ANALYSIS OF INDONESIA'S COAL EXPORT COMPETITIVENESS IN THE INTERNATIONAL MARKET AND ITS DETERMINANT FACTORS

Abstract

Indonesia is one of the world’s largest coal exporters, with a significant contribution to
meeting global energy demand. However, the competitiveness of Indonesia’s coal
exports is strongly influenced by international market dynamics and external factors.
This study aims to analyze the competitiveness of Indonesia’s coal exports in the
global market using the Vector Autoregression (VAR) model for the period 2004–2023.
The variables analyzed include Foreign Direct Investment (FDI), international coal
prices (HBI), exchange rate (NT), national coal production, and competitiveness
measured through the Revealed Comparative Advantage (RCA). The results indicate
that Indonesia still lags behind Australia in terms of RCA, although the gap has
narrowed between 2018 and 2023. Conversely, compared to Russia, Indonesia
consistently outperforms. The impulse response function (IRF) analysis reveals that
FDI has a positive impact on RCA, while rising international coal prices tend to
weaken competitiveness. National coal production shows a positive effect in the
medium term, whereas the exchange rate responds negatively to price fluctuations.
Variance decomposition (VD) results show that FDI had a dominant contribution in
the early period (70–75%) but declined to around 20%, while the influence of
international coal prices increased to 40%. Overall, Indonesia’s coal export
competitiveness is largely shaped by external factors, requiring strategies such as
market diversification, downstream industry development, efficiency improvements,
and the optimization of global geopolitical opportunities.