Of the total imports, palm oil imports accounted for 72.35 percent in 2004, 61 percent in 2005 and 62 percent in 2006. Soybean oil was reported to be on the
increase with time as an import product in India alongside palm oil. During the same period, import of soybean oil increased from 1.1 million in 2004 to 1.9
million in 2005. The import of Soybean then reduced in the year 2006 to 1.6 million tons. It was revealed from the study that palm oil imports contributed to
72.35 percent of vegetable oil imports in the year 2004. There was reduction in import of CPO in the next period where only 61 percent of total vegetable oil was
imported as palm oil in 2005 while in the year 2006, only 62.41 percent accounted for palm oil imports. It was also found out that soybean accounted for 23.59
percent, 35.43 percent and 31.73 percent of the total Indian vegetable oil imports in the year 2004, 2005 and 2006 respectively. The other vegetable oils imported
into India market accounted for about 5 percent average on the entire period.
6.2 Competitiveness of Indonesian Crude Palm Oil in world Market
It was discovered during the study that Indonesia is highly competitive in India CPO export market than any other country. This shows that it recorded
competitiveness index value of greater than one. In the year 2005, Indonesia had competitiveness index of 1.1 as compared to that of Malaysia of 0.73. In the year
2006, export competitiveness of Indonesia reduced to 1.03 while that of Malaysia increased to 0.81 as represented in Table 21. It was also realized that Thailand had
recorded an increase in its CPO export market share in India from 0.41 in 2005 to 0.65 in 2006.
With respect to the China CPO export market, Indonesia is still competitive as its market share continued to increase. Its export competitiveness
index increased from 1.07 in 2005 to 1.11 in 2006 as shown in Table 20. That showed an upward rise in its export market share in the export of CPO to the
China oil market. During the same period, Malaysia only registered a rise in its CPO export market share in China market with export competitiveness index of
1.00 in 2005. This value reduced in the following year to 0.94, therefore indicating a decline in export market share of Malaysian CPO in the Chinese
market.
Table 20. Competitiveness Index in China and India Markets Year 2005-2006 India
China Country
2005 2006 2005 2006
Indonesia 1.10 1.03 1.07 1.11
Malaysia 0.73
0.81 1.00 0.94 Thailand
0.41 0.65 0.42 0.68
The study further revealed that both Indonesia and Malaysia registered RCAI values of greater than one in the two markets considered. From Table 21, it
was found that in the India export market, Indonesia had RCAI values of 1.33 in 2004, 1.55 in 2005 and 1.52 in 2006. Malaysia also recorded higher RCAI values
in the same period from 1.34 in 2004, 1.58 in 2005 and 1.53 in 2006.
Table 21. Revealed Comparative Advantage Index Year 2004-2006 India
China Country 2004
2005 2006
2004 2005
2006
Indonesia 1.33 1.55
1.52 1.53 1.52
1.45 Malaysia 1.34
1.58 1.53
1.76 1.80 1.69
Thailand 0.97 1.03
1.16 0.16
0.17 0.77
However, the China CPO export market had Malaysia with higher RCAI values witnessed than Indonesia. In this market, Malaysia had RCAI of 1.76 in
2004, 1.80 in 2005 and 1.69 in 2006. Indonesia also recorded RCAI values of
1.53, 1.52 and 1.45 in that order. Thailand on the other reported an increase in its RCAI value to 1.03 in 2005 from the previous 0.97 in 2004 especially in India.
However, in 2006, Thailand RCAI increased drastically to 1.16 It has been observed that Indonesia has registered a higher value of
competitiveness index than Malaysia for the period that the study was carried out. This can be an indicator that Indonesia has an advantage on national endowments
than Malaysia. This is because Indonesia has enjoyed a cheaper labor input in CPO industry than Malaysia. At the same time, there has been an intensive use of
cheaper materials and inputs in the CPO industry that makes production cheaper. Malaysia on the other hand has recorded a higher revealed advantage index over
the years than Indonesia. This has been brought about by the fact that Malaysian CPO production industry is more efficient than that of Indonesia. Therefore,
Indonesia must invest heavily so as to maximize its production in a most efficient way so as to compete in the international market efficiently with Malaysia.
6.3 Revealed Comparative Advantage of Indonesian Crude Palm Oil
