THE PROGRESSIVE EXPORT TAX AND INDONESIA’S PALM OIL PRODUCT EXPORT COMPETITIVENESS

The relationship between Indonesia's palm oil product competitiveness and the government's policy intervention is still disputable among stakeholders. This research analyzes the association between the progressive export tax and the changes in export shares of Crude Palm Oil (CPO) and Refined Palm Oil (RPO) as well as the competitiveness of both commodities. Revealed comparative advantage (RCA) and export product dynamic (EPD) are used to measure the change in the export shares of CPO and RPO as well as of their export competitiveness to the main destination countries. To examine the impact of this policy, this research compares before and after the enactment of a progressive export tax policy at the end of 2007 and uses monthly export data for CPO and RPO products for the period 1997-2018. The result finds that after the enactment of the progressive export tax of CPO , the export share of CPO declined by 21% and the level of competitiveness of CPO products moved from Rising Star to Lost Opportunity compared with the condition during 1997-2007. In contrast, the export share of RPO products increased and its competitiveness level moved to a better position from Falling Star to Rising Star. Although shifting the export value of both CPO and RPO, as one of the objectives of the implementation of the export tax, was achieved, this study is highlighting essential commentary in which policymaker still needs to search for new export markets while maintaining export shares in the main export destinations.