Indonesia's footwear industry could fall short of its 2007 export target of US$1.8bn, due to increasing competition from its neighboring countries.

The country is likely to trade below the 12.5% annual growth it expected for the year, official sources from Indonesian Footwear Association (Aprisindo) said.

Officials of Aprisindo blame the country's economic crisis in recent years and increasing fierce competition from neighboring countries like China, Vietnam, India and Pakistan.

"In 2006, 22 new footwear plants were established, but 48 others closed their doors in recent five years due to our economic crisis which is preventing the government from making investments into the infrastructure of the footwear industry," said Eddy Widjanarko, chairman of Aprisindo.

"Transportation and distribution costs account for 18% of the cost of manufacturing products in Indonesia, while it is between 8% and 12% in other countries in Asia.

"In addition, production costs have grown by 3.5% per year, driving footwear enterprises into difficulties and even bankruptcy," added Widjanarko.

Five major footwear manufacturers and exporters in Indonesia, including PT Spotec, PT Dong Joe Indonesia, PT Tong Yang, PT Hardaya Aneka Shoes Industry and PT Nagasakti Paramashoes Industry, who all earn at least US$25m in export turnover per month, had to shut their plants in the last year.

In 2006, Indonesia's footwear exports fetched US$1.6bn, a year-on-year increase of 12.3%.

By Ngo Tuan.