Jakarta. Sportswear giant New Balance announced on Monday the plan to expand its Indonesian operations by sourcing products to a seventh factory located in the West Java town of Cirebon.

The new factory is expected to begin production in August.

An Indonesian government official said the new investment is valued at more than Rp1 trillion ($67.9 million).

New Balance Country Manager Elmore Simorangkir said the company has made Rp 2 trillion in direct investment since it came to Indonesia and is committed to adding more, getting convinced by the stable political situation, improved infrastructure, and favorable regulatory regime in the country.

Elmore admitted that the decision to expand operations was made after the Indonesian government introduced the job creation law which eases investment and business procedures.

"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,” he told reporters in Jakarta.

New Balance has established partnerships with more than 300 Indonesian suppliers, making the country a strong candidate to become its main production base in Southeast Asia.

The new factory will manufacture footwear in collaboration with local manufacturers, Elmore said.

New Balance sources footwear and apparel from factories in Banten and East Java with the plan to expand operations in Central and West Java as well, he added. Its footwear export from Indonesia topped $500 million last year to China, Japan, the United States, and European countries.

Investment Minister Bahlil Lahadalia applauded New Balance’s investment commitment that reflects “international investors’ confidence in Indonesia”.

“With regard to the investment value, I need to check again but for sure it’s above Rp 1 trillion and only at the initial phase,” Bahlil said.

“They plan to have new factories in Cirebon and Majalengka. The company currently runs factories in East Java and plans to expand to West Java – this distribution is good,” he added.

The new investment is expected to create 40,000 new jobs.

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