FORMATION OF COMPOSITE GLOBAL COMMODITY PRICES AS AN INFLATION INDICATOR FOR EAST JAVA

With the average contribution of imports to Gross Regional Domestic Product (GRDP) in the last five years reaching 19.1%, the dynamics of global commodity prices also influence the economic performance of East Java, including the movement of inflation. A composite indicator of global commodity prices is needed to find out the impact of changes in various global commodity prices on inflation in East Java. By adopting the Bank Indonesia methodology in forming a composite global price known as the Imported Inflation Price Index (IHIM) which has considered the method of forming a global composite price created by the IMF (IMF Commodity Price Index), the compilation of East Java global price composites also examines the accuracy of commodity selection and aspects of data availability. The selected global price composite for East Java is a composite of seven global commodities which include food (wheat, soybeans, corn and CPO) and non-food (iron, gold and oil). These are two aspects determining the relative weight, namely (I) the import portion of the total input based on the Input-Output table and (ii) the commodity weight of derivatives in the East Java Consumer Price Index (IHK) basket. Furthermore, with OLS regression, the composite of East Java global commodity prices affects the core-traded inflation movement in East Java. Thus, the composite of global commodity prices in East Java can be used as an indicator of East Java inflation projections, especially core-traded inflation. This study, in general, will also examine the effect of the exchange rate impact on the movement of core inflation, especially traded groups in East Java. Based on the regression results it is known that the impact of the exchange rate movement on core traded inflation in East Java is more significant than the effect of world commodity price movements.

EAST JAVA HALAL TOURISM OUTLOOK: POTENTIAL ANALYSIS AND STRATEGY FOR EAST JAVA HALAL TOURISM DEVELOPMENT

East Java is included in the strategic area of national halal tourism development by the Ministry of Tourism. This was supported by the existence of religious tourism objects, natural and artificial tourism attractions, organizing annual cultural events, and adequate infrastructure. The purpose of this research is to review the potential and formulate strategies for the development of halal tourism in East Java. This research uses secondary data with qualitative method and SWOT analysis technique. Internal analysis shows the strengths and weaknesses factor as well as external analysis shows the opportunity and challenge factors of weakness in the development of halal tourism in East Java. Strength factors include diversity of tourist destinations, infrastructure to support the mobility of tourists, and level of tourist visits. Weakneses factors include promotion and branding, skilled human resources, as well as supporting facilities for halal tourism. Opportunity factors include government policy support, existence of supporting institutions and international reputation of halal tourism Indonesia. Threat factors include economic stability, security stability and competition for the halal tourism industry. Based on the analysis of internal and external factors, the formulation of the development strategy of halal tourism in East Java among others : a) S-O strategy: encouraging domestic and foreign investment in the development of halal tourism in East Java; b) W-O strategy: development of East Java halal tourism information center platform; c) S-T strategy: create a brand identity for East Java halal tourism titled “Khazanah Jawa Timur”; d) W-T strategy: establishment of special economic zone for east java halal tourism.

OPTIMIZING DEMOGRAPHIC DIVIDEND IN PERSPECTIVE OF RETURN ON EDUCATION IN EAST JAVA: TO SCHOOL, TO WORK, OR TO ENTREPRENEUR?

Human capital highly affects economics productivity. Thus, education plays an important factor in every demographic dividend. This study will estimate the return on education to paid-employment and self-employment in East Java using SAKERNAS 2012. Using Mincerian specification and Sohn model, this study analyzed the baseline model and to analyse further in self-employment. This study will also compare result in East Java with National and other Java province. Results from estimation found that return on education in East Java is generally higher than national, but lower than West Java. As for self-employment, return on education in East Java is lower than paid-employment, but in the lowest magnitude if compared with National and other Java region. Labor market flexibility that analyzed in this study also shows that East Java relatively more flexible. As a matter of opportunity cost, the low return rate of education in East Java demand some adjustment in education and labor market policy to optimize the economic outcome.

DEVELOPMENT STRATEGY OF EAST JAVA TOURISM AS AN ALTERNATIVE SOURCE OF ECONOMIC GROWTH

The economic condition of East Java has been good lately by consistently having economic growth above the national economic growth and consistently contributing above 14% of Indonesia’s GDP from 2011 to 2016. However, lately East Java’s economy has slowed down due to the slowing down of its main industry sector, which is the manucfacturing sector. Looking by the growth trend that continues to increase, the tourism sector is considered to be a promising sector as an alternative source of economic growth in East Java. Other than that, to consider tourism sector as an alternative source of growth, we must see the linkage of the tourism sector to other industry sectors. This will be proven by using the Input-Output Analysis and the tourism sector is proven to have a wide linkage to other industry sectors. The strategy analysis of the development of tourism sector as a growth alternative source is continued by using the panel data regression with model developed by Joshi, Pouydal, & Larson (2017) with the study case of 30 provinces in Indonesia from the year 2010-2015. This analysis will also be linked to the model of tourism multiplier. Based on the analysis, there are 3 strategies for the development of tourism sector, which is increasing the conducive socioeconomic conditions, development of tourism infrastructure, and development of tourism resources.

EAST JAVA’S PRODUCTIVITY GROWTH: EVIDENCE OF INDUSTRIALIZATION OR DEINDUSTRIALIZATION IN THE JAVA ISLAND?

This study estimates Technical Efficiency (TE) and Total Factor Productivity (TFP) to analyze the sources of growth in the province of East Java in Indonesia. Technological progress, technical efficiency change, and scale effects are estimated through a stochastic frontier analysis (SFA) to break up different sources of growth within manufacture. This study looks at patterns of output expansion by differentiating gains from conventional sources –input growth and technological progress- and non-conventional sources –technical efficiency change and scale effects-. Results are aggregated based on tech-intensity, firm size, capital to output ratio employed, and labor skills. It also compares East Java with the other five provinces in the Java Island, the manufacturing corridor of the country. As expected, manufacturing sector is growing through input growth effects and tech progress-conventional sources- but underperforming in productivity by having negative efficiency change and negative scale effects. Labor has the largest elasticity to output (0.436), capital and raw materials have a much lower elasticity, and energy has a large negative one (-3.097) also causing a sharp increase in the cost of production. Low-tech firms, higher skills, and medium in size perform 72% better than average (TFP). MLT firms with labor-intensive and medium-size firms perform 58% better than average. However, champion industries have lower skills, good access to materials, and are less intensive in energy use. Some features of firm performance are: firm with larger portions of human skills capture the largest TE and higher TP values; those under high skills report larger losses due to negative scale effects; labor-intensive firms have larger TFP (less efficient but less exposed to energy prices).

THE EFFICIENCY OF LARGE AND MEDIUM SCALE OF THE FOOD AND BEVERAGE INDUSTRIAL PRODUCTION IN EAST JAVA: DATA ENVELOPMENT ANALYSIS (DEA) AND STOCHASTIC FRONTIER ANALYSIS (SFA) APPROACHES

This study aims to estimate the technical efficiency of food and beverage industry in East Java in 2011 to 2013 using micro data at the company level. Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA) are used to estimate technical efficiency. The output variable was the value of production, while input variables were capital, labor, raw material, and energy. The Likelihood Ratio test dictates that the Translog production function is more appropriate for use in this study. The estimation results show that the efficiency of food and beverage companies in East Java by using SFA has decreased significantly by 3.02%, whereas with the DEA method, the average technical efficiency has increased by 0.583% compared to the beginning of the year in 2011. In addition, there is difference in the efficiency value between SFA and DEA. The technical efficiency value of SFA calculation is greater than that of DEA. The dissimilarity is caused by the difference of specification in both methods related to the interaction between uncaptured variables in the DEA method. The results of this policy have implications on the government's obligation to pay attention to the food and beverage industry in order to suppress the company’ various operating costs, such as maintenance for old machines, which has an impact on on technical efficiency or improve the ability of labor in terms of machinery utilization. Therefore, in the following year, the performance of the food and beverage industry as the largest sub-sector in manufacturing is able to show the progress.

PERKEMBANGAN EKONOMI, INFLASI, DAN STABILITAS SISTEM KEUANGAN PROVINSI JAWA TIMUR SEMESTER I – 2018

Perekonomian Jawa Timur pada semester I 2018 sedikit melambat dibandingkan semester sebelumnya, namun diiringi dengan rendahnya tekanan inflasi Indeks Harga Konsumen (IHK) dan stabilnya sistem keuangan daerah. Perlambatan pertumbuhan ekonomi Jawa Timur terutama disebabkan oleh belum kuatnya kinerja ekspor luar negeri. Dari sisi perkembangan inflasi, rendahnya inflasi disebabkan oleh penurunan inflasi kelompok administered price dan core inflation dibandingkan paruh kedua 2017 seiring dengan hilangnya base effect kenaikan tarif dasar listrik di tahun 2017. Lebih lanjut, terjaganya stabilitas keuangan daerah tercermin dari masih positifnya pertumbuhan kredit, terjaganya rasio Non Performing Loan (NPL) di kisaran 3%, serta masih kuatnya kinerja sektor korporasi dan sektor Rumah Tangga di Jawa Timur. Pada semester II 2018, kinerja ekonomi Jawa Timur diperkirakan tetap tumbuh tinggi seiring dengan perkiraan peningkatan konsumsi swasta dan kinerja net ekspor antar daerah sebagai dampak adanya momen Natal dan Tahun Baru. Inflasi IHK Jawa Timur pada semester II 2018 diperkirakan sedikit meningkat dibandingkan pencapaian pada paruh pertama 2018, dengan peningkatan bersumber dari kelompok volatile food dan core inflation. Meskipun meningkat, namun inflasi Jawa Timur diperkirakan tetap dalam batas sasaran inflasi 3,5%+1% seiring dengan terjaganya pasokan dan intensifnya upaya pengendalian inflasi. Dari sisi stabilitas keuangan daerah dan kinerja perbankan Jawa Timur, kinerja pada semester II 2018 diperkirakan tetap baik dengan risiko kredit dan risiko likuiditas yang tetap terjaga.

Assessing the Economic Resilience of the Poor and Vulnerable Groups East Java Province in the Middle of the Covid-19 Pandemic : Susenas Data Study 2019

The COVID-19 pandemic has had a significant economic impact, especially on the poor and vulnerable groups in East Java, which is one of the provinces most affected by this pandemic. However, studies that focus on assessing the level of economic resilience of the poor and vulnerable groups in East Java are still limited. This study was conducted to analyze the economic resilience of the poor and vulnerable groups in East Java in terms of various characteristics such as access to social safety nets, asset ownership, savings account ownership, employment sector, and access to public facilities. Using Susenas data as the main data source and quantitative descriptive analysis method, this study shows that the poor and vulnerable groups have low resilience, limited access to social safety nets and low self-defense systems are two important factors that affect resilience levels.It will be used to evaluate existing policies and provide recommendations for future policy improvements.

Horti Bank: the Concept of Agricultural Financing Through Farmer Group Synergy to Increase the Welfare of Horticultural Farmers Affected by Covid-19 in East Java

The COVID-19 pandemic (Corona Virus Disease 2019) is considered a global pandemic by WHO (World Health Organization) and its spread has reached Indonesia. The COVID-19 pandemic has an impact on national economic growth which causes a decline and also causes an economic downturn. This Pandemic also caused an economic downturn experienced by the Province of East Java which had a relatively large number of cases. The agricultural sector is present as a resilient sector that can survive the COVID-19 pandemic which can contribute to supporting the economic growth rate of East Java. The agricultural sector consists of several sub-sectors, one of which is the horticultural crop sub-sector which has high potential. There are many obstacles experienced by horticultural farmers in their farming. The purpose of this study is to determine the problems experienced by horticultural farmers in East Java Province and to form an institutional model as a solution to the problem to improve the welfare of horticultural farmers in East Java Province through increasing NTP (Farmer Exchange Rate). Analytical descriptive method, case study method and literature study were used in this research. The results showed that (1) the problems experienced by farmers were (a) horticultural farmers generally have a relatively small capacity to provide capital; (b) Sales of horticultural crops are only made to middlemen; (c) Low accessibility to local financing institutions; (d) Agricultural financing credit system that is too burdensome for farmers; (e) There is a gap between farmers and financial institutions; (f) Credit by formal institutions is prioritized in the non-agricultural sector; (2) The existence of the "Horti Bank" institution which is implemented will help in overcoming the problems of horticultural farmers in East Java Province by providing facilities in the form of capital loans with the concept of investment, managing finances, and providing access to insurance for horticultural farmers in East Java Province; (3) The simulation results show that the existence of a Horti Bank can increase the exchange rate of farmers so that it is expected to reduce poverty in East Java.

Explaining the Fall of Socio-Economic Inequality on Welfare in East Java: A Household Level Analysis

Poverty in East Java is complex problems multidimentional. East Java Province is one of the province that has highest number of poverty in Java Island. The condition of poverty reflects that population welfare level and suspectible to poor. The aims of this study is analysis determinan socio economics to welfare in East Java by using survei data from Indonesia Family Life Survey (IFLS 5). This study was analyzed by two approach are multiple linier regression model and ordered logistic model. The results of this study shows that micro credit, years of education, social capital, infrastructure availability and assets ownership have significant effect to welfare in East Java. Demographic factors like age and number of household also shows significant result to welfare in East Java.