Analysis of Indonesian tea competitiveness in the international market

Abstract

Indonesia is one of the largest producers and exporters of tea commodities on the international market. Indonesia as a tea exporting country is also a country that imports tea. Tea is one of Indonesia’s leading agricultural export commodities on the international market. In 2013-2016 Indonesian tea exports tended to decrease by 10.05% per year. As a result of the decline in export volume, some of the main markets of tea that have been controlled by Indonesia have been taken over by other tea producing countries. To maintain tea as the main export commodity in agriculture, precautionary measures need to be taken to maintain existing market share through increasing productivity or improving the quality of tea so that it can enter the international market as premium tea. Based on the background that has been described in general, this study aims to analyze the competitiveness of Indonesian tea on the international market. Specifically, this study aims to analyze the position of tea exports, the competitiveness of Indonesian tea and the strategy of increasing Indonesian tea exports on the international market. The method used to answer the research objectives is the Trade Specialization Index (ISP), Revealed Comparative Advantage (RCA), Constant Market Share (CMS) and Diamond Porter Theory. The data used in this study are time series secondary data from 2010-2016. Based on the results of the study showing that the position of Indonesian tea exports in the international market, the average value of Indonesian ISPs in the world market from 2010-2016 was 0.69. This value indicates that the position or stages of Indonesian tea exports are at the stage of expanding exports with indicator values (0-0.8) and tend to be exporting countries rather than importers. The competitiveness of the results of the average value of Indonesian tea RCA in the international market calculated from 2010-2016 reached 2.32 because the RCA value is greater than one, Indonesia has a strong competitiveness in tea exports in the world. For the value of Indonesian tea CMS, the average for the last six years is positive for standard growth and composition effects but is negative in terms of the effect of competitiveness.