Export intensity and competitiveness of Indonesia's crude palm oil to main destination countries

Abstract

Palm oil is a superior product from Indonesia that is continuously and widely used for daily needs such as cooking, grooming, and manufacturing. However, this potential must be supported by oil palm business actors' performance to maintain its intensity and competitiveness. This study investigates how various factors affect Indonesia's crude palm oil (CPO) export intensity and competitiveness by employing panel regression and the basic gravity model. The panel data used here is a 20-year time series with cross-sections from five major importers from 1999 to 2018. The results show that the importer's gross domestic product (GDP) and quantity of export significantly and positively affect Indonesia's CPO export intensity, while the exporter's GDP and economic distance has a significant and negative effect. The factors that positively and significantly influence competitiveness are soybean's import value and Roundtable on Sustainable Palm Oil (RSPO) certification, while Malaysian CPO's export and population of importing countries negatively affect Indonesian CPO competitiveness.