Factors that Affect the Export of Crude Palm Oil Indonesia in International Trade

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He will graduate soon, in October 2014, from Semarang State University (UNNI'd

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ABSTRACT

Fakhrus Radifan. 2"14 “Factors that Affect the Export of Crude Palm Oil Indonesia in International Tr" de “. Final Project. The Department of Economic Development. Faculty of Economics. Semarang State University. The first Supervisor, Prof. Dr. Etty Soesilawati, M.Sc, and the second supervisor,  Ari Bowo Prasetyo, SE, M.Sc.

Keywords: Export CPO, CPO Production, Exchange Rate / Dollar, World Crude Oil Prices, International Trade, Error Correction Model.

Crude Palm Oil is one of the leading export commodities that can contribute to Indonesia's foreign exchange earnings from the export. Products processed from palm oil, which is rich in benefits, have a sizeable export opportunity in international markets; on the other hand, they also can be used as raw material for cooking oil, margarine, soap, etc. CPO can also be used as an alternative fuel vegetable oil substitute that can be renewed. However, Indonesia's CPO export volume tends to fluctuate and decline, creating international trade restrictions. This study investigated the effect of independent variables (Indonesian CPO production, exchange rate Euro / U.S. dollar, and crude oil prices) on the dependent variable (CPO exports) in the short and long term.

This study uses time series data or time series. The analysis model used is an econometric analysis tool error correction model (Error Correction Model / ECM). This model can explain the behavior in the short term and long term.

The results showed that (1) the variable of production in the short-term production has no significant effect on exports, but in the long-term, it affects Indonesian CPO exports. (2) The variable of exchange rate against the U.S. dollar in the short term has no effect on exports, but in the long term, the rate has a significant positive impact on Indonesian CPO exports. (3) Variable crude oil prices in the short-term and long-term have a positive and significant impact on Indonesian CPO exports. (4) All Production, Exchange, and World Crude Oil price variables positively and significantly affect long-term Indonesian CPO exports.

Based on the results of this study, the long-term independent variables have a positive and significant impact on Indonesian CPO exports. Indonesian CPO producers are expected to increase their production capacity and monitor the development of world crude oil prices and exchange rate movements against the U.S. dollar.