A SYSTEM DYNAMICS MODEL OF DOMESTIC TIN INDUSTRY CHAIN TO INCREASE ECONOMIC VALUE ADDED

• Main Author: Jannah, Fathul
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/44046
• Institution: Institut Teknologi Bandung

The enactment of Law Number 4 of 2009 concerning Mineral and Coal Mining encourages the development of a downstream mineral industry. However, long before this Law was enacted, the tin mining sector already had special regulations, namely: Regulation of the Minister of Trade of the Republic of Indonesia No.04 / M-Dag / PER / 1/2007 concerning Provisions on the Export of Tin Bars which states that tin products can be exported only in the form of tin bars with a content of 99.85% Sn. In the case of tin commodities, tin ore mined has been processed into tin metal domestically, and> 95% is exported. The remaining around 4% is used for the interests of domestic intermediate industries (tin plates and tin solder). This fact is contradicted to the aim of increasing added value mentioned in the Government Regulation of the Republic of Indonesia Number 23 of 2010, in the explanation of Article 95 paragraph (2), which is to ensure the availability of raw materials to meet the necessity of the national industry, employment, and increase state revenue. Referring to this, one of the indicators of success in increasing the added value of tin is the high absorption of tin for the domestic industry. The low absorption of domestic tin metal is due to the lack of capacity of intermediary industries which process tin metal into semi-finished products. As a result, tin metal is exported and the supply shortage of tin-containing semi-finished goods (tin plates and tin solder) is sufficient by importing intermediate goods containing tin. In order to understand this phenomenon, a system dynamics model was built to describe the condition of the tin industry chain in Indonesia. This model is used to analyze policies. The Indonesian tin industry chain model consists of production (supply) and consumption (demand) subsystems. The production subsystem consists of the mining, smelter and intermediary industries segments. In the model, a policy structure is formed related to the development of the tin intermediary industry. As this industry grew, the level of tin metal exports and the level of imports of tin-containing semi-finished products declined. This has an impact on increasing the acquisition of value added. At the end of the simulation period (year 2022), the estimated net value added that can be obtained from the tin industry chain is USD USD 912,029,082.