Agric. Econ. - Czech, 2024, 70(3):101-111 | DOI: 10.17221/332/2023-AGRICECON

Palm oil trade restrictiveness index and its impact on world palm oil exportsOriginal Paper

Hakimah Nur Ahmad Hamidi1, Norlin Khalid2, Zulkefly Abdul Karim2
1 Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Terengganu, Malaysia
2 Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Selangor, Malaysia

Despite numerous attempts to remove tariff and non-tariff barriers, the average number of barriers in the agricultural sector, particularly in the palm oil sector, is rising. Non-tariff effects are subjective, which makes them challenging to quantify. A new palm oil trade restrictiveness index that considers each trade barrier imposed on palm oil exports, such as tariff and non-tariff measures, is necessary to facilitate the sector’s exports. Hence, this study aims to calculate the trade restrictiveness index (TRI) of palm oil and analyse its impact on Malaysia’s and Indonesia’s palm oil exports. This study uses a gravity model with Poisson pseudo-maximum likelihood (PPML) estimation to analyse the impact of trade barriers on world palm oil export for a sample of 59 major palm oil importing countries from 2009 to 2019. The study revealed that each importing country imposes different restrictions on Malaysia and Indonesia. The TRI showed a negative and significant relationship influencing palm oil exports in the case of Malaysia, while a positive and significant relationship for Indonesia. The policy implications of this study suggest that policymakers in both Malaysia and Indonesia should take proactive steps to comply with every criterion demanded by the importing country.

Keywords: non-tariff measures; tariff; trade; trade barrier; vegetable oil

Received: October 2, 2023; Revised: February 2, 2024; Accepted: February 6, 2024; Prepublished online: March 18, 2024; Published: March 26, 2024  Show citation

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Hamidi HNA, Khalid N, Karim ZA. Palm oil trade restrictiveness index and its impact on world palm oil exports. Agric. Econ. - Czech. 2024;70(3):101-111. doi: 10.17221/332/2023-AGRICECON.
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