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The Effects of Rattan Ban on the Industrial Growth and Distribution of Economic Rent in Indonesia
Abstract:
Rattan export bans helped develop the rattan industry in Indonesia, especially rattan furniture manufacturing. Sumatera, Kalimantan, and Sulawesi were the major suppliers of rattan raw materials while Java had taken the lead in value-adding, absorption of labor, and industrial growth. The study analyzed the effects of rattan export bans on the industrial growth and distribution of economic rent.
Before it was banned, rattan raw material export was the highest in volume and value. When it was banned, the semi-finished rattan products took the lead. When export of semi-finished rattan products was also banned, finished rattan products dominated the rattan export industry.
The value-added analysis showed that value-added on finished rattan products was higher than that of the other rattan products. Thus, the value-added on products in large/medium industries was higher than in small industries. Entrepreneurs' share of value-added profit was greater than that of the laborer.
The economic rent analysis showed that the government obtained only 21.2-27.2 percent from the economic rent value while entrepreneurs got windfall profits of 72.8-79.9 percent.