Of course, you often hear the term import-export in buying and selling transactions.
But apparently, there are still many who do not understand the meaning of export and import.
Both of these activities play an important role in the country’s economy. From these two activities, there was international trade between countries.
Furthermore, we will understand what import, export, purpose and benefits of both mean.
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Understanding Export and Import in Detail
Exports as well as imports are not just buying and selling transactions between countries. In more detail, there is an explanation of both.
In the following, the definition of export and import along with a full review.
1. Export
Export is an activity of selling goods or services from within the country to abroad.
Where in the process, follow the policies imposed by each country. Delivery of goods or services can be by land, sea or air.
Generally, countries export because their country’s needs have been fulfilled or even excess.
Therefore, exports are carried out to sell excess production to help other countries whose needs for these goods or services have not been met.
Either because they are unable to produce themselves, or because their production is still below domestic demand.
The benefits of exports for exporters themselves include increasing domestic income, increasing people’s per capita income and many others.
Parties carrying out export activities are known as exporters. An exporter must be officially registered with the government agency of the country.
2. Import
In contrast to exports, imports are activities of buying goods or services from abroad to meet domestic needs.
So import activities are carried out because a country is unable to produce or the production of goods and services is still below the needs of the community.
However, in carrying out import activities not all types of goods can be entered or purchased for domestic needs.
This is regulated in international trade policies. Usually those that cannot be imported include endangered animals, illegal firearms and prohibited drugs.
The party that imports is called the importer. If importers import products in large quantities, they must be accompanied by customs.
After that, the government will also impose import taxes on each of these imported products.
The benefit of this import activity for the country is to meet the demand for imported products.
Besides that, it also cooperates with exporters, of course. This way you can get help supplying the raw materials or finished products you need.
Therefore, importers take advantage of inventory software so they can manage their supply better when they get help from exporters.
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Purpose of Export and Import
After understanding the meaning of export and import, we will then discuss the purpose of both.
The following describes the purpose of export and import.
1. Purpose of Export Activities
There are several objectives of export activity. These objectives include:
- Increase company profits. This can be realized if the demand for products to be sold also increases.
- Adding to the expansion of the domestic market and starting to develop it in the global or world market. This is also very helpful for existing domestic producers.
- Holding control over the market price of a product that is exported. Generally, product prices in the domestic market are cheaper than export prices. Thus exporters can control the market price of the product.
2. Purpose of Import Activities
The purpose of importing or buying products from abroad are:
- Meet the needs of domestic companies for imported raw materials or products. This is in accordance with the definition of import that has been explained.
- Increasing the country’s foreign exchange through customs fees on imported goods.
- Obtain the latest technology that can increase the effectiveness of domestic production. This can happen if what is imported is a more sophisticated means of production and can only be obtained from the exporting country.
Those are some of the objectives of export activities as well as imports. So what are examples of exports and imports around us?
Referring to the definition of export and import above, we can take the example of buying and selling between countries that we often encounter.
One example of imports is the import of dates from Middle Eastern countries. Where this product is one of the biggest commodities and does not exist in Indonesia.
As for the export example, let’s say a crop such as palm oil, which is exported to India, China and Pakistan.
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Batik cloth and songket are also commodities that are often exported by Indonesia to foreign countries, as well as many examples of other commodities.
Factors Affecting Commodity Excellence and Causing Export-Import
Commodities are goods and services that can meet consumer needs.
To be exported, of course a commodity must have its own superior value. This then becomes the reason for the occurrence of export-import activities between countries.
There are three factors that have a major influence on the superiority of a commodity. These factors include:
1. Nature
The first factor that influences commodities is nature, more precisely geographical conditions in a country.
Like Middle Eastern countries with sub-tropical climates, allowing date palms to thrive there.
In contrast to Indonesia, although the people like dates, the tropical climate does not allow cultivating dates here.
Even if it were possible, the quality of the dates produced would not be as good as dates produced in Middle Eastern countries.
2. Technology
Technological advances also affect the superiority of a commodity. The more sophisticated the technology, generally the better the quality of the products it produces.
In addition to quality, technology is also able to speed up the production process. So, technology is also an important factor in creating the advantages of a commodity.
This could be the reason for importers to buy sophisticated production equipment to produce quality products.
It can also make exporters have the opportunity to export their products because they are able to produce quality products and in large quantities.
However, for importers, this means having to prepare a large warehouse storage capacity that can be managed with a warehouse application to control the increasing volume of products in the warehouse.
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3. Production Costs
The last or third factor is production costs . The size of production costs, will affect the selling price of a product or commodity.
If the production costs are low, then the selling price is also cheaper. Low commodity prices are also an attractive advantage for importers.
From the explanation above, we can see that import-export is a sale and purchase transaction between countries.
As already stated in terms of export and import, that activity is carried out as an effort to fulfill the need for a product.
However, from the benefits, we can also see that these two activities are also useful for improving the welfare of the domestic community.
Good relations and cooperation between countries can also be realized through this activity.
Even though it has many benefits with good intentions, in the process both exports and imports must follow existing policies.
This is to prevent cooperation in illegal or dangerous fields for the people of a country or even the world as a whole.