Ministry of Industry: Bata Closes Factory to Be More Efficient

The Ministry of Industry continues to provide guidance to the footwear industry to make it competitive.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

The school shoe display showcased at the Bata shoe store in Mall Bintaro Xchange, South Tangerang, Banten, on Monday (6/5/2024). The Bata shoe store remains in operation following the closure of its shoe factory in Purwakarta, West Java, on Tuesday (30/4/2024).

JAKARTA, KOMPAS — Responding to the closure of the shoe factory owned by PT Sepatu Bata Tbk in Purwakarta, West Java, the Ministry of Industry said the company was carrying out a business transformation to make it more efficient. The Ministry of Industry said that it continues to provide guidance to the footwear industry so that it continues to be competitive.

Minister of Industry Agus Gumiwang Kartasasmita said that Bata management was carrying out business transformation. "They are adjusting their business activities to be more efficient. "Including them selling assets in order to make the company healthy and efficient again," said Agus, Tuesday (7/5/2024).

Secretary General of the Ministry of Industry, Eko S A Cahyanto, added that Bata is one of the oldest shoe companies in Indonesia that has been operating in the country since the Dutch colonial era.

Quoting from Bata's 2023 annual report, the company was established in the homeland in 1931. At that time, they were still an importer of shoes. It was only in 1940 that Bata established a shoe factory in Kalibata, South Jakarta.

Eko added that an industry can survive in the long run if they make good investments in both capital and production development efforts. Companies need to continuously improve their capacity to stay up-to-date, both in terms of product models and production processes to become more efficient.

He said that his team continues to provide guidance to the footwear industry to remain competitive. One way, according to Eko, is by ensuring the availability of raw materials for footwear production. The growth of the footwear industry can be seen in the April 2024 Industry Confidence Index (IKI) released by the Ministry of Industry, in which the footwear industry is included as one of the 19 sub-sectors experiencing expansion.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

Bata Financial Highlights 2023. Source: Bata Annual Report 2023

Also read: Factory Closes, Bata Shoe Store Operates Relying on Imported Products

Still operating

According to Kompas, Bata's head office in the Ventura Building, Cilandak, South Jakarta, Tuesday, is still operating. Bata's head office occupies one floor, namely the 7th floor of the building. It can be seen that there are still many employees working at their desks.

When attempting to conduct a face-to-face interview, the Director and Secretary of Bata Hatta Tutuko Company were in Purwakarta. They promised to provide interview time.

Previously, Bata announced the closure of its factory in Purwakarta on Friday (3/5/2024) through the disclosure of information displayed on the Indonesia Stock Exchange (IDX) website. In the information, Director and Company Secretary of PT Sepatu Bata Tbk, Hatta Tutuko, stated that the factory was closed on Tuesday (30/4/2024).

In the official statement, Hatta stated that PT Sepatu Bata Tbk has made various efforts over the past four years amidst losses and industry challenges caused by the pandemic and rapidly changing consumer behavior.

The company can no longer continue production at its Purwakarta factory due to declining customer demand for the type of product made there and the sustainable supply needs that can be obtained from local suppliers in Indonesia far exceed the factory's production capacity.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

Bata Shoe Store at Bintaro Xchange Mall, South Tangerang, Monday (6/5/2024).

The incident, information, or material facts have an impact on the operational activities, law, financial conditions, or continuity of the operations of the issuer or public company. With this decision, the company cannot continue production at the Purwakarta factory.

Quoting its financial report, the company has been experiencing losses for at least the past three years and it has been growing. In 2021, Bata's comprehensive losses reached IDR 51.04 billion and doubled in 2022 to IDR 107.15 billion. In 2023, the losses increased again to IDR 188.41 billion.

Also read: Intensively "Online", Using Influence, Bata Closes Factory in Purwakarta