Foreign Ownership and Productivity of Food Industries in Indonesia (original) (raw)
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Foreign Presence and Indonesian Food Industry Performance
International Journal of Economics and Financial Issues
This paper analyzes the influence of foreign presence on the performance of food industry in Indonesia using panel data from 28 subsectors in the period of 2011 to 2015. The data used is the Annual Survey of Large and Medium Industries (IBS) from Statistics Indonesia. The performance indicator utilized is the price cost margin (PCM). The PCM model was estimated using regression and tested with the Hausman statistical test. The results show that foreign presence increases the performance of Indonesia's food industry. Other factors that affect the industry's performance are industry concentration, market growth and imports of raw materials. Foreign presence, concentration and market growth have a positive effect on performance, meanwhile import ratio has a negative effect. The government needs to continue to encourage foreign investment in the food industry since the presence of foreign presence will improve industrial performance. In addition, efforts are also needed to supply quality raw materials by encouraging the development of domestic upstream industries.
2022
Presidential Regulation (Perpres) No 44/2016 states that in the vegetable and animal crude oil industry, copra industry, coconut oil industry, palm oil industry, foreign ownership is limited at a maximum of 95 percent. These industries are included in the edible oil, vegetable and animal fats industry (ISIC 104). This study analyzes the effect of foreign ownership share on the trade propensity in the edible oil, vegetable and animal fats industry in Indonesia using the Tobit model. The data used are the cross-section data from 2015 Annual Survey of the Manufacturing industry from Statistics Indonesia. The results show that firms with foreign ownership share of more than 95 percent have the same export propensity with foreign ownership of between 50 and 95 percent. However, the import propensity of firms with foreign ownership between 50 and 95 percent is the lowest compared to other ownership. The government should continue to restrict foreign ownerhip shares at the maximum of 95 percent in this industry.
Foreign Presence and Industrial Concentration In Indonesian Food Industries
Signifikan: Jurnal Ilmu Ekonomi, 2020
Indonesia requires foreign investment to meet the capital needs of the food industries. On the other hand, foreign presence can cause high industrial concentration. This paper analyzes the effect of foreign presence on the concentration of the food industry in Indonesia using panel data from 28 subsectors in the period 2011-2015. The data used is the annual Large and Medium Industries Survey (IBS) data from Statistics Indonesia. The concentration indicators used are the concentration ratio (CR4) and the Herfindahl Hirschman Index (HHI). By using panel regression, the result shows that foreign presence has a positive influence on the concentration of the food industry in Indonesia. Besides, the economies of scale and market size also significantly influence the concentration of the food industry. The result indicates that the government investment policy must endorse more competition among firms.
Journal of Economic Cooperation …, 2009
The paper investigates the impact of foreign ownership on total factor productivity (TFP) for Food and Tobacco and Financial Business sectors of Pakistan. Theoretical framework of Caves (1974) is estimated to examine firm"s productivity from foreign investment. Cobb-Douglas production function is estimated for each sector and then TFP is extracted from this function. Extracted TFP is regressed on set of variables including ownership dummies, foreign presence at sector level and firm size by using Random Effects model. The study concludes that foreign ownership has positive effect on TFP of both the sectors. However, the evidence for the impact of foreign presence at sector level is mixed. Firm size negatively affects TFP. The study recommends the provision of fiscal incentives to encourage research and development expenditures, rationalizing of labour laws and lower corporate tax rates to encourage joint ventures among foreign and domestic firm.
The Effect of Foreign Ownership on Firm Performance: Evidences from Indonesia
Proceedings of the 3rd Asia Pacific International Conference of Management and Business Science (AICMBS 2019), 2020
This study examines the effect of foreign ownership on firm performance using a panel data consisting of 66 non-financial firms listed in the Indonesia Stock Exchange. Five-year period data from 2014 to 2018 is considered. The result of the random effects model indicates that foreign ownership has a positive and significant effect on firm performance; foreign firm ownership is found to have more roles in encouraging performance than what foreign institutional investors can do. This result is consistent with the facts about foreign ownership in Indonesia, where high and stable foreign ownership, in the long run, is beneficial for domestic companies, due to effective monitoring, facilitation of technology usage, international market development, and professional management. The problems in this study is limited due to the fact that the firms being studied, either companies or institutions, are mostly owned by single foreign investors
Measuring the Productivity of the Foods and Beverages Industries in Indonesia: What Factors Matter?
Economics and Finance in Indonesia, 2021
The foods and beverages industries have shown the largest share of output in the manufacturing sector of Indonesia for more than a decade. This study aims to investigate its performance indicators through the growth of total factor productivity (TFP) and its determinants, such as imported raw materials, exports, absorptive capacity, firm size, market concentration, and capital ownership. This study employed firm-level panel data from 2008–2015 and the Growth Accounting method of Solow residual in addition to the fixed effects model to estimate TFP growth and its determinants. The results show that the foods and beverages industries in Indonesia showed positive TFP growth from 2008–2015. Moreover, variables of absorptive capacity, firm size, and market concentration promote the TFP growth of firms. Meanwhile, import intensity discourages TFP growth. However, within a certain threshold, firms with import activities perform better than non-importer firms. However, imports and exports ...
Ownership structures and productivity in Indonesia and Malaysia
International Journal of Monetary Economics and Finance, 2017
The relationship between ownership structures and company performance has been issue of interest among academics, investors and policy-makers. So far, there are still inconclusive findings that family and state ownership giving positive or negative impact on firm performance. This study employed technical efficiency and Malmquist productivity index to measure firm performance. Period of this study will be conduct from 1992 to 2007. Result of this study revealed that Technical efficiency study in Indonesia showed that state owned enterprises (SOEs) had better performance than family owned enterprises (FOEs) since SOEs' performance increased more stably during research period. Meanwhile Malaysia-based technical efficiency study demonstrated that FOEs samples had lower efficiency level than SOEs, which performed a little enhancement. In term of productivity, Indonesian FOEs had become more productive compare with SOEs during three sub-periods. On the other hand, Malaysian FOEs and SOEs had improved from time to time within the three sub-periods.
International Journal of Economics and Financial Issues
Foreign direct investment (FDI) is necessary for Indonesia since the rate of saving is still low compared to the higher demand for investment in Indonesia. FDI contributes not only to the higher rate of investment but also to the spillover of other industrial sectors through technology transfer. The FDI spillover could be in the form of horizontal or vertical spillover with upstream and downstream linkages. The spillover of FDI can give a positive or negative impact on the productivity of sectors or other industries. The objective of this study is to analyze the impact of FDI spillover on the productivity of the domestic food industry. The food industry had the highest value of FDI during 1990-2014, but it had a low value of total factor productivity. The research results show that the FDI spillover gives positive impact to the productivity of domestic food industry which has the highest foreign investment with upstream and downstream linkages. The horizontal and vertical spillover of FDI on upstream linkages gives positive impact to big domestic companies with higher levels of technologies. Meanwhile, the vertical spillover of FDI on downstream linkages gives positive impact to local companies with lower levels of technologies.
Foreign Ownership and Employment Growth in Indonesian Manufacturing
2010
Many developing countries would like to increase the share of modern or formal sectors in their employment. One way to accomplish this goal may be to encourage the entrance of foreign firms. They are typically relatively large, with high productivity and good access to foreign markets, and might therefore be better at creating jobs than domestic firms are. However, previous research on the issue has been limited by the paucity of long data sets for firm operations.
Foreign Ownership, State Ownership and Energy Efficiency in Indonesia’s Private Manufacturing Plants
This paper examines correlations between the shares of foreign multinational enterprises (MNEs) or state-owned enterprises (SOEs) in Indonesian manufacturing industries and energy efficiency in local, private plants in those industries using data on medium-large plants from the industrial censuses for 1996 and 2006. The econometric results suggest that energy intensities in private plants were often positively correlated with the presence of SOEs and majority-foreign MNEs but negatively correlated with the presence of heavily-and minority-foreign MNEs in 1996. However, the results were often reversed for 2006 and were sensitive to the sample analyzed as well as the measure of SOE or MNE presence and its level of aggregation.