The Effect of Price and Tariff Policy on Shallot Import in Indonesia

Abstract

Shallot is an agricultural commodity whose prices fluctuate depending on the season and cannot always be predicted in advance. In order to stabilize prices, the government often imports shallots. The government also imposes tariffs on imports so that the price of imported shallots increases. As a result,  domestic production can be more competitive. Then domestic production can compete with imported goods, so it is hoped that imports of shallots will decrease. This study aims to determine the effect of price and tariff policies on shallot imports using Ordinary Least Square (OLS). In addition, a partial correlation analysis was carried out to identify the relationship between price and tariff policy variables with shallot imports. The results show that the increase in imported shallot prices and tariffs reduces imports of shallots. Those findings indicate that the tariff policy can control the import of shallots. In addition, the tariff policy has a negative relationship with shallot imports.