EXPORT PERFORMANCE OF INDONESIAN MANUFACTURED GOODS IN AUSTRALIA

58 Export Performance o f Indonesian Manufactured Goods in Australia EXPORT PERFORMANCE OF INDONESIAN

M A N U F A C T U R E D G O O D S IN A U S T R A L I A ^

Muhammad Akhyar Adnan

Lecturer, Faculty of Economics Islamic University of Indonesia, Yogyakarta.

A bstract

h e e x p o r t s o f I n d o n e s ia n m a n u f a c t u r e d p r o d u c t s to

T s t u d y is t o i n v e s t i g a t e t h e f a c t o r s b e h in d t h e p o o r e x p o r t

A u s t r a l ia a r e p e r f o r m i n g p o o r ly , e v e n i f c o m p a r e d to t h o s e o f M a l a y s i a a n d T h a il a n d . T h e o b j e c t iv e s o f t h is

p e r f o r m a n c e o f I n d o n e s i a n m a n u f a c t u r e d p r o d u c t s in

A u s t r a l ia .

T w o t y p e s o f r e s e a r c h t e c h n i q u e s w e r e c o n d u c t e d . F ir s t ly a li t e r a t u r e r e v ie w , w h i c h in c l u d e s t h e s t u d y o f t h e t h e o r e t i c a l

f r a m e w o r k o f i n t e r n a t i o n a l t r a d e , p r e v i o u s r e la t e d r e s e a r c h r e s u lt s a n d c o l le c t i n g s e c o n d a r y d a t a fr o m v a r i o u s s o u r c e s . T h e s e t e c h n i q u e s w e r e u s e d to i n v e s t i g a t e t h e c a u s a l f a c t o r s fr o m a m a c r o o r g e n e r a l p o in t o f v ie w . S e c o n d ly , m a il s u r v e y . T w o t y p e s o f q u e s t i o n n a i r e w e r e d e s ig n e d , o n e w a s f o r w a r d e d to s e v e n t y e i g h t A u s t r a l ia n im p o r t e r s , a n d t h e o t h e r w a s s e n t

to s e v e n t y e i g h t I n d o n e s ia n e x p o r t e r s . T h e s e w e r e a im e d a t

i n v e s t i g a t i n g t h e f a c t o r s b e h in d t h e p r o b le m s fr o m a m ic r o o r s p e c if i c p o in t o f v ie w . I n a d d i t i o n , t w o i n t e r v i e w s w e r e

c o n d u c t e d , fir s t w it h t h e I n d o n e s ia n C o m m e r c ia l A t t a c h e 4 in Canberra, and second with the Director of Indonesian

C o m m e r c ia l O f f i c e in S y d n e y .

D e s c r i p t i v e a n d q u a l i t a t i v e a n a ly s is w a s a p p lie d t o m a j o r parts of the data obtained, with statistical manipulations

a p p lie d to t h e r e m a in d e r . T - s t a t i s t i c o r s t u d e n t t e s t a s w e ll a s

a n a ly s is o f v a r ia n c e ( A N O V A ) , F - t e s t a n d o r t h o g o n a l c o n t r a s t

t e s t w e r e a p p lie d to t e s t t h e s ig n if ic a n c e s .

T h e i n f o r m a t io n c o lle c t e d i n d ic a t e s t h a t m a c r o a s p e c t s , s u c h

a s c o m m u n i c a t i o n p r o b le m s , I n d o n e s ia n b a n k i n g p r a c t ic e s , lack of information and shipment seem to play a more s i g n i f i c a n t r o le in t h e p o o r e x p o r t p e r f o r m a n c e o f I n d o n e s ia n m a n u f a c t u r e d p r o d u c t s t o A u s t r a l i a t h a n d id t h e m ic r o o r

s p e c if i c a s p e c t s lik e t h e p r ic e a n d t h e q u a lit y o f p r o d u c t s .

Keywords: Export; Indonesia; Manufactured Goods; Australia.

C)This article is b ase d on the research o f an MBA thesis (1 9 9 0 -1 9 9 1 ) at The University o f Wollongong, Australia.

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Introduction

Australia is one of the closest and most promising markets for Indone­ s i a n e x p o r t p r o d u c t s . G e o g r a p h i c a l l y , it i s l o c a t e d n e x t t o t h e I n d o n e s i a n a r c h i ­ pelago, giving Indonesia basically a comparative advantage, such as in ship­ ping cost factors and thus price, compared to many other competitor countries.

Economically, Australian people have high purchasing power, as indicated by the high GNP per capita. For example, in 1987 the Australian GNP per capita of was US $11,100, compared to Indonesian GNP per capita of only US $450.

(World Bank Report, 1989, pp. 164-5). But ironically, the total value of Indo­ nesian export to Australia grows slowly, and it is much slower compared to the growth in the value of Malaysia and Thai exports, or even the Australian ex­ ports to Indonesia itself. This fact can be seen clearly from Table 1 and Table 2.

Table 1 indicates that the total value of Indonesian exports to Australia (at both the actual and constant price values) in 1988-1989 is lower than Malay­

sia and Thailand, although 10 years ago, the total value of Indonesian export was much higher than them. This also means that the growth rate of the total value of Indonesian exports is lower than Malaysian and Thai growth rates. The total value of Indonesian exports declined (in comparison to Malaysia and Thai­ land) by 15.44% during the past decade,

or minus 1.54% annually, whereas the total value of Malaysian and Thai exports grew 80.42% and 283.45% re­ spectively, or 8.04% and 28.35% annually. Hence, in ten years, both Malaysia and Thailand have successfully overtaken Indonesia in the growth of exports to Australia.

V o l l , N o .1 , D e c .1 9 9 3 “ T h e I n d o n e s i a n R e s e a r c h S o c ie t y

60 Export Performance o f Indonesian Manufactured Goods in A ustralia

T a b l e 1:

T h e E xp ort V a lu e o f In d o n e sia,M alaysia and T h ailan d to A ustralia

D u rin g 1 9 7 9 - 1 9 8 0 to 1 9 8 8 - 1 9 8 9 in T h ou san d A u d. In A c tu al and C o n stan t P rice ( 1 9 8 0 - 1 9 8 1 = 1 0 0 .0 )

A C T U A L P R IC E C O N S T A N T P R IC E

P e r io d e INDONESIA MALAYSIA

MALAYSIA THAILAND

S ou rc es : - A u stralian B u r eau o f S tatistics,F oreign Trade - A u stralia B u re au o f S tatitics, Y ear B o o k A u stralia, 1 9 90 . - C alcu la tion (actual p rice tim es C o n su m er P rice In d ex or C P I) d o n e by author.

BBS Moloysia

■ 18335338 T h a i l a n d

F i g u r e 1: T h e G r o w t h o f T o t a l V a l u e o f t h e I n d o n e s i a n , M a l a y s i a n a n d T h a i exports to Australia during 1979-80 - 1988-89 at constant price 1980-81= 100.

Source: Australian Bureau of Statistics, Foreign Trade, 1988-89.

The Indonesian Journal o f Accounting and Business Society 61

T a b le 2 :

Export and Import Values of Australia to Indonesia, Malaysia and Thailand dur­ ing 1986-87 to 1988-89 (at actual price) in million Australian dollar.

748,3 Import from Indonesia

Export to Indonesia

Export to Malaysia

742,4 Import from Malaysia

Export to Thailand

474,8 Import from Thailand

420,0 Source: Australian Bureau of Statistics, Foreign Trade Australia, 1988-1989.

The data in Table 2 also shows that the bilateral balance of trade be­ tween Australia and Malaysia and Thailand is better than that between Austra­ lia and Indonesia. As seen from the data the value of exports and imports be­ tween Australia and both Malaysia and Thailand is relatively balanced com­ pared to Indonesia. The exports and imports value of Malaysia and Thailand have grown similarly, while the Indonesian values have declined.'

Questions need to be addressed to the performance of Indonesian ex­ ports, especially exports to Australia. Why is Indonesian export performance worse than those of Malaysia and Thailand ?; Why did the value of Indonesian exports to Australia decline ?; What are the factors behind it ?.

S c o p e L i m i t a t io n

The data shown above comprise the total value of exports including all the commodities which were exported from Indonesia, Malaysia and Thailand to Australia. A problem of poor performance of Indonesian exports can be per­ ceived from these total values. However, this study will not

investigate the determinant factors for all export commodities, simply because each commod­ ity has it’s own characteristics, and investigation of a large number of charac­

teristics can not be covered by this short study. This study therefore will be limited to an investigation of the performance of the export values of manufac­

tured goods only.

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62 Export Performance o f Indonesian Manufactured Goods in Australia

Export of Indonesian Manufactured Goods

Table 1 above can be broken down into tables 3, 3 (a), 4, 4 (a), 5 and

5 ( a ) . T h e s e a r e e x h i b i t e d r e s p e c t i v e l y in t h e f o l l o w i n g p a g e s .

Tables 3 to 5(a) show in the same way as Table 1 and 2, that the value of Indonesian exports of manufactured products are still below both the Malay­ sian and and Thai values. In 1988-1989 for example, the total value of Indone­

sian manufactured exports to Australia (totalled from the Standard International Trade Classification or SITC number 5, 6, 7 and 8)

was $69,851 whilst the value for the same category items of Malaysia and Thailand were $133,593 and $140,731 respectively [at constant price (1980-1981 )=100].

This comparison can be seen in the following figure.

T ab le 3:

In d on esia E xp ort V alu e T o A u stralia and C o m su m er P rice In d e x ( 1 9 8 1 - 1 9 8 2 = 1 0 0 .0 ) ( ‘0 0 0 A u d .)

201 1 7 4 .5 0 329 1 8 7 ,3 0 2 C ru d e M a terial ( e x c .f u e

7 ,8 9 8 1 7 4 .5 0 2 4 ,9 5 6 1 8 7 ,3 0 3 M in er al F u e ls , lu b rican

1 6 2 .6 0 4 2 2 ,3 7 4 1 7 4 .5 0 2 0 7 ,0 4 5 1 8 7 ,3 0 related m a te r ia ls 4 A n im a l, v e g e ta b le oils ,

660 1 7 4 .5 0 5 ,2 2 0 1 8 7 ,3 0 fa ts an d w a x e s 5 C h em ic al an d related

8 .6 9 3 1 7 4 .5 0 9 ,5 0 8 1 8 7 ,3 0 p r od u cts, N E S . 6 M a n u fac tu r ed g o o d s cla s

6 9 .3 1 2 1 7 4 .5 0 9 1 ,9 2 4 1 8 7 ,3 0 fle d c h ie fly b y m aterial. 7 M a ch in er y an d tran sp ort

1 2 ,9 8 0 1 7 4 .5 0 2 3 ,4 8 7 1 8 7 ,3 0 articles. 9 C o m m o d itie s & tran sacti

2 2 ,3 4 4 1 7 4 .5 0 1 2 ,6 3 9 1 8 7 ,3 0 n ot c la s s ifie d els e w h e r e in th e S IT C

T otal

S o u rc es : - A B S , F o reign T r a d e A u stralia - A B S , Y ea r B o o k au stralia 19.90 (C u n s u m e r P rice In d ex )

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T a b le 3a: In d o n e sian E x p ort V a lu e to A ustralia

D u rin g 1 9 8 4 -8 5 to 1 9 8 8 - 8 9 at C on stan t P rice ( 1 9 8 0 - 8 1 = 1 0 0 .0 )

in T h o u sa n d A u stralian d ollars.

176 7 0 .9 2 % 2 C ru d e M aterial ( e x c .f u e l)

1 3 ,3 2 4 7 8 .5 2 % 3 M in eral F u e ls , lub ricant &

1 1 0 ,5 4 2 -4 4 .5 2 % related m aterials 4 A n im a l, v e g e ta b le o ils ,

2 ,7 8 7 2 5 2 .0 9 % fats and w a x e s 5 C h em ic al an d related

5 ,0 7 6 3 6 3 .3 9 % p r od u cts, N E S . 6 M an u fac tu red g o o d s c la s s i­

4 9 .0 7 8 3 0 0 .2 8 % fied c h ie fly b y m aterial. 7 M ac h in ery an d transport

3 ,1 5 6 3 3 0 .4 1 % eq u ip m en t. 8 M is c e lla n e o u s M an u factu red

1 2 ,5 4 0 1 72 .1 8% artic le s. 9 C o m m o d itie s & transaction

n ot cla ssified e ls e w h e r e in

1 1 0 ,5 4 2 -4 4 .5 2 % - M an u factu red ( 5 ,6 ,7 ,8 )

S o u r c e s: - A B S , F ore ign T rade A ustralia - A B S , Y ear B o o k A ustralia 1 9 9 0 (C o n su m e r P rice In d ex ) - G row th calcu la tion is d on e by au th or

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64 Export Performance o f Indonesian Manufactured Goods in Australia

T a b le 4:

M a la y s ia n E xp ort V a lu e to A u stralia an d C on su m er P rice In d ex ( 1 9 8 1 - 1 9 8 2 = 1 0 0 .0 ) (000) Aud

93 1 7 4 .5 0 135 1 8 7 .3 0 2 C ru d e M aterial (e x c .f iie

1 3 9 .4 1 2 1 7 4 .5 0 1 9 0 .2 8 3 1 8 7 .3 0 3 M in eral F u e ls, lu b rican

1 4 5 ,0 6 3 1 7 4 .5 0 1 4 2 ,9 0 3 1 8 7 .3 0 related m a ter ials 4 A n im a l, v e g e ta b le o ils ,

4 2 .8 3 3 1 7 4 .5 0 4 4 ,0 2 8 1 8 7 .3 0 fats an d w a x e s 5 C h em ic a l an d related

9 1 .5 2 5 1 7 4 .5 0 1 1 3 ,8 7 4 1 8 7 .3 0 fie d c h ie fly b y m aterial. 7 M a ch in er y an d tran sp ort

3 1 ,4 4 0 1 7 4 .5 0 3 8 ,8 4 4 1 8 7 .3 0 articles. 9 C o m m o d itie s & tran sacti

2 1 .5 0 3 1 7 4 .5 0 8 ,8 4 6 1 8 7 .3 0 n ot c la s s ifie d e ls ew h er e in th e S IT C

T otal

S o u rc es : - A B S , F or eign T r ad e A u stralia - A B S , Y e ar B o o k A u stralia 1 9 9 0 (C o n su m er P rice In d e x)

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T a b le 4 a :

M alay sian E xp ort V alu e to A ustralia

D u r in g 1 9 8 4 -8 5 to 1 9 8 8 -8 9 at C on stan t P rice ( 1 9 8 0 - 8 1 = 1 0 0 .0 )

In T h o u sa n d A u stralian dollars

9 5 24 53 72 7 0 0 .0 0 % 2 C ru de M aterial (e x c .f u e l)

1 0 1 ,5 9 3 4 3 .6 3 % 3 M in eral F u els, lubricant &

7 6 ,2 9 6 3 4 9 .0 9 % related m aterials 4 A n im a l, v e g e ta b le o ils,

2 3 .5 0 7 -2 6 .5 1 % fats and w a x e s 5 C h e m ic al and related

1 4 .4 1 6 3 4 5 .6 3 % p rodu cts, N E S . 6 M an u fac tu r ed g o o d s c la s si­

6 0 .7 9 8 3 6 .8 8 % fied c h ie fly by m aterial. 7 M a ch in e ry and transport

3 8 .0 0 1 1 70.89 % eq u ip m en t. 8 M is c e lla n e o u s M a n u fa c ­

2 0 .7 3 9 4 6 .7 9 % tured articles. 9 C o m m o d itie s & tran saction

not cla ssified e ls e w h e r e in

th e SIT C Total

Summary - A g ricu ltu re ( 0 .1 ,2 ,4 )

15 1 .8 9 3 12.31% - F u els (3 )

7 6 .2 9 6 3 4 9 .0 9 ° b - M an u factu red ( 5 .6 .7 ,8 )

S o u rc es : -A B S , F ore ign T rad e A ustralia

-A B S , Y ear B o o k A ustralia 1 9 9 0 (C o n su m er P rice In d ex)

-G row th calcu la tion is d on e by author.

66 Export Performance o f Indonesian Manufactured Goods in Australia

T a b le 5:

1987-88 C .P .I . 1 9 8 8 - 8 9 C .P .I.

2 ,6 0 9 1 7 4 .5 0 3 ,4 1 2 1 8 7 .3 0 2 C ru d e M aterial ( e x c .f u e l)

1 0 ,9 4 2 1 7 4 .5 0 1 2 ,3 8 7 1 8 7 .3 0 3 M in eral F u e ls , lu b rican t

383 1 7 4 .5 0 504 1 8 7 .3 0 related m a ter ials 4 A n im a l, v e g e ta b le o ils ,

770 1 7 4 .5 0 1 ,0 25 1 8 7 .3 0 fa ts an d w a x e s 5 C h em ica l an d related

1 0 8 .1 9 5 1 7 4 .5 0 1 2 4 ,5 1 8 1 8 7 .3 0 fie d c h ie fly b y m aterial. 7 M ac h in er y an d tran sp ort

6 1 ,3 4 4 1 7 4 .5 0 9 9 ,4 7 4 1 8 7 .3 0 tu r ed articles. 9 C o m m o d itie s & tran sac tion

4 ,9 4 2 1 7 4 .5 0 5 ,8 1 3 1 8 7 .3 0 n ot c la s s ifie d els e w h e r e in th e S IT C

S ou rces: - A B S , F o r e ig n T rad e A u str a lia - A B S , Y e a r B o o k A u str a lia 1 9 8 8 ,1 9 8 9 ,1 9 9 0 (Im p ort In d e x P ric e )

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T a b le 5 a :

T h a ila n d E x p o r t V a lu e to A u str alia

D u r in g 1 9 8 4 -8 5 to 1 9 8 8 -8 9 at C o n s ta n t P r ic e ( 1 9 8 0 - 8 1 = 1 0 0 .0 )

in T h o u sa n d A u str alia n d ollar s

1 ,8 2 2 13 1.6 3% 2 C ru de M aterial ( e x c .f u e l)

6 ,6 1 3 5 0 .8 5 % 3 M in eral F u e ls , lubricant &

269 u n lim ited related m aterials 4 A n im a l, v e g e ta b le o ils,

547 - 2 .6 2 % fats and w a x e s 5 C h em ic al an d related

6 ,9 7 4 1 5 1.6 6% p rod u cts, N E S . 6 M a n u fac tu red g o o d s c la s si­

6 6 ,4 8 1 8 8 .5 3 % fied c h ie fly by m aterial. 7 M ac h in e ry and transport

5 3 ,1 0 9 2 2 9 .6 5 % tured articles. 9 C o m m o d itie s & tran saction

n ot c la s sifie d e ls e w h e r e in

Summary - A gr icu ltu re ( 0 ,1 ,2 ,4

269 u n lim ited - M an u factu red ( 5 ,6 ,7 ,8 )

S o u rc es : - A B S , F oreign T rade A ustralia - A B S , Y ear B o o k A u stralia 1 9 8 8 ,1 9 8 9 ,1 9 9 0 (Im port P rice In d ex) - G row th calcu latio n is d on e b y author.

Voll.Nal, Dcc.l993°Thr Indonetian Research Society

68 Export Performance o f Indonesian Manufactured Goods in Australia

Figure 2: The comparison of total export value of manufactured products from Indonesia, Malaysia and Thailand to Australian in 1988-1989 at constant price (1980-1981)= 100.

Figure 2 shows the comparisons for the year 1988-1989. The compari­ sons of export values of manufactured products of Indonesia, Malaysia and Thailand to Australia for the last five years period (1984-85-1988-89) are shown

in Figure 3.

$400000 -i

1984-851985*861986-871987-88 1988-89

Period

F i g u r e 3 : G r o w t h o f e x p o r t v a l u e o f I n d o n e s i a , M a l a y s i a n a n d T h a i l a n d ’s m a n u ­ factured product to Australia during 1984-85 - 1988-89 at constant price 1980­

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S i n c e xt h e 1 9 8 0 s , t h e I n d o n e s i a G o v e r n m e n t h a s b e e n e n c o u r a g i n g n o n ­ oil export, especially manufactured goods. The Indonesian Government effort to reorientate the export from oil to non-oil, has been assessed as successful by many parties (Hill, 1989, pp. 1-3) . This rapid growth can be depicted as follows:

Exports

Year

Figure 4: Composition of Indonesian Exports, 1970-88 (Adopted from Hill, 1989, p.8).

Note: Defined as follows: Agriculture - SITC 0,1,2 (excl. 27 & 28), 4; Fuels, Minerals & Metal - 27, 28, 3, 68; Manufacturing - SITC 5-8 (excl. 68).

Source: BPS, Ekspor [Exports], Jakarta, various issues.

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70 Export Performance o f Indonesian Manufactured Goods in Australia

Indonesia has-a rapid growth in export of manufactured commodities, but this growth has not penetrated the Australian market successfully. The above

data clearly indicate this fact..

The following questions should therefore be addressed to this phenom­ ena: Why is Indonesia export value of manufactured products to Australia much lower than her two closest neighbours?. Why is the Indonesian manufactured export to Australia performing poorly?. What are the key factor(s) behind this?. In the other words, the problem

can be stated as follows: What are the key

factors that induce the poor performance of Indonesian manufactured export to Australia?.

Research Objectives

The purpose of this study or research is to attempt to investigate broadly the factors which result in the poor performance of export manufactured goods of Indonesia to Australia. This included factors at both the macro level or gen­ eral aspects, and the micro level or specific aspects. Micro aspects include ev­ erything directly related to the products such as price, quality, delivery and pro­ motion, and macro aspects include all aspects which indirectly related to export activity such as bureaucracy, banking practices, telecommunication system and so on. The study was oriented to both these aspects, i.e. (1) what are the factors or determinants that influence the performance of Indonesian manufactured ex­

port to Australia at the macro level, and (2) what are the factors or determinants that influence the performance of Indonesian manufactured export to Australia at the micro level.

Research Methodology

To answer the problem addressed in this study, inductive method, as well as deductive method were applied. The following techniques of data col­ lecting are utilised.

o Literature Review.

This review was conducted for two things. Firstly, to objectively iden­ tify the probleiji that was observed or perceived. The basic idea of this study is

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only a rough observation of the availability of Indonesian manufactured prod­ ucts in some Australian markets. The low availability of Indonesian products indicated that they have not yet succeeded in penetrating Australian market as well as they have the European Economy Community (EEC), United States of America (U.S.A.) and others [Hill, 1989, pp. 29], When compared to Malaysia and Thailand, Indonesian exports to Australia are apparently lower. (Table 3 to

P r o b l e m i d e n t i f i c a t i o n is b a s e d o n d a t a g a t h e r e d f r o m s e v e r a l p u b l i c a ­ tion issued by Australian Bureau of Statistics, relating to Australian Imports and Exports with its trading partners

Secondly, to search theoretically the determinants which are probably involved or have significantly influenced the problem being researched. This search is done by reading some textbooks, journal articles, and previous related thesis and dissertations.

o Experience Survey.

In addition to library research, two interviews with competent persons in relation to the Indonesian export performance to Australia have been con­ ducted. They were first, the Indonesian Trade Attache in Canberra, A.C.T. and second, the Director of the Indonesian Commercial Office or ICO (formerly The Indonesian Trade Promotion Centre or ITPC) in Sydney, New South Wales.

o Sample Survey.

In order to investigate the problem empirically, a sample survey has been conducted as well. Mail survey was selected instead of telephone or personal interview, due to cost and time restraints. Mail survey in this case, is less ex­ pensive than both telephone or personnel interview, because the respondents are living in wide range of areas throughout Australia, and Indonesia

Two types of questionnaire were designed and respectively mailed to Australian importers as well as to Indonesian exporters.

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72 Export Performance o f Indonesian Manufactured Goods in A ustralia

P o p u l a t i o n a n d S a m p le

There is no accurate data available dealing with the fixed number of Aus­ tralian importers who import from Indonesia, and the Indonesian exporters who export to Australia (research population). However, there is a list of Australian companies which have contacted The Indonesia Commercial Office (ICO) in Sydney. This list consists of the companies which have imported from Indone­ sia, or they are interested in to do so. Among the companies listed, seventy eight were chosen to be the respondents, they represented the following category of

products: ■furnitures

■ foods ■ fabrics ■ cement

■ stationery

Of the Indonesian exporters, seventy eight were also chosen to be re­ spondents. Those respondents are located in three Provinces, namely: West Java, Special Territory of Yogyakarta, and Bali. The selection of those provinces was influenced by the fact that there are many exporters who exported to Australia (in comparison to others), or companies whose products could potentially be exported to Australia. The respondents represented the following category of products:

■ furnitures ■ foods ■ fabrics ■ stationery ■ handicraft

Survey Instruments

As stated earlier two kinds of questionnaire were designed and sent to respondents. One questionnaire was forwarded to Australian importers and the other sent to Indonesian exporters.

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D a t a A n a l y s is M e t h o d

Simple Univariate analysis has been conducted to the data collected. Data tabulation and statistical calculation was done using “Statwork” program of Macintosh Computer. Descriptive and qualitative analysis was done for major

parts of data obtained, but to some others statistical manipulation was also done. T-statistic or student test were applied to test statistical manipulation of ques­ tion number 3, and analysis of variance (ANOVA), F-Test and orthogonal test were applied to answers of questions number 5a,5b and 5c of questionnaire.

Research Findings

The conclusions of the study are summarised in the following section. In addition to these, the implication of the study, the limitations and further research suggestion are also discussed, they are written respectively after the conclusion section.

C o n c lu s io n

Because two points of view were used as a basis of analysis, the conclu­ sions drawn can also be grouped into two, i.e. conclusions relating to macro or general aspects, and conclusions relating to micro or specific aspects. These conclusions are as follows:

o Macro or General Aspects

From a macro or general aspects analysis, the factors that appear to im­ pact on Indonesian export performance are as follows:

1. Indonesian’s new or short experience in exporting manufactured products. Indonesia recently began to encourage the export of manufactured products in the mid 1980s, after the collapse of oil prices. Before the mid 1980s, the economy of Indonesia was heavily depended upon the export of gas and oil. This condition seems represents the role of government determinant as de­

scribed by Porter’s diamond [1990, pp. 125-128]

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74 Export Performance o f Indonesian Manufactured Goods in Australia

2. Poor Infrastructures. The Infrastructures that are needed to support export activities such as communication system (telephone, facsimiles, telex), clear and unambiguous regulations, simple bureaucracy, banking practices and so on, have not been arranged as well as they could be. Many examples can be seen illustrating this factor, including the delays in transfering of money, poor telephone connections, and so forth.

3. The readiness of Indonesian Exporters. Because of lack of experience, Indo­ nesian exporters are not yet be fully prepared to trade internationally. They seem not yet to be familiar with international trade habits and practices.

4. The information concerning Indonesia’s capability to be a competitive sup­ plier in manufactured products is not well recognised by many Australian importers. Ironically, the efforts to promote Indonesian products have not been effective, due to small funds provided by Indonesian Government.

5. Shipment costs seem to contribute significantly. Shipment cost from Indo­ nesia is around 30 - 40 % higher than that of Malaysia and Thailand. This cost will add to the other costs which eventually influence the final price. T h a t d e l i v e r y i s l a t e a n d o f t e n w r o n g d e l i v e r y is a n i m p o r t a n t f a c t o r t o b e n o t e d , a s it is c l e a r l y d e p i c t e d i n T a b l e 6 , w h e r e d e l i v e r y i s p l a c e d i n t h e first rank in the 'main problems’ when importing from Indonesia.

Table 6: The main problems in importing from Indonesia. Problems

Percentage Delivery(a)

37.93% Communication(b)

20.69% Bank/LC/Bureaucracy

(a) Including late, continuity and wrong delivery (b) Including the phone, fax and language problems

6. Overall, the determinants mentioned by Porter’s diamond, i.e. factor condi­ tions, demand conditions, supporting related industries, firm’s structure, strat­ egy and rivalry, and government role are less favourable in Indonesia, the one exception being physical resources.

The Indonesian Journal o f Accounting and Business Society

o Micro or Specific Aspects

Several specific factors related to international trade have been examined in relation to the export performance of Indonesia to Australia, they are: price, credit availability (representing ‘price’ factor in marketing mix) quality, pack­ aging, size and feature (representing ‘product’ factor in marketing mix), deliv­ ery (representing 'place or distribution’ factor in marketing mix) and reliability. Those factors are compared between Indonesian, Malaysian and Thai products. The results are as follows:

1. S t a t i s t i c a l l y t h e r e i s s i g n i f i c a n t d i f f e r e n c e b e t w e e n t h e m e a n o f p r i c e o f I n ­

d o n e s i a n p r o d u c t s a n d t h e m e a n o f p r i c e o f M a l a y s i a n p r o d u c t s , b u t t h e r e is no significant difference between the mean of price of Indonesian products and the mean of price of Thai products. However, this difference is not so

i m p o r t a n t , a t l e a s t i n t h e s h o r t t e r m . T h i s is b e c a u s e i m p o r t e r s o n t h e o t h e r side (see Table 6 which listed the main problems perceived by importers when importing from Indonesia) place the price factor at the lowest rank.

Price factor was given by only 3.45% of respondents, compared to delivery problems 37.93%, communication problems 20.69%, quality 20.69%, and

bank / LC / bureaucracy problem 17.24%. On the other side, while the re­ spondents (Australian importers) being asked the reasons why they imported from Indonesia, the responses also showed that price is qualitatively domi­ nant. In addition to these, both the Indonesian Commercial Attache and the Director of the Indonesian Commercial Office also stated that Indonesian products prices are generally still less expensive than those of Malaysia and Thailand. The only thing that may support the above statistical conclusion is that price is influenced by shipment cost as supported by the opinion of the Director of Indonesian Commercial Office in that Indonesian sea fleet cost is around 30 - 40 % higher than Malaysia.

2. The differences of mean in quality, packaging, size and feature, credit avail­ ability,

delivery and reliability factors between Indonesian, Malaysia and Thai products, are statistically not significant. However, attention to the qual­ ity, delivery and credit availability factor are still important, because many Australian respondents listed these factors as the main problems they are perceived.

76 Export Performance o f Indonesian Manufactured Goods in A ustralia

i.e. in terms of importance level, Australian importers assumed that price and quality of the product is the most important factor to be considered when importing

In addition, the other conclusion can be drawn from data analysis,

manufactured products from overseas.

Implications of the Study

General or macro aspects so far, seem to play a more important role rather than did specific or micro aspects of poor performance of exports of In­ donesia to Australia. Applying the determinants mentioned by Porter to the case of Indonesia, shows that almost all determinants are less favourable. In con­

trast, micro or specific aspects are basically not so bad, at least when compared to those of Malaysia and Thailand. It can be said that in terms of specific as­ pects Indonesian manufactured products are still relatively competitive and thus could penetrate the Australian market.

Based on the above, the improvement policies to support the competi­ tiveness of Indonesian manufactured products should be directed mainly to the general or macro aspects, of communication systems (telephone, facsimiles, telex), bureaucracy, banking practices and so on. However, improvements to every thing related to specific or micro aspects should always be kept going to sustain the competitiveness developed to date.

Limitations of the Study

This study uses several different ways to approach the problem and col­ lect the data, i.e. literature review, interview and mail survey by forwarding questionnaires to Australian importers which represent the buyers and Indone­ sian exporters which represent the seller.

Each technique utilised, however carries its own inherent limitations. Firstly, library research. After discussion of several theories developed by schol­ ars, the model which was recently developed by Porter in his latest research

was chosen to be applied to the case of Indonesia. This model however has been built on the study of several developed countries. The implication of Porter’s model has not been examined, whether for developed countries themselves or

The Indonesian Journal o f Accounting and Business Society 77

for developing countries. Furthermore, the data collected for the study of Indo­

nesia are from various sources. They range from different years before 1990, and are not aimed especially to the the topic discussed in this thesis.

Secondly, interview. Two interviews have been conducted with the In­ donesian Commercial Attache4 in Canberra and Head of Indonesian Commer­ cial Office in Sydney. These persons are the official representatives of the Gov­ ernment of Indonesia in relation with trading affair with Australia. However, an interview with any person does not always avoid bias and subjective opinions. This kind of limitation may also occur in this case.

Thirdly, mail survey utilising the questionnaire. This type of technique also contains the limitations such as, whether the sample chosen was represen­ tative of all the population, the incompleteness of response of respondents, and the possibility of different interpretation by each respondent to a particular ques­ tion of the questionnaire when answering. Furthermore, as it is reported in the previous chapter, that no response at all came from Indonesian Exporters which prevented

the researcher from being able to analysis the problem from the ‘seller’ point of view. Not much can be done to rectify these shortcomings, due the the cost and time restraints.

Further Research Suggestions

This is an investigation and exploratory study. Description approach has mainly marked the analysis used, and the scope of study, is still relatively broad.

Other techniques of research such as relationship and correlation study to macro as well as to micro aspects is suggested as further study of this topic, to ensure whether the factors or determinants found by this study are meaning­ ful or not.

A narrower scope, for example the study of specific industry, and more specifically, particular products exported by Indonesia to Australia is also sug­ gested. Different results, therefore, may be possible.

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78 Export Performance o f Indonesian Manufactured Goods in A ustralia

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