Indonesia Global Value Chain Participation in Regional Comprehensive Economic Partnership RCEP
Steven Raja Ingot (*), Dian Dwi Laksani
Trade Analysis and Development Agency, Ministry of Trade, Republic of Indonesia
*sri.bako[at]gmail.com
Abstract
The Global Value Change (GVC) has proved to be an important factor that encouraged trade in the last 30 years. About two-thirds of world trade involves intermediate goods that cross the border during production through GVC and shown significant improvement of foreign content of export from 18% to 25% within 1995-2014. Economic cooperation is proven as a way to boost GVC participation within its member in the region, including the Regional Comprehensive Economic Partnership (RCEP) due to regulation uniformity. The study used Trade in Value Added (TiVA) data aims to identify Indonesias GVC participation within RCEP as well as its position in GVC participation. Specifically, this study uses the participation index, the index of the number of production stages and index of the distance of the final product. The study shows that Indonesias GVC participation is higher than neighboring countries such as Malaysia and Thailand however, compared to other East Asian countries Indonesia is still low. Most of Indonesias GVC participation is as a supplier of raw material. Within RCEP, Indonesias participation in GVC is still dominated by Low Technology Industries. To maximize Indonesia GVC participation within RCEP and boost trade, public-private cooperation and predictable trade, as well as investment climate reforms, is required.
Keywords: RCEP; GVC; Trade in Value Added
Topic: Business Strategies on GVC Participation