Khairil, et.al. ( 2010 ) in their survey said that Malaysia and Indonesia palm oil plantations are the major trade good manufacturer with Indonesia presently is the largest manufacturer followed by Malaysia being the worldaa‚¬a„?s second-largest country of oil thenar. This is supported by Parkhomenho in his survey that Malaysia and Indonesia are major manufacturers of palm oil in the universe. In 2000, the entire oil produced is 23 million tones and 82 % were contributed jointly by Malaysia and Indonesia. Malaysia consumes 80 % of palm oil produced for export, while Indonesia is merely 30 % usage palm oil production for export and the remainder used for domestic market.
Malaysia presently accounts for 39 % of universe thenar oil production and 44 % of universe exports. If taken into history of other oils & A ; fats produced in the state, Malaysia accounts for 12 % and 27 % of the universe ‘s entire production and exports of oils and fats. Bing one of the biggest manufacturers and exporters of palm oil and thenar oil merchandises, Malaysia has an of import function to play in carry throughing the turning planetary demand for oils and fats sustainably.
In Indonesia, the oil thenar sector to turn quickly through the enlargement of the entire country of oil thenar plantations in 2008 to 2009 which is from 7 million to 7.3 million hectares. While rough palm oil ( CPO ) production grows from twelvemonth to twelvemonth which is 19.2 million dozenss in 2008 to 19.4 million dozenss in 2009. In 2008, the exports of CPO are 18.1 million tones. This value increased merely in the first nine months of 2009, CPO exports reached 14.9 million dozenss and in 2009, Indonesia has become a top thenar oil manufacturer with production of 19.4 million tones.
On the above survey, the aim of this survey is to find the factor that affect oil thenar production which is the factors that affect most of oil thenar production in Malaysia and Indonesia.
2. Literature Reappraisal
2.1Fresh Fruit Bunch ( FFB )
Harmonizing to Malaysia Palm Oil Council ( 2011 ), in Malaysia, oil thenar trees are planted chiefly of tenera assortment, a loanblend between the dura and pisifera. Oil thenar trees can last and productive to bring forth fruit for up to 20 to 30 old ages, and will get down fruting within 30 months after seting. Each ripe clump is known as fresh fruit clump ( FFB ). Ramasamy, et.al. ( 2005 ) survey that Malaysia is the universe ‘s chief exporter and manufacturer of palm oil, which is contributed about 50 % in 2002 of universe thenar oil production. Meanwhile, exports it is about 58 %. In 2002, from the 3.67 million hectares of oil thenar which is planted in Malaysia, 60 % were under private ownership, the bulk of which are run by houses in the private sector.
Area is one of the of import factors on oil thenar production. Based on Ramasamy, et.al. ( 2005 ), in the last two decennaries, the private sector played of import function to drive for growing which is in the production and the research and development of palm oil. In 1980 to 2002, the planted country which is under privately-owned plantations houses had increased from 557659 hectares to 2,187,750 hectares. The largest portion of these developments is being in the provinces of Sabah and Sarawak. Koczberski and Curry ( 2005 ) in their survey found that the ordinance specify the countries planted to oil thenar and the rentals are over fixed land countries, and besides kept for nutrient production, though this latter bound has non been enforced. In feedback to such force per unit areas, the several schemes have been developed by the smallholders to procure their supports, including non-oil thenar support schemes and new oil thenar production patterns.
Fairhurst and Mutert ( 1999 ) in their survey said that the world-wide country planted to oil thenar has increased more than 150 per centum over the past 30 old ages. The Southeast Asia is the largest portion that has taken topographic point of these additions, with dramatic production additions in Indonesia and Malaysia. Basri and Zaimah ( 2002 ) in their survey said that the consequences indicate that in finding the entire country of oil thenar in Malaysia, the alteration in either palm oil or natural gum elastic monetary value is non really of import even in the long-run. This can be due to the being of right land restraint.
3. Datas and Methodology
In this paper, one-year informations were used obtained from the Food and Agricuture Organization of the United Nations, Malaysia Economic Planning Unit, Malaysia Department Of Statistic and Indonesia Statistics. The information was covering in clip series informations from twelvemonth 1975 to 2006 that is 32 old ages. For the population, this paper focuses on Malaysia and Indonesia oil thenar industry. The information was taken about the sum of oil thenar production, entire country planted hectarage and output per hectare and were estimated utilizing ordinary least square ( OLS ) which is including simple and multiple arrested development.
3.1 Data Analysis
The E-Views programme has been used to run the arrested development of the information. The unit root trial is used to analyse the information to carry through at stationarity of the variables. Ordinary Least Square besides will be used to analyse and construe the informations. All dependent and independent variable are transformed to logarithm to suit the information.
3.1.1Unit Root Test
The information will be analyzed utilizing unit root trial before the informations estimation by utilizing ordinary least square. This is to prove the informations stationarity of the variables.
3.1.2 Ordinary Least Square
This is the method that used to gauge the unknown parametric quantities in the additive equation. It consist simple and multiple arrested development theoretical accounts. Simple arrested development theoretical account is a least square that have one independent variable. In other words, it fits the consecutive line to minimise the amount of squared every bit little as possible. Multiple arrested development theoretical accounts are a least square that used to cognize the relationship between several independent variables or variable forecaster. Both of theoretical account arrested developments are transformed into logarithm. The theoretical account arrested development for Malaysia was transformed into log-log. The expression is shown below:
4.1 H0: There is no relationship between FFB production and entire deep-rooted country
H1: There is a relationship between FFB production and entire deep-rooted country
4.2 H0: There is no relationship between FFB production and labour input hectare
H1: There is a relationship between FFB production and labour input hectare
4.3 H0: There is no relationship between FFB production and output per hectare
H1: There is a relationship between FFB production and output per hectare
4.3 H0: There is no relationship between FFB production with entire deep-rooted country, labour input and
output per hectare
H1: There is a relationship between FFB production with entire deep-rooted country, labour input and
output per hectare
In this subdivision, the determination of the survey will be analyzed. This is including the important between the variables, the relationship and the reading and besides the arrested development jobs. The information will be analyzed by utilizing the E-view plan to run a arrested development.
Before building the equation of arrested development theoretical account, a stationarity trial was conducted because the informations came from a clip series. Unit root trial was conducted in order to look into the stationarity of the clip series informations of all the variables. Unit root trial, using the Augmented Dickey-Fuller ( ADF ) trial, was used to prove whether the variables were stationary or non.
Notes: The value at the parenthesis is chance
Table 1 and 2 shown the consequences of the Augmented Dickey-Fuller ( ADF ) categories of unit root trials for Malaysia and Indonesia. The trials were applied to each variable over the period of 1975-2006 with a clip tendency at the variable degree and at the stationary of different.
Table 1 that is the consequence of the unit root trial for Malaya shows that FFB Production and Yield Per Hectare is stationary at the first difference. The Area and Labour Input is stationary at the 2nd difference.
Table 2 that is the consequence of the unit root trial for Indonesia shows that FFB Production is stationary at 2nd difference. The Area and Yield is stationary at the first difference.
For country, every 1 % additions in country, FFB production will increases 1.506942 %. The R2 of 0.96 agencies that 96 % dependent variable can be explained by independent variable while 4 % of dependent variable can non be explained by independent variable.
For labor, every 1 % additions in labor, FFB production will increases 1.634885 %. The R2 of 0.84 agencies that 84 % dependent variable can be explained by independent variable while 16 % dependent variable can non be explained by independent variable.
For output, every 1 % additions in output, FFB production will increases 6.218152 %. The R2 of 0.18 agencies that 18 % dependent variable can be explained by independent variable while 82 % dependent variable can non be explained by independent variable.
Table 4 shows that the R2 of 0.97 is high, therefore it explained that 97 % of the fluctuation in the value of oil thenar production. It means, there are 97 % of FFB production can be explained by country, labor and output. 3 % of FFB production can non be explained by country, labor and output.
If the entire country additions by 1 %, FFB production additions by 1.765193 %. If the labor additions by 1 %, FFB production lessenings by 0.360689 %. If output additions by 1 %, FFB production additions by 0.991747 %. The Durbin-Watson stat 0.61 shows that there is an autocorrelation occurs.
Table 5 shows that all variable that is country and output have a positive correlativity with FFB production.
For country, every 1 % additions in country, FFB production will increases 0.837503 %. The R2 of 0.99 agencies that 99 % dependent variable can be explained by independent variable while 1 % dependent variable can non be explained by independent variable.
For output, every 1 % additions in output, FFB production will increases 2.360656 %. The R2 of 0.07 agencies that 7 % dependent variable can be explained by independent variable while 93 % dependent variable can non be explained by independent variable.
Table 6 shows that the R2 of 0.99 is high, therefore it explained that 99 % of the fluctuation in the value of oil thenar production. It means, there are 99 % of FFB production can be explained by country and output. 1 % of FFB production can non be explained by country and output.
If the entire country additions by 1 %, FFB production additions by 0.823373 %. If output additions by 1 %, FFB production additions by 0.752742 %. The Durbin-Watson stat 1.14 shows that there is an autocorrelation occurs.
This survey is about the analysis of factor that most impact the oil thenar production. When carry oning the unit root trial, all variable are stationary. For Malaysia, the FFB Production, and Yield per Hectare are stationary at first difference while Area and Labour stationary at 2nd difference. For Indonesia, merely F FB production stationary at 2nd difference while Area and Yield per Hectare are stationary at first difference.
When carry oning the simple arrested development analysis, all variables are impacting the FFB production. The factor that more important and affect most of FFB production for Malaysia and Indonesia is Area. It is because, the country variable have a high value of t-statistic and F-statistic. However, in multiple arrested development analysis, the consequence indicates that Malaysia and Indonesia have an autocorrelation job. It can be detected by looking at the Durbin-Watson statistic. Malaysia and Indonesia have a lower value of DW stat. However, this job can be solved through the ADF trial by looking at its order of integrating.