Abstract
Coal is one of the most needed commodities globally because of its power plants and industrial machinery. According to World Coal Institute (2018), the world coal trade is dominated by several producing countries, Indonesia (ranked 2nd with 28.21 percent). Indonesia's coal exports are influenced by determinants of demand from export destination countries. This study will test at least four demand determinants in destination countries for their effects on Indonesian exports: exchange rate, foreign exchange reserves, population, and coal production. The study used six Asian countries (Japan, South Korea, India, Thailand, Philippines, and Malaysia) over 2008-2018. The methodology used is multiple linear regression with a series of chow and Hausman tests. Each variable has been tested by t-test (partial) and f test (simultaneous), and R2 test to analyze the percentage of the influence of the model on the dependent variable. This study revealed that the variable foreign exchange reserves and population growth of six Asian countries have a significant positive effect on Indonesia's coal export. Simultaneously, the exchange rate and coal production of the destination countries were not proven to have a negative impact but positively affected coal export. All variables have a significant and partially significant effect so that the model can explain the coal export variable at 93.08 percent (Adjust R-squared).Keywords: Coal Export, Demand DeterminantsJEL Classification: C2, F1, Q31
Highlights
Energy is an important part of the industrialization process, especially amid globalization, which requires various countries to carry out different transportation and trade functions (Salvatore, 1997)
This study indicates that the exchange rate has no negative effect on Indonesian coal exports during 2008-2018
This result contradicts the theory and the hypothesis that claims the exchange rate has a negative and significant effect on Indonesian coal exports (as the theory of Kang & Dagli (2018). This discrepancy may occur as the exchange rate increases
Summary
Energy is an important part of the industrialization process, especially amid globalization, which requires various countries to carry out different transportation and trade functions (Salvatore, 1997). Coal is one of the energy sources used by the majority of countries in the world. Data from World Coal Institute (2018) reports that the world’s coal trade is dominated by Australia (34.17 percent) while Indonesia is ranked 2nd with coal’s export of 28.21 percent from all the world coal trade. Like one of the coal exporters in the world energy trade, Indonesia has a high export value that is around 565 million tons per year (BPS, 2020). Coal has become a central Indonesia’s energy and mineral export commodity.
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