New Balance has announced it will make an IDR1 trillion (US$67.9 million) investment in Indonesia which could create as many as 40,000 new jobs. The decision was made after the Indonesian government introduced a job creation law designed to encourage investment and streamline business procedures for overseas firms.
“We are witnessing that under the leadership of Mr. Jokowi [President Joko Widodo], Indonesia is growing very rapidly. New Balance has long considered expanding operations in Indonesia, but only recently did we make the decision after the adoption of the job creation law that, in our opinion, offers incentives to investments,” New Balance Country Manager Elmore Simorangkir told the Jakarta Globe.
The sneaker and apparel giant is expected to build new factories in Cirebon and Majalengka while also improving its distribution across Indonesia with a focus on West Java. New Balance has previously invested IDR2 trillion (US$135.8 million) in the country.
Elmoring noted the stable political situation, improved infrastructure and favorable regulatory regime convinced the company to increase its presence with this commitment. Indonesia could even become the brand’s manufacturing base in Southeast Asia as it currently has more than 3000 established partnerships with local suppliers.
New Balance footwear exports from Indonesia surpassed US$500 million last year with these products routed to China, Japan, the United States and Europe.
In Asia, the brand is best known for being the kit sponsor of Liverpool FC between 2015-2000. New Balance shoes can be found throughout the continent, but it still lags behind Nike, Adidas and others in terms of popularity.
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Interesting Analysis
New Balance announcing further investment in Indonesia is another win for the government as it looks to increase foreign activity. Nike already makes 22 percent of its shoes there and many other footwear brands are active in some capacity.
Overall, Indonesia is the world’s third-largest footwear exporter and fourth-largest producer. It has also benefited from strained relations between the US and China, with the latter being a global leader in the shoe sector.
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