Global competitiveness of coffee products: A comparative study of Indonesia and Vietnam

Abstract

The competition and performance gap between Indonesia and Vietnam coffee underscore the importance of Indonesia assessing its global competitiveness against Vietnam. The study aims to analyze the competitiveness of Indonesian and Vietnamese coffee in international trade, focusing on green beans, roasted coffee, and instant coffee as the primary products of the coffee industry. Assessing export performance necessitates comparative analysis with competitor countries like Vietnam. The data comprises export statistics of both robusta and arabica coffee from Indonesia and Vietnam obtained from the UN Commodity Trade database, covering 2004 to 2021. The Revealed Comparative Advantage (RCA) and Revealed Symmetric Comparative Advantage (RSCA) methods were used to analyze Indonesia’s and Vietnam’s coffee competitiveness. The study analyzed the Trade Balance Index (TBI) to measure the trade balance of export commodities. The study result stated that Indonesia’s competitiveness in green bean coffee is lower than Vietnam’s. Vietnam surpasses Indonesia in the instant coffee market after facing reduced competitiveness from Indonesia between 2014 and 2020. Regarding roasted coffee exports, the two countries do not have a comparative advantage in international trade. In comparing TBI results, it is evident that green beans and instant coffee products from Vietnam and Indonesia possess a comparative advantage for export, with an average TBI of 0.97, 0.63, 0,91, and 0.52, respectively. Moreover, although roasted coffee in both countries lacks a comparative advantage, it still focuses on exports. To improve the competitiveness of Indonesian coffee, it is necessary to implement good agricultural practices to ensure consistency and quality, and government policies and regulations are vital to incentivize investment and innovation in upstream coffee processing, thereby fostering a solid industry.