IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 24 Nov 2008 | Removal date: 24 Dec 2010
Still in force

Financial grant

The Indonesia Investment Coordinating Board (BKPM) cites an official news report (dated 9June 2009) that:
1. Confirmed that Indonesian shoe production had reached 1.2 billion in the previous year, a 10 percent increase. The total value of Indonesian shoe exports was 1.88 billion US dollars in 2008.
2. Noted strong competition from Chinese footwear manufacturers and claimed that the latter were selling 17-33 percent lower than the "normal price".
3. Quoted Director General for Textile, Metal, Machinery and Multifarious Industries, Ministry of Industry, Mr. Anshari Bukhari, as saying ""With the campaign on the use of local products, we set a target to increase locally produced shoe sales by 10 percent". Furthermore the report states "The director general said that so far there had been an increase in the use of footware made at home, particularly by civil servants. Even many consumers felt they become more confident in using domestically made footware."
In addition, nine footwear manufacturers have so far been declared eligible by the Industry Ministry to receive government aid to modernize industrial machinery to help boost efficiency and productivity. Under the aid program the government will help finance 10 percent of new machinery purchases, having allocated a total of Rp 55 billion (about US$5.1 million) for this purpose for the year. For the nine eligible shoe companies, the total funds being made available by the ministry is Rp 4.2 billion. Statements by Mr. Anshari Buckari suggest that the government was prepared to receive footwear machinery investment applications until 30 July 2009.
The government argues that country's footwear industry is eligible for the machinery renewal fund since most of the machinery now used by footwear companies is very old.

The state aid program's implementation is selective, likely to affect investment decisions of non-eligible firms (including foreign investors) and is likely to affect trade flows (Indonesia being a large exporter of footwear.)
This measure was implemented by regulation 90/M-IND/PER/11/2008 on 24 November 2008 and replaced on 1 January 2011 by regulation 123/M-IND/PER/11/2010.

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

293 Footwear other than sports footwear
6401 Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes.
640199 Other
6402 Other footwear with outer soles and uppers of rubber or plastics.
640291 Covering the ankle
640299 Other
6403 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather.
640391 Covering the ankle
640399 Other
6404 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials.
640419 Other
294 Sports footwear, except skating boots
6402 Other footwear with outer soles and uppers of rubber or plastics.
640219 Other
6403 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather.
640319 Other
6404 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials.
640411 Sports footwear; tennis shoes, basketball shoes, gym shoes, training shoes and the like
295 Other footwear
6405 Other footwear.
640590 Other
296 Parts of footwear
6406 Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable insoles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof.
640620 Outer soles and heels, of rubber or plastics
640690 Other

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