THE IMPACT OF ZERO IMPORT TARIFF POLICY AND AIR POLLUTION PREVENTION AND CONTROL ACTION PLAN ON INDONESIAN COAL EXPORT TO CHINA

Indonesia and China are the main actors of world coal trading. Indonesia is the largest coal exporter and the main supplier of Chinese coal needs, while China is the world's largest coal importer. The zero import tariff policy on coal commodities applied by China in January 2008, has an impact on increasing Indonesian coal exports to China. However, after China issued its policy of Air Pollution Prevention and Control Action Plan, Indonesian coal exports to China began to decline in 2014. The objective of this research is to study the influence of zero import tariff policy and Air Pollution Prevention and Control Action Plan to the Indonesian coal exports to China. The method used in this research is the multi-input intervention analysis. Data used are developed from BPS. The results show that the zero import tariff policy applied by China has significantly positive and permanent effect on Indonesian coal exports to China. Meanwhile, the policy of Air Pollution Prevention and Control Action Plan has significantly negative and permanent effect. Policy recommendation is the implementation of policy about minimum standards of coal quality that may be produced. Thus, Indonesian coal exports quality will able to adjust market demand specification from importing countries that implement policies about pollution control.