Indonesian footwear products are shipped to 160 countries around the globe. The biggest markets are the European Union (EU) and the United States (USA). Both regions account for almost 60 percent of Indonesia's total footwear exports. Meanwhile, the Middle East is also emerging as a strong consumer of Indonesian shoes, supported by strong purchasing power.

However, Vietnam is increasingly becoming a big force in the global footwear market supported by significant investment realization in Vietnam's footwear industry. Therefore, Vietnam's (global) market share is rising (see table below). While China, Italy and Indonesia have all experienced sliding market shares, Vietnam's role in the global footwear market has grown sharply.

Global Market Share Key Footwear Manufacturing Nations:

Country 2015 2016
China 40.0% 35.4%
Vietnam  9.2% 13.2%
Italy  8.4%  7.9%
Indonesia  3.6%  3.4%

Source: Bisnis Indonesia

Investors are interested to establish footwear factories in Vietnam because the political context is stable, while Vietnamese workers are considered to have good skills. Moreover, since Indonesia is not engaged in a free trade agreement with the EU, import duties for Indonesian footwear shipments into the EU are 11 percent higher than their Vietnamese counterparts. Stakeholders in Indonesia's footwear industry therefore urge the government to engage in free trade deals with the EU and USA in order to make Indonesian shipments more competitive.

According to Aprisindo, Indonesian footwear shipments to both the EU and USA are stagnant, while Vietnam's footwear exports to these regions are rising. Therefore Aprisindo urges the government to improve Indonesia's logistics costs through infrastructure development and a more conducive tax environment. This would then attract new investment in Indonesia's footwear industry.

Indonesian Footwear/Shoe Exports 2010-2017:

Year Shoe Export
2018¹   $5.3 billion   +6.5%
2017¹   $5.0 billion   +3.5%
2016   $4.8 billion   +6.7%
2015   $4.5 billion   +2.3%
2014   $4.4 billion   +13%
2013   $3.9 billion   +11%
2012   $3.5 billion    +6%
2011   $3.3 billion   +32%
2010   $2.5 billion      -

¹ forecast
Source: Indonesian Trade Ministry

The domestic footwear industry of Indonesia is an important asset to the country’s manufacturing sector. Indonesia produces footwear (shoes) for several big global brands (triggered by Indonesia’s low labor costs), implying that the industry provides many job opportunities for Indonesians and is a vital foreign exchange earner. Investment in Indonesia’s footwear industry particularly originates from China and South Korea.

Besides rapidly rising minimum wages in the 2013-2015 period, another problem of Indonesia's footwear industry is the domestic supply of raw materials, most importantly leather and rubber. Despite being one of the world’s leading natural rubber producers, Indonesia needs to export this commodity first for processing purposes as domestic processing facilities are still insufficient.