The Influence of Value Added Tax Exemption Towards Processed Seaweed Exports of Indonesia

Seaweed is one of the prospective cultivated marine commodity that supports fisheryrevitalization program that is enacted by the government. In the downstream, thegovernment has made many efforts to increase the value added gain from this commodity. One of the efforts is by enacting a value added tax exemption policy throughGovernment Regulation about Import and/or Refferal of Certain Strategic Taxable Goodsthat are Free from Added Value Tax. This policy is enacted to encourage the businessworld especially in agriculture, where it is needed to give easier tax facility byestablishing agricultural products that are Taxable Goods. The purpose of this research isto analyze the influence of value added tax exemption policy that is enacted to domesticseaweed processing industry, towards Indonesia's processed seaweed export. Indonesiawas the world's biggest seaweed exporter for the last few of years. The government,through its value added tax exemption policy, aimed to encouraged domestic processingindustry to not only exporting seaweed as the raw materials but also to export processedproducts that have added value. The model used in this research was Error CorrectionModel (ECM). This research found that value added tax exemption policy has positiveand significant influences towards processed seaweed export in the long and short-run.This show that the government's policy in relation to value added tax exemption waseffective in increasing exports.

The marine and fisheries sector currently has very important role in supporting the nation's economy. This sector are not only source of foreign exchange, but also providing food and raw materials for the industry, providing employment, increasing people's income and becoming source of healthy and nutritious food. Global trade competition especially in fishery will become increasingly tight. The Government is required to conduct some strategic efforts in saving domestic fishery products from threats of influx of fishery products from foreign country. Improved competitiveness and increased added value become the key to win the competition (Pregiwati, 2014).
Seaweed is one of the prospective cultivated marine commodity that supports fishery revitalization program that is enacted by the government. This is due to the continues increase in demand of seaweed, whether for domestic or overseas needs.
Necessity for seaweed is calculated to be continualy increasing, following the increase of the need for immediate consumption and industry needs (Kordi, 2011). Indonesia's potential seaweed could be one of income source for the country's foreign exchange and could make Indonesia as the biggest raw seaweed exporter in the world. However, that export is still in the form of raw material, therefore the export price is low and the foreign exchange income that is gained is not maximum.
In the downstream, the government has made many efforts to increase the value added gain from this commodity. One of the efforts is by enacting a value added tax exemption policy through Government Regulation No. 7/2007 about Import and/or Refferal of Certain Strategic Taxable Goods that are Free from Added Value Tax. This policy is enacted to encourage the business world especially in agriculture, where it is needed to give easier tax facility by establishing agricultural products that are Taxable Goods, which reagarded as strategic Taxable Goods that is free from Value Added Tax (Djuanda, 2011). Based on the background stated, this study aimed to analyze the influence of value added tax exemption policy that is enacted to domestic seaweed processing industry, towards Indonesia's processed seaweed export.

Data and Method of collecting data
The data that are used in this research are secondary data that were collected as time-series data from the year 1993 to 2014, including the export data of Indonesia's processed seaweed and other variables that were expected influence Indonesia's seaweed export. GDP data and inflation are taken from Germany, Japan, and the United States of America. Those countries were selected, since those countries are Indonesia's three main seaweed export destination countries that give biggest export value for Indonesia. Besides that, there were also export data from Chile, Morocco, and Spain, that were chosen since

Methods of Analysis
The theory that was used in this research was international trade theory, market balance theory, and trade balance theory by Dornbusch et al (2008) which stated that net export, was depended on income, which influenced import expense, on overseas income, , which affected overseas demand towards export, and on real exchange rate, R. The increase of R or a real depreciation increased trade balance with the shifting of the demand of domestic produced products. : Error Correction Term (ECT) regression coefficient.

Unit Root Test
Data stationarity test was done in each variables that were used in seaweed export Whereas X_indo, GDP_as, GDP_ger, GDP_jep, INF_indo, and X_mar variables were not stationer in level 1 to 10%, therefore a stochastic differential process must be done, that was by deciphiring sets of time-series data with the unit root. Stochastic differential process was going to change the time-series data, from not stationery time-series data becomes stationer and had the means and variants that were constant in between periods.

Co-integration Test
The next step that could be done was doing a co-integration test. Co-integration test was done to know the long-term relation that happens between the research variables. The purpose of co-integration test between the variables was to show the presence of relation or long-term balance on independent variables towards dependent variables. However, in short-term, there was possibility that such imbalance occurs between the variables. It is imbalance that we often encounter in behavioral economics, where this is due to the inability of the economy to adjust the changes that occurred in economic variables (Harris & Sollis, 2003 result was obtained from residual probability value that was less than 10% alpha level (prob = 0.000 < 0.10) and t-statistic ADF value that was bigger than critical value on 1 to 10% level, therefore H 0 was rejected, so there was stationarity on equilibrium error variable. Stationer variables show that there was a co-integration relation in the model, therefore, it could be confirmed that there was a co-integration relation between X_indo, GDP_as, GDP_ger, GDP_jep, INF_as, INF_ger, INF_jep, INF_indo, KURS, X_chile, X_mar, X_spain DUMMY variables. The movement showed the relation or attachment between variables that could be used to make a long-term estimation or it could be said Nevadea Tiara Anugrahayu, Dwidjono Hadi Darwanto, Jamhari: The Influence….. that in every short-term period, all variables that were researched tend to adjust to each other, in order to reach a long-term balance.

The Formulation of Error Correction Model (ECM)
The formulation of ECM was done by regressing equilibrium error that was obtained in the long-term co-integration equation together with other variables that were used in this research. After the classic assumption test was done, in the form of multicollinearity test, heteroskedasticity test, autocorrelation test, and normality test, therefore it could be concluded that the estimation model had BLUE quality or best, linear, unbiased, and estimeate. Therefore the parameters of the model could be immediately estimated using Error Correction Model. The results of the formation of the ECM on the factors that affect the exports of seaweed Indonesia, either simultaneously or partial served at table 4.  F-statistic) 0.00*** Note : * significant on α=10% ** significant on α=5% ***significant on α=1% All variables that were inputted in the model above could affect Indonesia's seaweed export as big as 95 %, whereas the rest in the amount of 5% was affected by variables outside the model, therefore it could be said that types of independent variables that were inputted in the model were properly good. Speed of adjustment value that was obtained from ECT coefficient value in the model showed that it was approaching the value of 1 (one). This stated that to adjust actual value to the direction of new balance value, really fast adjustment change was needed. ECT coefficient value analysis concluded the presence of long-term relation indication between the variables. This indicate that every unit change will generate a change of seaweed export value at bigger than one unit, and fluctuation would adjust to the new balance. The magnitude of error correction was -1.59, indicates that adjustment to processed seaweed export equilibrium condition was as big as 0,63 years (1/1.59). This result showed that the long-term equilibrium condition was going to happen in the period of 0.63 years. According to Widarjono (2007), ECT coefficient imbalance correction in the form of absolute value explained how fast was the time that was needed to obtain a balance value. DUMMY, GDP_as, GDP_ger, GDP_jep, X_spain were constant for two possibilities (0 and 1), therefore a different intercept would be obtained.
In long-term, when D=0 or before the enactment of value added tax exemption policy, it was 4,009,547; whereas when D=1 or after the enactment of value added tax exemption policy, it was 8,954,720. In short-term, when D=0 or before the enactment of value added tax exemption policy, it was -528,231.40; whereas when D=1 or after the enactment of value added tax exemption policy, it was 6,126,892.60. This can be meant that the condition after the enactment of value added tax exemption policy (D=1) Indonesia's export volume of seaweed increased.
Based on this research, value added tax exemption policy that was enacted to domestic seaweed processing industry was considered effective. By giving tax facility, the world business of manufactured seaweed was became more encouraged. Considering there was free market and the threat of fisheries products entry from overseas to Indonesia, then increasing this value added product was important to be done. In this case, the government was urged to continue the betterment in doing various strategic efforts in saving fisheries products in domestic market.