Domestic footwear producers are upbeat that they can meet an export target of US$4.5 billion this year on surging demand from growth markets.

Indonesian Footwear Association (Aprisindo) advisory council head Harijanto said Wednesday that the optimism was backed by favorable first quarter export figures.

Outbound shipments of footwear grew by 17 percent to $1.07 billion in the January-March period, according to data from the Trade Ministry.

This year’s $4.5 billion export target represents a 10 percent increase from $4.1 billion last year.

“With business as usual we still can achieve a 10 percent rise throughout this year,” Harijanto said, adding, however, that the challenge ahead would be to catch up with rivals that had picked up the pace in exports in recent years.

Vietnam, for instance, has delivered more than $10 billion worth of footwear overseas. Exports of footwear rose slightly by 6.44 percent last year from 2013 as a global economic slowdown doused demand from key buyers, such as the EU, US and Japan.

Overseas sales of footwear followed an upward trend in the past five years with a surplus totaling $2.84 billion on average. There were 394 footwear firms operating in Indonesia with investment topping Rp 11.3 trillion ($859.48 million) in 2014, employing 643,000 workers nationwide.

Aprisindo chairman Eddy Widjanarko said that higher export value would be supported by purchases from fast-surging demand from growth markets, including Nigeria, Ethiopia, Kenya, India and Pakistan. “We also hope there will be some breakthroughs to push up sales to South America and we are working hard on that market, as our position there is still below China,” he recently said.

In terms of investment, the domestic footwear industry was expecting at least $120 million in investment this year, Eddy further said.

A Chinese firm and a Korean firm would spend $60 million and $50 million respectively to set up factories in Garut, West Java, and Ngawi, East Java, while a Swedish firm would pour $10 million into Nganjuk, East Java, he added.

The Chinese firm, which jointly teamed up with a local partner under the name of PT Changsin Reksa Jaya, reportedly began development of its factory in Garut late last month. The facility is designed to produce 15 million pairs of shoes and absorb 5,500 workers. It will supply shoes for Nike to meet overseas demand, including from Asia, the US and Europe.

Amid tighter competition with other Asian countries, Indonesia has recently eased the requirements to access tax allowance incentives, which is also available for labor-intensive industries like the footwear manufacturing industry.

The current tax allowance scheme cuts taxable income to 30 percent of total investment realized over six years, accelerates depreciation and amortization, charges tax of up to 10 percent for offshore taxpayers and carries forward losses from five to 10 years.

Labor-intensive and export-oriented firms are the ones that can get an extension of carried-forward losses above five years to a maximum of 10 years.Such a relaxation aims to support the government’s target of creating 2 million jobs annually.