An Anal alys ysis is on on En Enhan hancing cing In Indo donesian nesian Ex Expo ports ts to to Can Canad ada Naufa fa Muna and Miftah tah Farid rid Internship : October 16 – December 11, 2015 The Conference Board of Canada - Ottawa, ON
Objective and background Objective : to identify commodities that are produced in Indonesia that would have a high probability to successfully export to Canada . The research also pays provides a case study on the application of environmental and gender equality concerns associated with garment exports. Background Canada is potentially a large market for Indonesia given the size of Canada's economy and the presence of Canada on • the Pacific Rim. Indonesian exports to Canada are below those of its neighbouring countries, Thailand, Viet Nam and Malaysia. • If we compare Canada and the USA, where the distance between Indonesia and these two countries is similar and • customer preferences are virtually identical, the Indonesian export to the U.S. as a share of U.S. GDP is 20 per cent higher than the same figure for Canada. This suggests that Indonesia has room to grow in the Canadian market.
Methodology 1. Identifying Targeted Commodities for exporting to Canada (detail in the next slides) 2. Identifying competitor countries The trade data will be examined to determine which countries managed to steal market share away from • Indonesia for certain commodity groups. Effort will be made to see if there were any major changes to tariffs that might explain this shift in • market share. 3. Canadian market trends: GDP , retail sales and consumption Analysis of past and future market trends for the various commodity groups. 4. Gender and environmental case study A “broad brush” analysis based on literature review. • For the environmental analysis three variables are considered: the environmental impact from 1) production, 2) • processing and 3) end use. For the gender analysis, the variables to be considered are potential to benefit, presence of an export market access • mechanism for women, and the presence of social responsibility.
Methodology: Identifying T argeted Commodities for exporting to Canada Targeted commodities for enhancing Indonesia's exports to the Canadian market are defined as commodities that: (i) have been successful in both the world market and the Canadian market; or (ii) have been successful in the world market, but are considered to be a “missed opportunity “in the Canadian Market.
Methodology: Identifying T argeted Commodities for exporting to Canada Success in the List A world market Trend in the World Import Share for commodity j (List A)? Negative Positive Trend of Canadian Import Share from the World Ignored Ignored Negative for commodity j (not successful in world (not successful in world market) market) Negative Positive Ignored --when the trend Negative Ignored LIST C increase in the world import share from Indonesia for commodity j is less than the LIST C --when the trend Trend in the Missed-opp in trend increase in the world increase in Canada ’s import World Import import share for commodity j Canadian share from Indonesia for ... and the value of both market commodity j is less than the Share from Trend of Canadian world imports from LIST A -- when the trend (List C) trend increase in the Indonesia for Indonesia of commodity increase in the world import Import Share from Canadian import share from Positive j and total world share from Indonesia for Commodity j the world for commodity j commodity j is more than the Indonesia for imports of commodity j Positive LIST B trend increase in the world increase generates LIST B --when the trend Commodity j import share for commodity j LIST A and the value of both increase in Canada ’s import Success in world imports from share from Indonesia for Canadian Indonesia of commodity j commodity j is more than market and total world imports of the trend increase in (List B) commodity j increase Canada ’s import share for commodity j from the world
Data and sources The quantitative data for the analysis comes from the following sources: No Data Source 1 World imports from Indonesia, 6-digit HS Code level, 2003 – 2013 COMTRADE 2 Canadian imports from Indonesia, 6-digit HS Code level, 2003 – 2013 COMTRADE 3 Canadian imports from each partner country, 6-digit HS Code level, 2003 – 2013 COMTRADE 4 Tariffs issued by Canada for each partner country, 6-digit HS Code level, 20011 – 2013 WITS 7 Consumption historical trends and forecast StatCan and CBoC 8 Retail sales historical trends StatCan and CBoC The qualitative data comes from many literatures
T arge geted ed Commo modity dity for Exp xporting ting to Cana nada da
Successful Commodities in the Wor orld ld Mar arke ket • From 2003 - 2013, Indonesia Trend of World Import Share for commodity j exported to the world around 5018 Negative Positive commodities (at the 6-digit HS code level). Negative Ignored: 3572 Trend of World • 28.9 percent (1446 commodities) of Import Share them have been successful in world from Indonesia markets (List A). Positive for Commodity j Success (LIST A): 1446
In world markets, Indonesian exports of those commodities in List A increased rapidly List A Export Index (2003=1) The total value of exports of those commodities in List A increased from around US$ 20 billion in 2003 to US$ 120 billion in 2013.
Most of the commodities in List A are classified as either Lo Low T ec ech or or Un Unas assigned signed co commo modities dities Technology Classification of Indonesian Commodities that are Successful in Exporting to World Markets The technology structure of Indonesian exports changed little over the 2003 – 2013 time period.
Successful or Missed Opportunity Commodities in the Canadian Market Based on List A 33.9 per cent of the commodities in List A are either Trend of Canadian Import Share from the World successful or missed opportunities in the Canadian for commodity j Market: Negative Positive • 31.1 percent for successful (List B) • 2.8 percent for missed-opportunity (List C) Trend of Negative Ignored: the rest Missed-Opportunity Canadian (LIST C): 41 Import Share 1446 (LIST A) from Indonesia Positive for Commodity j Success (LIST B): 450
Successful commodity in Canadian Market Export Value of Indonesian Commodities that are Successful in the Canadian Market (List B) In terms of value, successful commodities exported to the Canadian Market (List B) grew from US$ 44.7 million in 2003 to US$ 473.9 million in 2013, an increase of 960 per cent. While, Canadian imports of the commodities in List B from the world grew by 116 percent from 2003 to 2013.
Missed-opportunity commodity in Canadian Market Export Value of Indonesian Commodities that are Missed opportunity in the Canadian Market (List C) The growth in the Indonesian missed- opportunity commodities (List C) is less than the growth of Canadian imports of the commodities in List C from the world (105 percent and 198 percent, respectively).
Refining and grouping of List B and C Refining of the commodities in List B and List C is obtained by excluding those commodities that had Canadian import value of less than US$ 1 million in 2013. List B: 450 64 commodities List C: 41 4 commodities Grouping according to production processes and Canadian retailing practices. The commodities quite diverse, ranging from primary products to high-end products, and from final goods to the input-goods.
Successful Commodities in The Canadian Market FINAL GOODS No Product Group No Product Group 1 Processed Fish 11 Footwear 2 Coffee 12 Wigs 3 Sugar 13 Precious Metal Jewelry 4 Cocoa Products 14 Electric Shavers 5 Rubber Tyres and Gaskets 15 Bicycles 6 Handbags 16 Electrical Musical Instruments 7 Paper Bags 17 Wind Musical Instruments 8 Carpets 18 Metal Furniture 9 Knitted or Crocheted Garments 19 Toys 10 Not knitted/ Crocheted Garments
Successful Commodities in The Canadian Market INPUT-GOODS AND OTHERS No Product Group No Product Group 1 Derivative Products from CPO 10 Valves 2 Chemical Products 11 Printing parts 3 Natural Rubber 12 Cash Registers 4 Metal Tubing 13 Lithium Batteries 5 Metal Tanks 14 High Tech Radar Apparatus 6 Copper 15 Electrical Apparatus 7 Aluminium 16 Aeronautical Navigation Equipment 8 Tin 17 Massage Equipment 9 Weighing Machinery 18 Optical Measuring Instruments
Missed Opportunity Commodities in The Canadian Market No Product Group 1 Cashew Nuts 2 Coconut oil and its derivatives 3 Swimwear 4 String Musical instruments
Indonesia’s competitors in Cana nadian dian market ket
Competitive Analysis The competitive analysis is limited to only those commodity groups defined as a “ missed opportunity” in the Canadian market since these commodities have lost market share to other countries. Only the top five exporting countries will be considered. Determining the countries that took market share away from Indonesia will help to focus the research into what needs to be done to improve Indonesia’s competitiveness for these commodity groups in the Canadian market. The research also looked at tariff rates for the top five exporters to Canada.
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