The Economic Performance of Indonesian Rice in the Integration of the ASEAN Economic Community (MEA) Free Market

摘要

Indonesia, a member of the ASEAN Economic Community (MEA) group, is now facing challenges, although it has been widely known as a specialist in the trade of natural resource-based products. In the integration of AFTA, Indonesia is one of the best-prepared countries, together with Malaysia, Thailand, and Singapore. Theoretically, free trade not only gives benefits to traders but also affect the domestic market. Indonesian dependence on rice is relatively higher compared to Malaysia and Thailand and even exceeds FAO standards. Another challenge faced by Indonesia is the increase in the population. MEA designs a concept of making ASEAN a single production and single market base, but how does MEA influence the production of Indonesian rice? This current study aims to analyze the economic performance of rice in Indonesia, including the productivity level and demand for Indonesian rice. It also aims to test the hypothesis that improving the economic performance of rice can be done by increasing production and productivity. The research method uses the Econometric Model of rice commodities in 18 equations, consisting of 12 structural equations and 6 identity equations. Based on the analysis using the Simulation Model method on improving rice performance in Indonesia, it was found that there was a decline in Indonesian rice production, and fertilizer prices and corn prices had a significant effect on land use variables.