly in the past few years across the country, with local politicians often supporting workers’ demands at some point, only to back business interests later, depending on political needs.

“Issues with the minimum wage are worrying investors,” Eddy Widjanarko, chairman of Indonesian Footwear Association (Aprisindo), said over the weekend.

“At least with some certainty in the minimum wage policy — for instance an adjustment every five years — the investors can make better calculations ... [and it would] make it easier to come up with business plans.”

Eddy said that Indonesia missed its $5 billion footwear export target last year partly because of the foreign investment plans being canceled. The country exported $4.1 billion worth of footwear in 2014, up 6.4 percent from 2013.

Investor Daily