American sportswear giant New Balance announced on Monday, May 8, 2023, the plan to expand its Indonesian operations by sourcing products to a seventh factory located in Cirebon, West Java. The new factory is expected to begin construction in August with the investment valued at more than IDR 1 trillion (US$67.9 million).
Asia’s Director of Materials at New Balance Vik Saran, said that this move is part of the company’s strategy to build more factories, with the aim of providing employment opportunities for people in Central Java and West Java, particularly in Cirebon and Majalengka.
Investment Minister Bahlil Lahdalia applauded New Balance’s investment that reflects “international investors’ confidence in Indonesia”. Moreover, the new sports shoe factory will collaborate with domestic shoe manufacturers and is expected to create jobs for 40,000 local workers.
After constructing a new factory in Cirebon, the company plans to expand its operations to Pati, Central Java and Nganjuk, East Java.
New Balance investment in Indonesia
New Balance has made IDR 2 trillion in direct investment since it came to Indonesia, and its factories in the country topped US$500 million in production value last year with products being exported to China, Japan, the United States, and European countries.
The company’s factories have been established in Serang, West Java and Mojokerto, East Java. With around 300 suppliers, Indonesia offers significant potential for the footwear sector manufacturing industry, presenting a great opportunity for New Balance.
New Balance Indonesia’s Country Manager for Sourcing Elmore Simorangkir said that Indonesia was chosen for expansion due its stable political conditions, clear legal regulations, and adequate infrastructure.
“We have observed the rapid development under the leadership of Mr. Joko Widodo, and New Balance have been planning to expand to Indonesia for some time. However, it was only recently that we have seen more incentives to invest in the country, especially with the introduction of the Job Creation Law,” Elmore said as quoted from Katadata on Monday, May 8, 2023.
The first quarter of 2023 saw the leather goods and footwear industry record a significant investment value, with domestic investment (PMDN) reaching US$34 million and foreign investment (PMA) reaching US$2.82 billion.
