Author : Syaiful Hadi

Summary : Since 1970s, MAlaysia has strengthened its position as the primary producer and exporter of world palm oil. However, during the 1975 - 2001 period, the rates of Malaysia's oil palm estate growth, and palm oil production and exports were lower than those of Indonesia. However, the Indonesian palm oil industry has always been overshadowed by Malaysia's, which is the main producer and exporter of world palm oil. the objectives of this study are to calculate the production cost, to measure the production efficiency and productivity in producing fresh fruit bunches (FFB) and crude palm oil (CPO), to examine the export competitiveness of Indonesia's palm oil industry. Production costs are analyzed in tabular descriptive manner. Efficiency of production, on the other hand, is analyzed using Banker -Charnes-Cooper (BCC) model, whilst productivity is analyzed using general malmquist productivity index(GMPI) and export competitiveness is analyzed using revealed comparative advantage (RCA). In general, there was competitiveness in the Indonesian palm oil industry. In fact, for some parameters, Indonesia's competitiveness was higher than those of Malaysia. Indonesia's FFB yield, oil extraction rate (OER) and CPO yield were higher with lower production cost of FFB and CPO than those of Malaysia. These conditions were supported by the increasing trend of export performance ratio (EPR) and net export/total trade ratio (NE/TT). However, the Indonesia's palm oil industry was still inefficient in using production input, and productivity of palm oil estates suffered a fluctuating decreasing trend.