Abstract: The problems of Indonesian rattan related to the policy sets by the government influence the upstream condition as well as the downstream condition of Indonesian rattan industry. The approach taken to solve rattan problems in Indonesia is by using system dynamic approach. Research finding about rattan phenomena in Indonesia raises a discourse that the government policy to prohibit rattan raw materials export turns out to be insignificant in helping the national rattan industry to increase its production and profit. If the trading system is given to the market without government intervention may be competition will seem fairer and the role of government is expected to assist the domestic market by making rattan as a superior product as with batik cloth.