Analysing Factor of Indonesias Natural Rubber Export Trade
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Institusion
Universitas Padjadjaran
Author
Ab, Yeni Maskurah
Subject
Datestamp
2021-11-23 00:00:00
Abstract :
Natural rubber is an important commodity in Indonesia, as it is one of the country’s top five export commodities. However, recently, Indonesia faces slowed growth in natural rubber production. As the second largest exporter of natural rubber in the world, Indonesia must maintain that position since there are many new comers in the natural rubber market This study investigates the factors that affect the export of natural rubber using the random effect gravity model, and the export data of Indonesian natural rubber to its 15 main importer countries from 2005 to 2014. Regression result shows GDP of Indonesia, Production of Indonesia, Consumption of importer countries, and world price positive and significant affecting natural rubber export of Indonesia. While exchange rate shows negative and significant effect. The other two variables, GDP of importer country and proxy of cost are not significant affecting export value of Indonesia’s natural rubber. These findings lead to two policy implementations. First, in order to maintain the sustainability of natural rubber, the government should support smallholder farmer, since approximately 80% of natural rubber plantation is owned by farmer, not only by providing subsidized seeds and fertilizers but also by supporting the replanting rubber plantations. Indonesia should learn from Thailand by issuing export tax (it is called CESS in Thailand), later this fund is used to help farmer in replanting their land. The second is by strengthening the role of rubber organization to maintain natural rubber price in good position.
Natural rubber is an important commodity in Indonesia, as it is one of the country’s top five export commodities. However, recently, Indonesia faces slowed growth in natural rubber production. As the second largest exporter of natural rubber in the world, Indonesia must maintain that position since there are many new comers in the natural rubber market This study investigates the factors that affect the export of natural rubber using the random effect gravity model, and the export data of Indonesian natural rubber to its 15 main importer countries from 2005 to 2014. Regression result shows GDP of Indonesia, Production of Indonesia, Consumption of importer countries, and world price positive and significant affecting natural rubber export of Indonesia. While exchange rate shows negative and significant effect. The other two variables, GDP of importer country and proxy of cost are not significant affecting export value of Indonesia’s natural rubber. These findings lead to two policy implementations. First, in order to maintain the sustainability of natural rubber, the government should support smallholder farmer, since approximately 80% of natural rubber plantation is owned by farmer, not only by providing subsidized seeds and fertilizers but also by supporting the replanting rubber plantations. Indonesia should learn from Thailand by issuing export tax (it is called CESS in Thailand), later this fund is used to help farmer in replanting their land. The second is by strengthening the role of rubber organization to maintain natural rubber price in good position.
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