Indonesian Crude Palm Oil Export Performance during the Period (1990Q1-2015Q4)

Prof. Dr. Firwan, T and Prof. Dr. Syamsurijal, T (2017) Indonesian Crude Palm Oil Export Performance during the Period (1990Q1-2015Q4). Merit Research Journal of Agricultural Science and Soil Sciences, 5 (8). pp. 152-165. ISSN 2350-2274

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Abstract

This study aims at analysing the Indonesian Crude Palm Oil (CPO) export performance. Therefore, there are two main aspects economically important to study. The first is to examine the competitiveness of Indonesian CPO product in the global market. The second is to examine the Indonesian CPO export volume growth (dependent variable) on its correlation with certain variables (independent variables), i.e. world CPO prices, CPO domestic production, rupiah exchange rate to US dollar, including residual variable. Data observation is quarterly where n = 104 (1990Q1-2015Q4). In this framework, it is used two main tools of analysis i.e. (1)Revealed Comparative Advantage Index (RCA-Index), and (2)Regression Estimation equipped with Error Correction Model (ECM). The implications of research findings are explored deeply by using descriptive analysis. Overall results of studies indicate that Indonesian CPO export performance within (1990Q1-2015Q4) were relatively, fluctuant, unstable and less competitive condition from year to years. Those facts are reflected by the following research findings: (a)the competitiveness of Indonesian CPO exports in the world market during the period of 1990Q1 to 2015Q4 was not strong if it is compared with competitiveness forces of world CPO exports or other exporting countries. Most of RCA-Indices during the period of study were less than one, even though in average is greater than one; (b)the Indonesian CPO export volume growth during the period (1990Q1-2015Q4) was less responsive to the change of independent variables; (c)the CPO world price and the rupiah exchange rate to US dollar variables are found in negative correlation with and have significant effects on Indonesian CPO export volume growth at different magnitudes for both in the long and short-term; (d)the domestic CPO production variable is found in positive correlation with and have significant effects on Indonesian CPO export volume growth at different magnitudes in long and short term; €the coefficient regression residual variable (ECT) is found in negative correlation with and have significant effects on Indonesian CPO export volume growth at different magnitudes in long term. The negative sign of ECT coefficient indicates low rate of adjustment in the short term toward an equilibrium condition long term. In brief, overall independent variables influence significantly dependent variable in the short and long term. Therefore, the Indonesian CPO export performance is in general quite good. But some policies are important to rise in order to increase the Indonesian CPO export competitiveness in global market. Keywords: Competitiveness, Indonesian CPO Export volume, world CPO prices, domestic CPO production, rupiah exchange rate to US dollar.

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