Comparative Analysis of the Competitiveness of the Indonesian and Malaysian Palm Oil Industry
Hadi, Syaiful (2004) Comparative Analysis of the Competitiveness of the Indonesian and Malaysian Palm Oil Industry. PhD thesis, Universiti Putra Malaysia.
Since 1970s, Malaysia has strengthened its position as the primary producer and exporter of world palm oil. However, during the 1975 - 2001 period, the rates of Malaysia's oil palm estate growth, and palm oil production and exports were lower than those of Indonesia. However, the Indonesian palm oil industry has always been overshadowed by Malaysia's, which is the main producer and exporter of world palm oil. The objectives of this study are to calculate the production cost, to measure the production efficiency and productivity in producing fresh fruit bunches (FFB) and crude palm oil (CPO), to examine the export competitiveness of Indonesia's palm oil and to recommend policy alternatives to improve the competitiveness of Indonesia's palm oil industry. Production costs are analyzed in tabular descriptive manner. Efficiency of production, on the other hand, is analyzed using Banker - Charnes - Cooper (BCC) model, whilst productivity is analyzed using general malmquist ... 111 productivity index (GMPI) and export competitiveness is analyzed using revealed comparative advantage (RCA). In general, there was competitiveness in the Indonesian palm oil industry. In fact, for some parameters, Indonesia's competitiveness was higher than those of Malaysia. Indonesia's FFB yield, oil extraction rate (OER) and CPO yield were higher with lower production cost of FFB and CPO than those of Malaysia. These conditions were supported by the increasing trend of export performance ratio (EPR) and net exportltotal trade ratio (NEITT). However, the Indonesia's palm oil industry was still inefficient in using production input, and productivity of palm oil estates suffered a fluctuating decreasing trend By comparing Indonesia's palm oil industry competitiveness based on ownership status, namely between horticultural limited liability company (PTP) and private, the research discovered that the competitiveness of PTP estates was lower than that of privately-managed estates. The FFB and CPO yield per hectare, OER, efficiency of production and productivity index in PTP estates were lower than those of privatelymanaged ones. Production cost of CPO in PTP estates was higher compared to that in the private estates. The study also provides several strategies to improve the competitiveness of Indonesia's palm oil industry, especially in PTP estates. Firstly, there is a need for immediate replanting of oil palm trees to replace the trees that are over 20 years old, and those that are over 17 years old and damaged. Secondly, the study calls for the application of fertilizer according to the recommended dosage. Thirdly, the study proposes that there is an improvement to the quality of FFB fraction that are being harvested and processed, improving the FFB to be harvested and processed. Fourthly, depositing the fund gained from the palm oil export tax in a special account. Lastly, reviewing the strategy for determining the export tax
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