The Effect of Vietnam Price Policy to Indonesian Import Dependency Ratio for Rice

Abstract

Purpose:

The objectives of this study are to analyse the effect of Vietnam's price policy to the Indonesian rice market and its’ impact to Indonesian Import Dependency Ratio.

Theoretical framework:

Price and quantity of Exporter Country will effecting the Importer's market performance, especially Import Dependency Ratio (IDR).  IDR is ratio between import and supply without stock, so higher value mean high. 

Design/Methodology/Approach:

We utilize secondary data from Food and Agriculture Organization, World Bank, United State Department of Agriculture, Indonesian Central Bureau of Statistics, Indonesian Ministry of Agriculture, and the Ministry of Finance. We analyse the data using simultaneous equation econometric model.

Findings:

This study reveal that the impact on the global market will increase when Vietnam's price declines more. The expansion and irrigation strategy can reduce the value of Indonesian Import Dependency Ratio.

Research, Practical & Social implications:

The Indonesian government can focus on policies in terms of land development and irrigation to increase domestic rice production, so that the impact of IDR can be minimized.

Implications/Originality/Value:

This study finds that the rice market in Indonesia is strongly influenced by the value of Vietnam's exports.