Increased
Competitiveness of
Indonesia's Rubber Rubber Exports After The Enactment of ACFTA (Asean-China
Free Trade Agreement)
Febriani1,
Wisnu Hendra Kartika Aji2,
Didi Widia3
Universitas
Padjajaran, Indonesia
|
Keywords |
Abstract |
|
Export,
Natural Rubber, ACFTA |
The ASEAN-China Free Trade Agreement (ACFTA), which came
into effect in January 2010, aims to increase economic cooperation and remove
trade barriers. However, the value of Indonesia's rubber exports decreased
significantly after the implementation of this agreement. This study uses the
gravity model and Revealed Trade Advantage (RCTA) method to analyze the
factors affecting the decline in the value of Indonesia's rubber exports. The
data used covers the period 2001-2022 and is taken from various sources
including TradeMap and interviews with rubber exporters. Findings show that
the value of Indonesia's rubber exports to China and ASEAN countries has
fluctuated, with a significant decline after 2011. Gravity model analysis
shows that ASEAN-China real GDP growth is negatively related to the value of
Indonesian rubber exports, while other factors such as exchange rates and
commodity prices also play a role. The decline in Indonesia's rubber export
competitiveness is not only caused by the implementation of ACFTA, but also
by internal factors such as low productivity and underinvestment.
Recommendations are given for commodity price adjustments to improve
Indonesia's rubber export competitiveness. |
Corresponding
Author :
Febriani
E-mail: anifebriani@gmail.com
INTRODUCTION
Plantation products are one of the key sectors in the
Indonesian economy, and changes in the country's foreign exchange in trade with
ASEAN countries and China can have significant implications (Darmanto et al., 2021). The Free Trade Agreement between ASEAN
and China has provided greater market access for Indonesian plantation products
to the ASEAN and Chinese markets (Kuik & Rahman, 2023). One of the leading products of
Indonesia's plantations is rubber sap with HS Code (Harmonized System) 400110
(natural rubber latex). Rubber gum plantations have the potential to increase
foreign exchange earnings through exports. However, since the entry into force
of the ASEAN-China Free Trade Agreement in 2010. The export value of Indonesian
rubber plantations has decreased significantly. At first, the export value of
rubber rubber has increased from 2001 to 2011. Then, after 2011, the export
value of rubber rubber continues to decline very significantly so that the
value of exports back as in 2005.
According to media Republika, some tire factories abroad
prefer to buy from Thailand because the country sells at a lower price than in
Indonesia, which is around 1.61 US dollars/kg. Thailand's higher rubber
productivity compared to Indonesia does allow the country to sell at a cheaper
price. The production of domestic rubber plantations is also slightly impaired
due to the increased frequency of rainfall, which can affect the quality of
rubber sap. According to Indonesia Investment, compared to other
rubber-producing competitor countries, Indonesia has a low level of
productivity per hectare. Some of the factors are the old age of rubber trees
in Indonesia and the lack of investment ability of smallholders, which in turn
results in a decrease in crop yields. Meanwhile, Thailand produces 1,800 kg /
ha. Rubber productivity in Vietnam (1,720 kg/ha) and Malaysia (1,510 kg/ha) is
also higher than in Indonesia. In addition, China's decision to impose a
lockdown also greatly affect the price of rubber in the global market. Because
the loss of demand from the country also has a direct impact on selling prices.
Based
on previous research on the effect of ACFTA using the gravity model method,
that the decline in the value of exports can be caused by many variables such
as real GDP of ASEAN countries and China, real exchange rates, rubber latex
commodity prices, State inflation, or even the implementation of free trade
agreements (ACFTA) (Mulatsih, 2019). Therefore, an in-depth analysis is
needed related to this issue, whether the value of Indonesia's rubber rubber
exports decreased due to the implementation of ASEAN-China free trade or
precisely due to other variables such as real GDP, exchange rates, commodity
prices, and inflation (Siregar, 2014). To analyze which variables affect the
decline of rubber gum Indonesia will use the gravity model method. After
calculation using gravity model method. Then, the author will see which
variables affect the export value of Indonesian rubber. After that, the author
will also use the Revealed Comparative Trade Advantage (RCTA) method to see whether
Indonesian rubber rubber commodities still have strong or weak competitiveness (Fidhayanti et al., 2024). If it turns out, the competitiveness of
Indonesian rubber rubber commodities is weakened or even negative and is also
caused by one of these variables. Thus, the author will provide advice to
relevant parties involved in accordance with the case. Suppose, competitiveness
decreases caused by commodity prices. So, the advice given is in the form of
commodity price adjustment as in 2011. The suggestion is expected to be able to
improve the competitiveness of Indonesia's rubber export value as in 2011. The
following authors collect data on rubber rubber exports from Indonesia to China
for the period 2001-2022.
Figure
1. The value of Indonesia's rubber exports to China
Figure 1 shows the changing conditions of international
trade from year to year, especially the export trade of Indonesian raw rubber
to China. Data from 2001-2010 showed a significant increase in trading Table. The
years 2001-2010 were the year before the ASEAN-China Free Trade Agreement was
enacted. 2011-2022 is the year of the ASEAN-China Free Trade Agreement. In the
year before the enactment of ACFTA (ASEAN-CHINA Free Trade Agreement) saw a
significant increase in 2001 to 2007. The increase from 2001 to 2007 reached
800,000,000 US dollars. The decline had occurred in 2009, which is down as much
as 100,000,000 US dollars from the previous year. But in the following years
(2010-2011) increased to 1,100,000,000 US dollars.
After the enactment of ACFTA (ASEAN-CHINA Free Trade
Agreement) Policy, raw rubber exports from Indonesia to China decreased from
year to year (Somjai & Patchimnan, 2016). In 2011 to 2016 alone the decline
reached 1,400,000,000 US dollars. But indeed the state of exports rose briefly
in 2017 increased by 400,000,000 US dollars. The situation did not last long,
in the following years (2018-2022) the state of exports decreased.
Indonesia is one of the countries that has been named as the
largest rubber producer in the world. Indonesia managed to produce an average
of 3,373,000 tons in the period 2014-2018. As the largest rubber producing
country, it is not surprising that Indonesia is a rubber supplier in various
countries. The majority of rubber products in Indonesia are exported to other
countries such as the United States, Finland, Japan, China, to Turkey. Although
ACFTA is a policy that takes place in ASEAN countries, but with this policy
rubber exports from Indonesia to the world are also affected. Here the author
has collected data on rubber exports from Indonesia to the world.
Figure
2. The value of rubber exports from Indonesia to the world
Figure 2 shows the changing conditions of rubber exports
from Indonesia to the world from 2001-2022. The table shows that the export of
rubber rubber from Indonesia to the world from 2001 - 2007 from year to year
has always increased. In 2007 alone the value of exports has reached
6,000,000,000 US dollars. This figure is 5,000,000,000 higher than the value of
exports in 2001. However, this situation did not last forever, in 2007 to 2009
the value of exports decreased by 2,500,000,000 US dollars. So in 2009 the
export value was in the range of 3,500,000,000 US dollars. The situation
changed again in the following year (2010), in 2010 to 2011 the value of
exports increased dramatically. Even in 2011 was the peak point of the increase
in the value of exports with figures in the range of 11,800,000,000 US dollars.
However, export conditions decreased again periodically from 2011 to 2022 with
the value of exports in 2022 in the range of 3,800,000,000 US dollars.
Indonesia, as one of the leading producers in the rubber gum
sector, plays an important role in the export of this commodity to ASEAN
countries (Joseph & Hari, 2019). Indonesia's rubber rubber exports to
the ASEAN region not only reflect Indonesia's economic potential, but also
create a major impact in the dynamics of regional trade (Marks, 2015). One of the main factors that support
Indonesia's rubber exports is the high quality of its products. Indonesia has
succeeded in producing superior rubber sap that meets international standards.
This ability to provide high quality products has become a major attraction for
ASEAN countries that need rubber industry raw materials for their manufacturing
sectors (Putri, 2022).
The
condition of Indonesia's rubber export to ASEAN is also influenced by the
prevailing policies. ACFTA (ASEAN-China Free Trade Agreement) is one of the
policies on international trade in the ASEAN region. So do not be surprised if
the condition of rubber exports from Indonesia to the ASEAN region is strongly
influenced by the policy. The following authors present data on Indonesia's
rubber rubber exports to ASEAN countries for the period 2001-2022.
Figure
3. The value of
Indonesia's rubber exports to ASEAN countries
Figure 3 shows a diagram of the amount (US dollars) of
rubber exports from Indonesia to ASEAN countries. According to the diagram,
apparently the ASEAN-China Free Trade Agreement (ACFTA) policy greatly affects
exports from Indonesia to ASEAN countries. Since the enactment of the policy,
precisely in 2011, the number of exports has decreased quite drastically. It
can be seen, the decline in the amount of export value reached less than
$500,000,000. As a result, the number of exports from the year since the
enactment of ACFTA is only in the range of less than $100,000,000.
Domestic natural rubber prices in Indonesia tend to increase
from year to year. In the last 10 years the price of domestic rubber has
increased by about Rp. 7,000. Although always increased, but in 2015 the price
of rubber had dropped dramatically which was originally around Rp. 16,000 down
to about Rp. 11,000. In the next year, 2016, rubber prices rose again with
prices around Rp. 18,000. Although our rubber supplies are abundant, domestic
rubber prices tend to rise each year. Many factors contribute to this, one of
which is inflation.
As the third largest rubber producer in the world, Indonesia
certainly conducts export-import activities in the ASEAN region. Export-import
activities are still running smoothly despite the ACFTA policy. From other
countries, Indonesia exports the most to Singapore with a total value of
2,788,930,000 US dollars (2001-2022). This value is able to control 78.3% of
the total exports of Indonesian rubber to other ASEAN countries. Seen through
trademap data, Singapore imports rubber rubber with HS Code 400110 (natural
rubber latex) from Indonesia very much. However, rubber with HS Code 400110
(natural rubber latex) exported by Singapore to other countries is 0 (Singapore
does not export) on commodities with the HS Code. It can be assumed that,
commodities with HS Code 400110 (natural rubber latex) are imported by
Singapore to be processed into finished products or derivative products. Then,
the finished product or derivative products will be exported to other
countries.
The international Tripartite Rubber Council (ITRC) was
established after the signing of the Bali Declaration on December 12, 2001 in
Bali, Indonesia. The ITRC is an active collaboration between Thailand,
Indonesia and Malaysia (TIM) to sustainably increase the price of natural
rubber in the global market, with the aim of ensuring fairness and
profitability for rubber farmers (Rumokoy, 2020). As part of this effort, the
International Rubber Consortium Ltd (IRCo) was established in Bangkok. Basically, IRCo is a joint
venture formed through a Memorandum of Understanding (MoU) approved by all
three major natural rubber producing countries in 2002.
Despite the ITRC, the value of rubber exports continues to
decline every year. The world's three major natural rubber producing countries
agreed to make efforts to control prices so that rubber commodities can provide
fair rewards for farmers. As a founding member of the ITRC, Indonesia is
required to adhere to the regulatory scheme of work that has been created,
including restrictions on natural rubber exports to regulate supply in the
global market. The aim is to influence the global price of natural rubber by
increasing prices through export restrictions. This policy will have an impact
on Indonesia's smallholder plantation communities, as most of the rubber
plantations are owned by them. Although the AETS scheme has been implemented,
the global price of natural rubber has not increased. Instead, the price of
natural rubber continues to decline year after year.
This shows that there are many other obstacles outside the
ITRC's control that affect the price of natural rubber. ITRC policies such as
the Supply Management Scheme (SMS), Agreed Export Tonnage Scheme (AETS), and
Demand Promotion Scheme (DPS) will still be continued by the government as
domestic policies. On the other hand, government policies can be considered as
interventions because the market cannot achieve the goal of public welfare
independently. Although policy objectives are achieved, there are often parties
who are affected or experience side effects. Policies implemented by the
Indonesian government through the ITRC can have an impact on member countries, especially
for rubber farmers.
This study offers novelty by combining quantitative analysis
approaches through gravity and RCTA models to explain the factors affecting the
decline in the value of Indonesian rubber exports. In addition, this study also
considers internal factors that have been overlooked in previous studies, such
as low productivity and minimal investment levels among smallholders.
This study aims to analyze the effect of ACFTA and other
factors on the value of Indonesian rubber exports, and provide strategic
recommendations to improve the competitiveness of rubber products in the
international market. The results of this study are expected to provide input
for stakeholders, both government and industry players, to formulate more
effective policies in improving the competitiveness of Indonesian rubber
exports. In addition, this research can also serve as a reference for future
studies related to free trade and the plantation sector.
RESEARCH METHODS
This research takes the case of Indonesia's rubber trade in
ASEAN countries and China. The research was conducted from October 2023 to
February 2024. The methods used include quantitative analysis with the gravity
model and Revealed Comparative Trade Advantage (RCTA) to evaluate factors
affecting the value of rubber exports. Data collection was conducted by
combining primary and secondary data. Primary data was obtained through
interviews with five Indonesian rubber exporters. Secondary data in the form of
time series data were taken from the TradeMap website, covering Indonesian
rubber exports to China, exports to the world, and exports to five ASEAN member
countries (Malaysia, Singapore, Vietnam, Thailand, and the Philippines) for the
period 2001-2022. The recruitment of respondents used purposive sampling
technique. This method was chosen to ensure that the respondents involved were
individuals with relevant knowledge and experience in the rubber trade. The
respondents consist of rubber exporters who are active and experienced in the
international market, so that the information obtained can provide a deeper
insight into the challenges and opportunities in Indonesia's rubber exports.
Descriptive analysis will be conducted to provide an overview of export trends,
imports, and market dynamics. After that, a gravity model will be applied to
analyze the influence of variables such as real GDP, exchange rate, world
rubber price, inflation, and ACFTA implementation on the value of rubber
exports. The RCTA method will also be used to evaluate the competitiveness of
Indonesian rubber commodities in the context of international trade. Chow test
and Hausman test will be conducted to determine the most appropriate model,
whether it is Pooled Least Square, Fixed Effect Model, or Random Effect Model.
The results of the analysis will be interpreted to provide recommendations for
stakeholders, including strategies to improve the competitiveness of Indonesian
rubber exports. Through this systematic research flow, it is expected that the
results of the analysis can provide comprehensive insights into the factors
affecting the value of Indonesian rubber exports after the implementation of
ACFTA.
RESULTS AND DISCUSSION
ACFTA is a working agreement on Comprehensive Economic
Cooperation between ASEAN and the people's Republic of China that was approved
on 4 November 2002 in Phnom Penh and entered into force in 2010, pursuant to
Article 8 of the agreement. This agreement simplifies the export and import
process by establishing special provisions regarding tariffs on export and import
goods. According to Laird and Yeats (1990), the policy of reducing import duty
rates within the framework of integrative economic cooperation can increase the
demand for imports from member states involved in the integration. In this
regard, trends in the value of Indonesia's potential commodity exports in the
ASEAN market from 2011 need to be analyzed to understand the impact of ACFTA on
Indonesia's exports.
Figure
4. The value of Indonesia's potential commodity exports in the ASEAN
market
after the implementation of ACFTA in 2011-2022
Source: (Trademap, 2024)
Figure 4. shows data on the value of Indonesia's potential
commodity exports to the ASEAN market after the implementation of the
ASEAN-China Free Trade Area (ACFTA) from 2011 to 2022. This bar graph presents
export values in USD for several major commodities, with each commodity
represented by a different colored bar.
Commodities analyzed are palm oil and its fractions processed (HS code
151190), fatty acids, Industrial, Monocarboxylic (HS code 382319), Stainless
Steel, Flat Rolled, hot rolled, in Rolls (HS code 721913), motorcycles, Piston
engines (HS code 871120), and Motor Vehicles for Transport <10 people (HS
code 8703).
Based on the data, it provides a clear picture that palm oil
and its fractions dominate exports with a significant surge in 2021 and 2022,
indicating strong demand and strategic position in the global market. Exports
of motor vehicles for <10 people increased rapidly after 2017, showing
growth potential in the automotive sector. Meanwhile, fatty acids, stainless
steels, and motorcycles show a steady trend with consistent export values,
signaling the need for innovation or new marketing strategies. The
implementation of ACFTA appears to have boosted exports, particularly for palm
oil and motor vehicles, with this trade agreement possibly expanding market
access and reducing tariff barriers.
Figure
5. The value of Indonesia's potential commodity exports in the Chinese market
after the implementation of ACFTA in 2011-2022
Source: (Trademap,
2024)
Meanwhile, Figure 5. shows the magnitude of the value of
Indonesia's potential commodity exports to the Chinese market after the
implementation of ACFTA from 2011 to 2022. Based on 2024 Trademap data. This Table
covers five main commodities namely
ferro nickel (HS code 720260), copper ore and concentrate (HS code 260300),
palm oil and its fractions (HS code 151190), semi-finished products of
stainless steel (HS code 721899), and aluminum ore and concentrate (HS code
260600). In general, the Table shows the
positive impact of ACFTA on exports of several Indonesian commodities to China,
with significant increases in exports of ferro nickel and aluminum ore. The
Data shows that Indonesia is capitalizing on the opportunities from this free
trade agreement, although market dynamics and Chinese demand are also
influencing this outcome.
Based on these two data, it is concluded that Indonesia's
mining and plantation sectors have increased their competitiveness in the
international market, especially in China. From the two data shows commodities
that have export potential value in the ASEAN market but there is no visible
rubber rubber commodity (Abbas & Waheed, 2018). This is because it is related to the
problem of rubber production in Indonesia which is less than optimal. According
to Kompas.id, low World rubber prices lead to a decrease in productivity and
price fluctuations, which makes rubber farmers abandon their gardens. Many are
converting rubber plantations into other more promising crops, in contrast to
other countries such as Vietnam and Ivory Coast that actually expand rubber
land. As a result, the area of rubber plantations in Indonesia is shrinking and
land productivity is very low, only 300 kg of crumb rubber per hectare per
year, far below other rubber-producing countries.
In
addition to internal challenges, external factors such as the European Union
deforestation regulation (EUDR) also affect Indonesia's rubber production (Muradian et al., 2025). EUDR makes it difficult for local
farmers with strict environmental sustainability requirements, thus requiring
large investments in infrastructure and technology that are difficult for
smallholders in Indonesia to meet. According to the Ministry of trade, 92.81%
of the national rubber plantations are owned by smallholders.
Table
1. Conditions of export
and import of rubber sap Indonesia
to the country-ASEAN and China 2019-2022
|
Country |
2019 |
2020 |
2021 |
2022 |
||||
|
Export ($) |
Export ($) |
Export ($) |
Import ($) |
Export ($) |
Import ($) |
Export ($) |
Import ($) |
|
|
Malaysia |
6.959 |
5.487 |
23.966 |
11.033 |
5.943 |
14.041 |
157 |
9.557 |
|
Philippines |
6.019 |
156 |
5.280 |
0 |
9.444 |
136 |
6.542 |
984 |
|
Singapore |
1.412 |
13 |
812 |
7 |
986 |
102 |
1,008 |
1 |
|
Thailand |
1 |
13,688 |
0 |
13,747 |
1 |
34,008 |
1 |
50,536 |
|
Vietnam |
9,780 |
16,038 |
19,289 |
14,186 |
11,764 |
28,720 |
12,935 |
27,666 |
|
China |
310,465 |
223 |
406,916 |
48 |
301,588 |
286 |
265,876 |
976 |
In units of thousand USD
Source:
(Trademap, 2024 processed)
Table 1 shows the export and import conditions of Indonesian
rubber sap to ASEAN countries and China from 2019 to 2022. This Data covers the
value of exports and imports in thousands of USD, providing an overview of the
dynamics of rubber sap trade between Indonesia and these countries (Sujarwo, 2021). The table reveals that China is the
main market for Indonesia's rubber sap exports, with a very high export value
every year. In contrast, imports of rubber sap from China are relatively small
compared to exports, which indicates a significant trade surplus for Indonesia.
Table 2.
Export value of Indonesian rubber before and after ACFTA
|
Countries |
before
ACFTA (2001-2010) |
after
ACFTA (2011-2022) |
|
Malaysia |
$ 118,021 |
$ 170,711 |
|
Philippines |
$ 73,077 |
$ 131,206 |
|
Singapore |
$1,902,237 |
$ 886,693 |
|
Thailand |
$ 2,253 |
$ 1,128 |
|
Vietnam |
$ 142,051 |
$ 135,680 |
|
China |
$ 4,952,923 |
$ 8,496,727 |
Source:(Trademap,
2024)
Table
2 shows the value of Indonesia's rubber exports to various countries before and
after the implementation of ACFTA, with the period before ACFTA from 2001 to
2010 and the period after from 2011 to 2022. Based on the table in general, the
application of ACFTA affects Indonesian rubber exports in different ways.
Countries such as Malaysia, the Philippines and China experienced significant
increases in the value of exports, indicating that this agreement opens up more
market opportunities. In contrast, exports to Singapore, Thailand, and Vietnam
declined after ACFTA, possibly due to changes in market preferences or
increased local production capacity in those countries (Boguszewski 2022). China remains a major market for
Indonesia's rubber gum exports, with a huge increase in export value, reflecting
high demand in China's industrial and manufacturing sectors. The impact of
ACFTA varies in each destination country, depending on the dynamics and
characteristics of each market.
Figure
6. Pie Table of Indonesia's rubber
export value to ASEAN and China
before
and after ACFTA
Figure 6. showing two pie Table s comparing Indonesia's
rubber sap exports to China and ASEAN before and after the implementation of
ACFTA. The first Diagram (2001-2010) shows that 69% of Indonesia's rubber
exports go to China, while 31% go to ASEAN. The second Diagram (2011-2022)
shows an increase in the proportion of exports to China to 87%, with exports to
ASEAN falling to 13%.
This change reflects the positive impact of ACFTA which
increases free trade, reduces tariffs, and strengthens trade relations between
Indonesia and China. The increase in exports to China may be due to the high
demand for industrial products and the export of finished products. Although
the percentage of exports to ASEAN is declining, the absolute value of exports
may still increase. The ACFTA policy shows how international trade can change
the country's trade map (Anggraeni, 2019). So, in conclusion, ACFTA does not
significantly reduce the export value of Indonesian rubber.
To analyze the factors that affect the change in the export
value of Indonesian rubber to ASEAN countries and China, gravity model and
modified gravity model can be used. Before doing the analysis with gravity
model, Chow test and Hausman test to determine the right model approach. The
selection of the best model was carried out by comparing estimates from three
approaches: Pooled Least Square (PLS), Fixed Effect Model (FEM), and Random
Effect Model (REM). The
estimated results of this model can be seen in the table.
Table 3.
Chow's test and Hausman's Test
|
Test
Type |
Probabilitas
Cross-section |
|
|
|
Gravity Model |
Modified Gravity
Model |
|
Chow Test |
0,0000 |
0,0000 |
|
Hausman Test |
0,0000 |
0,0000 |
|
Result |
FEM |
FEM |
Source: Trademap, Calculation Results
Eviews 12
Based
on the results shown in the table, the probability of the Chow test for the
Gravity Model is 0.0000, which is lower than the significance level of 0.05
(5%). The results show that H0 is rejected, and the most suitable model is the
Fixed Effect Model (FEM). In addition, the probability of the Hausman test for
the Gravity Model is also 0.0000, which is also lower than 0.05 (5%),
supporting the decision to use FEM as the right model. The same is true for the
Modified Gravity Model, where the probability values of the Chow Test and the
Hausman test are also 0.0000, respectively, which is lower than 5%. Thus,
indicating that FEM is the right model approach for Modified Gravity Model as
well.
Table 4. Fem test
|
Varibel |
Gravity Model |
Modified Gravity Model |
||
|
Koefisien |
Probabilitas |
Koefsien |
Probabilitas |
|
|
C |
42,9342 |
0,0527 |
19,6317 |
0,2965 |
|
LnGDP Rill Indonesia |
0,6443 |
0,5408 |
- |
- |
|
LnGDP Rill Asean China |
-1,6323 |
0,0234 |
0,0983 |
0,0125 |
|
Distance |
-0,4813 |
0,2604 |
-3,8005 |
0,9308 |
|
LnInflation |
- |
- |
0,0117 |
0,9528 |
|
LnRER |
- |
- |
-0,9122 |
0,6328 |
|
LnWorld Rubber Prices |
- |
- |
0,9340 |
0,0731 |
|
LnDomestic Rubber Prices |
- |
- |
0,0929 |
0,8183 |
|
Dummy ACFTA |
0,0065 |
0,9884 |
-0,1242 |
0,7305 |
|
|
Weighted
Statistics |
|||
|
R-square |
0,8868 |
0,9357 |
||
|
Prob
(F-statistic) |
0,0000 |
0,0000 |
||
|
Sum square
resid |
99,3097 |
50,7439 |
||
|
Durbin-Watson
stat |
1,1101 |
1,2432 |
||
|
|
Unweighted
Statistics |
|||
|
Sum square
resid |
120,0224 |
68,1464 |
||
|
Durbin-Watson
stat |
0,8634 |
0,8271 |
||
Based
on the analysis of data from the table, the results of the Fixed Effect Model
(FEM) model for the panel data were obtained. In the Gravity Model, the
R-square value of 0.8868 indicates that 88.68% of the variation in the
dependent variable can be explained by the independent variable in the model.
The rest, which is 11.32%, is influenced by other factors that are not included
in the model. While for the Modified Gravity Model, the value of R-square reached
0.9357, which means 93.57% variation in Indonesia's rubber exports can be
explained by the independent variables used in the model. The rest, which is
6.43%, is influenced by factors not covered by the model.
Both models, both Gravity Model and Modified Gravity Model,
have passed the feasibility test with a very low probability (F-statistic)
value of 0.0000. Thus showing that there is at least one independent variable
that has a significant influence on the dependent variable.
In the Gravity Model, the ASEAN-China Real GDP has a
negative and significant influence on the confidence level of 5%
(③=0.05), as seen from a probability value lower than 0.05. This result
indicates that the increase in ASEAN-China Real GDP is associated with a
decrease in the value of Indonesia's rubber rubber exports, assuming other
variables remain constant.
While other variables, namely Indonesia's real GDP and Dummy
ACFTA did not show a negative and insignificant effect on the confidence level
of 5%, so it did not significantly affect the export value of Indonesian rubber
sap (Mulatsih, 2019). Distance also had a negative but
insignificant effect on the 5% confidence level, suggesting that distance had
no meaningful impact on the value of exports in this model. In regression
analysis, a negative coefficient indicates a negative relationship between the
independent variable and the dependent variable. That is, if the independent
variable increases, the dependent variable tends to decrease, assuming that the
other variables in the model remain constant.
Meanwhile,
in the Modified Gravity Model, the results are consistent with the Gravity
Model, where the ASEAN-China Real GDP shows a significant and negative
influence (Irshad et al., 2017). This means that the increase in
ASEAN-China Real GDP is significantly associated with a decrease in the value
of Indonesia's rubber rubber exports. In contrast, variable distance,
inflation, Real Exchange Rate (RER), domestic rubber prices, World rubber
prices, and Dummy ACFTA showed no significant effect on the confidence level of
5% (0.05). However, the distance and RER variables showed a negative influence.
That is, each increase of one unit in the logarithms of distance and RER is
associated with a decrease of 3.8005 units and 0.9122 units, respectively, in
the dependent variable (such as trading volume or other variables analyzed),
assuming that the rest of the variables remain constant.
Table 5. The Competitive Status Of Rubber
|
Period |
RXA |
RMP |
RCTA (RXA-RMP) |
competitiveness
Status Competitiveness |
|
2001 |
1.502960789 |
0.082207489 |
1.4207533 |
positive |
|
2002 |
0.850868209 |
0.07311319 |
0.777755019 |
positive |
|
2003 |
1.08613161 |
0.060637345 |
1.025494265 |
positive |
|
2004 |
1.640405259 |
0.039031646 |
1.601373613 |
positive |
|
2005 |
1.830217871 |
0.024295952 |
1.805921919 |
positive |
|
2006 |
2.294503076 |
0.036569563 |
2.257933513 |
positive |
|
2007 |
2.322766726 |
0.030424557 |
2.292342169 |
positive |
|
2008 |
2.260435184 |
0.024482749 |
2.235952435 |
positive |
|
2009 |
2.06561246 |
0.037697072 |
2.027915387 |
positive |
|
2010 |
2.128783227 |
0.038050643 |
2.090732584 |
POSITIVE |
|
2011 |
1.668159959 |
0.035493665 |
1.632666294 |
POSITIVE |
|
2012 |
1.792860289 |
0.052619058 |
1.740241231 |
POSITIVE |
|
2013 |
1.674398976 |
0.04123211 |
1.633166865 |
POSITIVE |
|
2014 |
1.506517665 |
0.051580674 |
1.45493699 |
POSITIVE |
|
2015 |
1.328451288 |
0.067420901 |
1.261030387 |
POSITIVE |
|
2016 |
1.383948326 |
0.072086503 |
1.311861823 |
POSITIVE |
|
2017 |
1.772050173 |
0.061988309 |
1.710061863 |
POSITIVE |
|
2018 |
1.058993739 |
0.080650226 |
0.978343514 |
POSITIVE |
|
2019 |
1.056571963 |
0.081978262 |
0.974593701 |
POSITIVE |
|
2020 |
1.525994192 |
0.110055352 |
1.41593884 |
POSITIVE |
|
2021 |
0.721290242 |
0.133451586 |
0.587838656 |
POSITIVE |
|
2022 |
0.601886151 |
0.142808287 |
0.459077864 |
positive |
Source : Trademap, Microsoft Excel 2019 (Processed)
Figure
7. Grafik RCTA Getah Karet Indonesia HS Code 400110
Based On Table 5. it can be seen that the competitiveness
status of Indonesian rubber sap from 2001 to 2022 showed a positive value (RCTA
> 0), which indicates that Indonesian rubber sap still has sufficient
competitiveness to be exported. However, Figure 7. shows a significant decrease
in the competitiveness of Indonesian rubber from 2007 to 2022. This graph shows
a downward trend that continues until the competitiveness of rubber sap
approaches the level of 2002, even lower in 2022 than in 2002. Although there
were increases in 2016 to 2017 and from 2019 to 2020, these increases were not
enough to return competitiveness to 2006 levels.
If this decline in competitiveness continues until it
reaches negative values, the rubber industry and the economy as a whole could
suffer several significant impacts:
- Decrease in prices, because to remain
competitive producers may need to lower selling prices, which will have an
impact on decreasing profit margins or even losses for producers.
- Decrease in production, considering
that if demand decreases and prices continue to fall, manufacturers may
reduce or stop production, which will lead to a reduction in jobs in the
rubber sector.
- Rubber farmer crisis, due to a
decrease in competitiveness and prices can lead to an economic crisis for
rubber farmers, who may be forced to switch to other commodities or leave
the agricultural sector.
- Increased imports, caused if the
domestic industry can not compete, domestic consumers may import more
rubber from abroad, which will weaken the resilience of the domestic
economy.
- Macroeconomic
impact, the rubber industry is an important part of the economy in several
regions in Indonesia. A significant decline in the industry could have a
negative impact on regional and national economies, including a decrease
in local income, foreign exchange, and an increase in poverty. In
addition, if this trend continues, Indonesian rubber sap could be
displaced from the list of leading commodities due to a decrease in
competitiveness or even reach negative values.
This decline in the competitiveness of Indonesian rubber
needs to be addressed immediately so that it does not continue until it reaches
a negative value. Considering that although Indonesian rubber sap has decreased
competitiveness from 2006 to 2022, the competitiveness status of Indonesian
rubber sap still shows positive values. According to the Investment
Coordinating Board (BKPM) (2020), the agriculture, plantation, and livestock
sectors are one of the five main sectors in investment in Indonesia. In
addition, support through the people's Business Credit (Kur) also helps increase
the capital production of farmers. This government support is the reason why
the competitiveness of Indonesian rubber remains positive.
This positive value indicates that there are opportunities
to increase the competitiveness of Indonesian rubber, especially with the
potential for cooperation in ASEAN and China. However, rubber production in
Indonesia is still considered less than optimal, which requires improvements to
support rubber farmers. Indonesian rubber prices tend to be higher because of low
productivity, one of which is caused by high rainfall that affects the quality
of rubber sap. In addition, low World rubber prices have an impact on
productivity and cause farmers to leave their gardens, so that plantation land
area shrinks due to land conversion and decreased productivity.
In addition, there are also external challenges such as the
European Union deforestation regulation (EUDR), which is an obstacle to rubber
production. EUDR requires farmers to meet strict environmental standards, which
require large investments and technologies that are not always available,
thereby reducing their income. To meet this challenge, the Indonesian
government has initiated a joint communique on the sustainability of natural
rubber commodities with the member countries of the Association of natural
rubber producing countries (ANRPC). This communique, agreed at the ANRPC
meeting in India in October 2023, invites the European Union and other
stakeholders to consider the negative impact of regulation on rubber farmers
and producers, as well as to seek fair and sustainable solutions without
disrupting trade or the global supply chain of rubber.
CONCLUSION
Based on the discussion in this study, it can be concluded
that the ACFTA agreement did not significantly affect the decline in the value
of Indonesian rubber exports. Gravity model analysis shows that the decline was
influenced by Indonesia's real GDP, ASEAN-China real GDP, real exchange rate,
and domestic rubber price. Although the competitiveness of Indonesian rubber is
still positive and worth exporting, it has been declining since 2006. Some
foreign tire factories prefer to buy rubber from Thailand due to its lower
price, while Indonesian rubber prices are higher due to low productivity, which
is affected by rainfall that can reduce sap quality. In addition, low global
rubber prices cause fluctuations in productivity and prices, encouraging
farmers to abandon their farms and causing land shrinkage due to conversion.
External factors such as the European Union's deforestation regulation (EUDR)
also pose a challenge to rubber production, as farmers must meet strict
environmental sustainability standards, which require investment and high
technology that is difficult to afford, reducing farmers' income.
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