Abstract
This study aims to analyze the impact of Information and Communication Technology (ICT) on bilateral trade in service between Indonesia and its ASEAN trading partners. The sample is bilateral export in service between Indonesia and 9 ASEAN countries such as Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Vietnam, Myanmar, Laos and Cambodia. The total trade in service data is based on UN-Comtrade. It consists of service products that are coded in Standard International Trade Classification (SITC). This study uses the gravity model framework of data panel from 2005 to 2017 with random effect model is analyzed using Generalized Least Square. Based on the regression analysis, results show that sub-index of ICT Development Index (IDI) such as mobile-cellular telephone subscriptions per 100 inhabitants which represents technology development, has a positive and significant impact on Indonesia’s service export to ASEAN countries. Other variables such as GDP and distance also have significant effect on Indonesia’s export in service. GDP reporter, GDP partners and common language have positive and significant effect on Indonesia’s export in service. Furthermore, distance has a negative and significant effect on Indonesia’s export in service. These results are in line with Gravity model theory. In addition, these results are expected to be strong enough for the specifications of alternative models and estimation methods. Based on these results, some expected trade policy recommendation related to trade in service and telecommunication particularly trade between Indonesia and ASEAN countries can be formulated. For instance, to strengthen Indonesia’s networking and infrastructure of telecommunication in ASEAN countries. To build more Base Transceiver Station (BTS) located in trading partners in ASEAN. Telin Singapore established by Telkom Indonesia is officially established in 2007 and is the first Telkom footprint in international business. Since Singapore is Indonesia’s trading partner which has the highest of ICT Development Index among other ASEAN countries, the Indonesian government need to continue the implementation of Information and Communication Joint Committee Indonesia-Singapore.
Highlights
Technology plays an important role in international trade and commerce since international trade is one of the sources of growth
Gross Domestic Product (GDP) Indonesia has a significant and positive sign, this means that the greater the GDP of the country of origin, the greater the Indonesian service exports to ASEAN
The variable of GDP of trading partner countries has a significant influence on Indonesian exports in 20052017 explains that the greater the GDP of trading partner countries, the greater Indonesia’s exports to ASEAN countries
Summary
Technology plays an important role in international trade and commerce since international trade is one of the sources of growth. As of 2016, an average ASEAN Member State generates about 37% to 74% of its GDP from the services sectors, Source: ASEANStats, 2015 Figure 1. With rapid advances in Information and Communication Technology (ICT) since the 1990s, as well as increased efficiency for transport of goods and people across national boundaries, the variety of sectors and volume of services provided across national boundaries are rising fast (Racela & Thoumrungroje, 2020). More and more business transactions and delivery of services projects such as engineering design and financial market consultancy are undertaken through electronic channel such as internet and other telecommunication network (Tee et al, 2020). Even the lowest among ASEAN Member State, Myanmar, generates 38% of its output from the services sector, while Singapore as the highest among ASEAN Member States generates 72%
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