Iwan Hermawan, Carunia Mulya Firdausy, Khoiru Rizqy Rambe, Fadhlan Zuhdi, Ezra Putranda Setiawan
Despite being one of the world’s largest archipelagic nations with extensive coastal resources and significant salt production potential, Indonesia imports salt in millions of tons yearly due to persistent quality and productivity gaps. This study aims to investigate the impact of salt import tariffs on trade, production, employment, and welfare, and to analyze policy options for developing the salt industry in Indonesia. Using a Computable General Equilibrium (CGE) model and the Analytic Hierarchy Process (AHP), the results indicate that Indonesia’s import dependence remains high despite the absence of productivity gains. Tariffs, combined with productivity improvements achieved through technological innovation and improved production methods, yield the most favorable outcomes, enhancing the trade balance, boosting output, and mitigating welfare losses. AHP results further identify the most strategic policy option, maintaining the existing salt tariff policy while providing technological assistance and innovation in salt production. These findings highlight the importance of integrated tariff–productivity strategies to enhance Indonesia’s salt industry’s competitiveness, resilience, and sustainability. © The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2025.
National Research and Innovation Agency, Jakarta, Indonesia; Research Centre for Economics of Industry, Services, and Trade, National Research and Innovation Agency, Jakarta, Indonesia; Faculty of Economics and Business, Tarumanagara University, Jakarta, Indonesia; Faculty Mathematics and Science, Yogyakarta State University, Yogyakarta, Indonesia
