The Analysis of Export Determinant of Indonesian Pepper in the International Market

Indonesian pepper is well known as the king of spices because its position is more important than other spices in Indonesia, in terms of production and export. Indonesia become the second largest of pepper exporter in international market. The largest producer and exporter of pepper is Vietnam. But, in 2015, about 39 % of Indonesian pepper were exported to Vietnam whereas Vietnam already known as the largest exporter in the world. Therefore, the main objective of this study is to determine factors that may affect the trade flow of Indonesian pepper in the international market, in order to know the appropriate strategy to develop export of Indonesian pepper in the international market. This study uses export demand approach to analyze the determinant of Indonesian pepper trade flow. The objects of this study are whole pepper and ground pepper using the 6-digit classification of harmonized system (HS) code, with code 090411 for whole pepper and 090412 for ground pepper. The result shows factors that statistically significant in affecting export demand of Indonesian pepper are the GDP per capita of importing countries, economic distance, export price, real exchange rate, and participation in FTA. GDP per capita of the importing countries shows positive effect to the export volume of Indonesian pepper. Meanwhile, the economic distance, export price, real exchange rate, and participation in FTA have a negative effect to the export volume of Indonesian pepper.