International Journal of Advance Agricultural Research
ISSN: 2053-1265
Vol. 5(4), pp. 61-65, August 2017



North Sumatra’s export performance and competitive advantages in the implementation of ASEAN Economic Community (AEC)

Jongkers Tampubolon*, Albina Ginting, Hotden L. Nainggolan and Johndikson Aritonang

Department of Agribusiness, Faculty of Agriculture, HKBP Nommensen University, Medan- Indonesia.

*To whom correspondence should be addressed. E-mail: jtampubolon@yahoo.com.

Received 27 June, 2017; Received in revised form 27 July, 2017; Accepted 31 July, 2017.

Abstract


Keywords:
Economic integration, Competitive advantage, ASEAN Economic Community, North Sumatra.


The effective implementation of ASEAN Economic Community (AEC) by the end of 2015 potentially led to a positive economic impact in the form of trade creation as well as negative impact in the form of trade diversion for its country members. North Sumatra as an entry point for Indonesia international trade experienced these impacts directly from economic integration. Hence, this study sought to analyze North Sumatra’s position in facing the implementation of AEC and to further propose export economic development strategies; in order to take maximum benefits of available opportunities. From the study, it was discovered that North Sumatra prevailed as a champ in the implementation of AEC due to its competitive advantage in exports market. Since the year 2000, Asia has become the main export destination with export’s share of up to 50% and has sustainably increased annually. In 2010, two third of export income originated from ASEAN countries especially Singapore. Export commodities are dominated by vegetable oil and vegetable fat as well as crude rubber. To maintain and promote North Sumatra’s competitive advantages, it is recommended that the smallholders plantation (especially palm oil) be empowered in order to increase production which is currently 16% compared to that of state plantation; and investment be stimulated in the processing industry with crude palm oil and crude rubber as the raw materials, so that the exported commodity is in the form of final goods that can be directly exported to the end-consumer country (so far the export is in raw material and semi-finished goods and is re-exported by Singapore). The export of final goods will increase diversification of destination country and bring added value to the local economy of North Sumatra.

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