Vietnam Rice Production Comparative Advantage To Indonesia
As a country located in the Asian region, rice is certainly not something new there. Having a variety of cultures and other diversity, Asia is a paradise for the best food in the world. The presence of rice is not something new anymore. Even the presence of rice is inseparable from the lives of Asians, especially Indonesia. As a tropical area, and on the equator, this poses a threat to every Asian country and also to Indonesia.
As a country with 2 seasons, dry season and rainy season it can bring its own problems for Indonesia. During the dry season it can actually cause severe droughts that threaten the agricultural sector in Indonesia and other countries in Asia. In this discussion the theory that will be used is Comparative Advantage. Developed by David Richardo, Comparative Advantage is a condition where a country produces an item or service with a low opportunity cost compared to other countries (Amadeo, 2018). Where this creates profit for the country that has the Comparative advantage.
Comparative Advantage according to David Ricardo means that a country will be more effective if the country maximizes producing something that they capable to produce well and leaves what it cannot maximize. So something that the country doesn't maximize can be imported from other countries by conducting international trade. In this case International trade is very important because in this market that every country will fulfill what the country cannot afford for production. In January 2018, the Indonesian government signed an import agreement with a Vietnamese company regarding rice imports that will be carried out by Indonesia. The agreement details 500,000 tons of rice from Vietnam. Trade Minister Enggartiasto Lukita confirmed that there was a contract agreement with Vietnam regarding large imports of 500,000 tons (Sihombing, 2018). The government said that imports were carried out to strengthen the stock in Bulog's warehouse, anticipate disaster, and also maintain the stability of rice prices on the market (Kuwado, 2018). Vietnamese rice was chosen because the rice has better quality than the local rice. In addition, production costs in Vietnam are cheaper than the cost of rice production in Indonesia, making Vietnam chosen so the purchase of rice can be cheaper. Based on data quoted from the International Rice Research Institute (IRRI), the cost of rice production in Indonesia is the most expensive in Asia take cost at Rp. 4,079 / kg. Whereas in Vietnam it was Rp1,619 / kg (Dedy Afrianto, 2017).
Cheaper production costs make Vietnam more efficient in producing rice than Indonesia. Besides that rice productivity in Vietnam is also higher than Indonesia by producing 6. 67 tons / ha. While Indonesia is at 5. 7 tons / ha (Produktivitas Padi Indonesia di Bawah Vietnam, 2017). In the corn farming sector, Indonesia has a better productivity of the land, which is 5. 07 tons / ha and Vietnam is 3. 92 tons / ha (Listiyarini, 2016). In terms of corn Indonesia has a comparative advantage on it rather than Vietnam. The conclusion of this case is the rice imports from Vietnam are due to Vietnam having comparative advantages in terms of lower production costs and better land use per hectare than Indonesia. That's why Vietnam was chosen as the importer of rice because in addition to the quality rice, the price is cheap, Vietnam also has better specialties than Indonesia. In this part Vietnam has their comparative advantage rather than Indonesia. But in terms of corn, Indonesia can be better in use their land rather than Vietnam. It can be seen from more corn fields obtained compared to Vietnam.
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