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In the 1990s, Budi Makmur took the decision to expand into shoe upper leather. “These days we’re producing more leather for shoes than for gloves,”Mr Sutanto says, “probably 60% of the total. A lot of footwear brands have moved part of their production to Indonesia in recent years, partly as a reaction to rising costs in China. It was a good decision for us to diversify. The golf glove market has become mature, so there is a lot of competition now, and the price is not so good. You maybe only have to produce leather in three colours (two types of white and a black), so it’s easier for other tanners to get into this market. They can start production before they even get an order.”

The shoe factories he is referring to are ones making shoes in east and west Java for the US and European brands, including adidas, MBT and Geox which has also begun production in Indonesia using Budi Makmur leather, rather than the central part of the island where the tannery is. “We are just too far from the seaports to have footwear factories,” the chairman says.

Even if they don’t make it to central Java, the shoe manufacturers are in Indonesia for the long term, Mr Sutanto believes. With eight million young people coming onto the employment market every year, the government is only too pleased to have companies come to the country from overseas to create jobs (as many as 30,000 in one  recently opened shoe factory in Java). “This is a relatively small island, but we have a huge population and a plentiful labour supply,” he continues. “And we don’t have the problem of people going home for New Year and not returning because the people working in the factories live locally.” It’s ten hours by truck from the tannery to Jakarta in the west and six hours to Surabaya in the east, so he is confident of being able to continue supplying these facilities from Yogyakarta.

His company’s relationship with the city authorities is good, he says. Yes, they expect tax  revenues from the bigger companies there, but most of all they look to these employers to create jobs for local people, and, as is fitting for a popular tourist destination, to manage waste and pollution extremely strictly.

At the moment, 30% of Budi Makmur’s output stays in Indonesia, shipping to these manufacturers of gloves and shoes. The bulk of customers are in other parts of Asia. But in two  years’ time, with the increase of  shoe production there, the company’s chairman believes 60% of total output will be consumed by domestic manufacturers.

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