Unleashing the efficiency and potential of Indonesian fishery exports to the European Union market
2024
Khaliqi Muhammad | Novianti Tanti | Purnomo Wibowo Rulianda
The free trade agreement (FTA) between Indonesia and the EU is anticipated to boost Indonesia's economic growth, particularly in trade. However, from 2020 to 2022, EU countries issued 38 notifications concerning Indonesian exports, primarily related to sanitary and phytosanitary measures, which are nontariff barriers in free trade. Indonesia has not benefited from the positive trend in EU fishery commodity imports. This study addresses the research gap on the efficiency and export potential of Indonesian fishery products in the EU market. It aims to assess factors influencing trade flow, export efficiency, and export potential of Indonesian fisheries to the EU using the stochastic frontier gravity model (SFGM). The SFGM in the gravity model determines the maximum potential trade level achievable in bilateral trade. This research utilized panel data on Indonesian fishery exports to the EU-27 countries from 2003 to 2021 (19 years). This study analyzed the HS 03 products-fish, crustaceans, mollusks, and other aquatic invertebrates-exported from Indonesia to 25 EU countries. The results indicated that the GDP of both exporting and importing countries, competitiveness and the exchange rate of the rupiah against the US dollar positively impacted fishery exports to the EU. Conversely, distance, represented by trade costs, negatively impacted Indonesia's fishery exports in the EU. The findings showed Indonesia did not have a 100% efficiency value. The highest market potential for Indonesia in the EU was in exporting fishery products to France, Italy, Germany, Austria, and Spain.
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