DOI: 10.36347/sjebm.2018.v05i07.006

Pages: 597-604

East Java in Indonesia is one the largest production area of cassava where the cultivation and producing areas are adjacent to each other. Seventy percent of cassava was processed locally to produce cassava starch. However, policy for cassava starch is considered less successful because production is still fluctuating and only accounts for 8% per year (2007-2015) in national production. The purpose of this research is to analyze competitiveness, policy impact and perspective change of cassava starch competitiveness in East Java by using Policy Analysis Matrix (PAM). This research was conducted in small industry from two production centers of cassava starch with census method, all 33 industries in Trenggalek Regency and all 25 industries in Kediri Regency. Primary data was generated through interviews with owners of cassava starch industry in July-September 2017. Based on the research, cassava starch industry in East Java has a competitiveness that includes competitive advantage with PCR value was 0.62 and comparative advantage with DRCR value was 0.23. Overall government policy has not been able to provide incentives to producers. After the policy, the industry must increase spending on input costs so that the profits derived by the cassava starch industry in East Java decrease. Abolition of import tariff tax for cassava starch by 10% causing cassava starch industry in East Java has no competitive advantage, but fixing the base price for cassava to 650.00/kg makes the competitive advantage of the cassava starch industry in East Java slightly increased. Thus, the cassava starch industry still has a comparative advantage despite the strengthening and weakening of the rupiah exchange rate against US $.