Analysis of Trade Specialization and Competitiveness of Indonesian Coconut Oil in the International Market (2010-2020)

Liu Xia,Siska Setiya Dewi

doi:10.4236/ojbm.2022.101015

Abstract

Processed coconut products are one of Indonesia’s leading export commodities. Coconut can be processed into several products including coconut milk, copra, and coconut oil. In this study researchers focused on processed coconut products in the form of coconut oil, namely crude coconut oil with HS code 151311 and virgin coconut oil with HS code 151319. The researcher conducted an analysis of the trade specialization and competitiveness of Indonesian coconut oil in the international market. A quantitative research method was deployed in this study with secondary data obtained from several sources relevant to the topic of this research, such as the United Nations Commodity Trade, Statistics Indonesia, the Ministry of Agriculture of the Republic of Indonesia and the Ministry of Trade of the Republic of Indonesia. The data analysis method used in this study is the Trade Specialization Index (TSI) which is used to analyze the trade specifications of Indonesian coconut oil and Revealed Comparative Advantage (RCA) which is used to analyze the comparative competitiveness of Indonesian coconut oil. The results in this study are the trade specialization of Indonesian coconut oil is at the maturity stage which means Indonesia tends to be a coconut oil-exporting country, with a TSI value of Indonesian crude coconut oil (0.94) and Indonesian virgin coconut oil (0.99). The results of the RCA research also show positive things for Indonesian coconut oil, where crude coconut oil and virgin coconut oil get an RCA value of more than 1 which means Indonesian crude coconut oil and Indonesian virgin coconut oil have comparative advantages and strong competitiveness in the international market with the average RCA value of crude coconut oil (30.67) and virgin coconut oil (27.07).

Highlights

The development of the dynamics of people’s lives and the economy of countries, causes every country to be integrated with each other without state territorial boundaries
Indonesia and the Philippines are ranked one of the highest Trade Specialization Index (TSI) values among other producers, this is because the average value of Indonesian and Philippines crude coconut oil exports is greater than imports of crude coconut oil or in other words the trade balance of crude coconut oil commodities is surplus, the average trade balance of Indonesian crude coconut oil in 2010-2020 was a surplus of 387,043,794 USD and the Philippines had an average trade balance of crude coconut oil surplus of 688,762,911 USD, Sri Lanka had a surplus of 81,263,801 USD
Looking at the TSI values of the three countries, Indonesia, the Philippines and the Netherlands, which are around 0.81 to 1.00, it indicates that these three producing countries are entering the maturity stage, which means that these three countries have strong competitiveness in the international market and are net exporters of virgin coconut oil

Summary

Introduction

The development of the dynamics of people’s lives and the economy of countries, causes every country to be integrated with each other without state territorial boundaries. The ease of exchanging information, exchanging services and goods, technology and science makes the countries of the world into a single entity, which needs each other Free trade is associated with the absence of quotas, tariffs, or other barriers in international trade This allows each country to specialize in the goods produced, making it cheaper and more efficient than competing countries, allowing each country to get higher real income (Irwin, 2019). The contribution of agriculture to GDP in the third quarter amounted to 571.87 trillion rupiahs, up 14.68% from the same period in the previous year This cannot be separated from the export contribution of the Indonesian plantation sub-sector, recorded in the January-October 2020 period of 359.5 trillion rupiahs, an increase of 11.6% compared to the same period in 2019 of 322.1 trillion (Directorate General of Plantation, 2020). This is due to the large demand for plantation commodities such as palm oil, cocoa, rubber, cloves, and Indonesian coconut

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