- This event has passed.
TPSA Releases Report An Analysis of the Global Value Chain for Indonesian Footwear Exports
February 25, 2018
Although Indonesia’s footwear sector is growing and performing well in aggregate, there remains untapped potential for the industry. Aside from directly increasing production, Indonesia can benefit more from its footwear sector by extracting a higher share of the total value along the global value chain (GVC) for footwear.
Indonesians have a global reputation as experts in the manufacture of footwear products. But as incomes continue to rise in the country, firms must find a way to absorb these rising costs. One way to do so is by expanding the share of high-value activities in the chain that are conducted domestically. Typically, the activities that occur prior to, and after the production process are higher value, and thus generate the profits to support the higher wages that Indonesians earn today compared to a decade ago.
If Indonesian firms are not able to create more value, then the higher wages paid to workers will eventually make them uncompetitive in the global market. Thus, finding ways to engage in these higher value-added activities will be crucial to their long-term success. However, the industry faces a number of significant barriers that limit its production and export potential. The purpose of this report is to identify these key barriers and to provide recommendations to industry stakeholders that may help alleviate these competitive bottlenecks.