Indonesia should increase its competitiveness to get benefit from ASEAN Economic Community, especially CPO (crude palm oil) which prospective future market is predicted to be still prospective which is marked by world demand for CPO is still high. This study examines the competitiveness of CPO in West Sumatra Province from 2000 to 2016 in Indonesian market (domestic) and the word market from 2000 to 2015 using RCA (Revealed Competitive Advantage) index analysis. The result of the research shows that the CPO of West Sumatra in Indonesia market (domestic) which shows the value of RCA index > 1, its means that the export value of CPO of West Sumatra has competitiveness while the value of Index RCA CPO of West Sumatra in world market is got value of RCA index average equal to 1,2, its mean export of CPO in West Sumatra still have competitiveness average world CPO, although if seen RCA index each year there is a value of RCA<1.

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The agricultural sector in Indonesia, especially Crude Palm Oil (CPO) has contributed the country’s foreign exchange with the value of CPO exports in 2016 amounting to the US $ 17.8 billion, up 8 per cent compared to the previous year of US $ IG.5 billion. This has led Indonesia to become the largest producer and exporter of palm oil until now. Six provinces became the largest production centre of palm oil in Indonesia, but West Sumatera Province has not been included in the big six. West Sumatera Province, which is still dominated by an agriculture sector, and or plantation sub-sector has contributed 6.57%. The purpose of this research is to analyze the competitiveness of CPO export of five provinces located in Sumatra Island in a domestic market and compare it with C PO competitiveness in West Sumatera Province with time-series data from 2000-2016 using RCA (Revealed Comparative Advantage) Index. The results show that on average the RCA value produced by RCA > 1 is only South Sumatera province with RCA < 1 if each year the analysis of each Province shows fluctuating RCA values that lend to show a decline. Except for the value of RCA Provinces West Sumatera showed on the increase. One of the causes of the declining RCA values is that each Province has started to focus on the development of downstream CPO products so that the CPO that was once more exported overseas has gradually started to reduce exports and more to meet domestic demand as raw materials CPO downstream products such as the manufacture of food and non-food products. Meanwhile, CPO in West Sumatera Province is still dominated by foreign exports compared to downstream development.

This study is to analyze the relationship between market conduct and product development. The research is focused on the case of CPO and PKO derivative product development. The research question is that whether market conduct support or not the development of CPO and PKO derivative products in Solok City? For this purpose, there are six aspects are necessary to be analyzed: (i) by using time series data (2010-2018), the hypothesis testing of price relationship equation between the dependent variable, i.e: Pp which is considered as the realization of buying price of FFB at the farmer’s level, with several related independent variables. The results show that each parameter coefficient of independent variables marked by positive sign and smaller than one, except for ETC parameter coefficient which is marked by negative sign and smaller than one. Those facts indicate that there is a big possibility of opportunity opened for creation and development of derivative products of CPO and PKO; (ii) by calculating RCA indices of CPO (2004-2018), the finding is RCAs>1 in average which implies that the development of CPO derivative products has a comparative advantage. (iii) the LQ values for most of business fields and industry in forming GRDP of Solok City is in average greater than 1 (one) which implies that market opportunities are opened for those sectors to be developed as the engine of mover economic growth of the regions. (iv) HDIs of Solok City (2014-2018) are in average equal to 77.00. (v) the palm oil industry tree shows that there are many possibilities of creating and developing CPO and PKO derivative products. (vi) the location of Solok City is quite strategic as the center for industrial derivative product development of CPO and PKO in Sumatra. All findings confirm that the existing condition of market conduct supports the development of CPO and PKO derivative products industries in Solok City.

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