interregional trade group ui-2012
DESCRIPTION
Interregional trade group UI-2012TRANSCRIPT
INTERREGIONAL TRADE – PATTERN
AND FUTURE CHALLENGES
“ If each region can grow, inter-regional trade will also grow” -- SBY (2009) --
Definition and Theories of IRT
Current Situation of IRT in Indonesia
Factors Affect the IRT in Indonesia
IRT Development Policy
Future Challenges
Policy Recommendation
Theories around the Interregional Trade:
Inter-regional Trade :
Trade that takes place between two or more regions
Locational TheoryIndustrial locational choice that is beneficial close to input or market
Economic Base Theory
Regional economic growth directly related to demand of goods and services outside the region
Competitive Advantage Theory
Trade interactions will be higher with high competitiveness region
Regional Dependency on Production input
Demand = Supply
Lack of Processing Industry (to process raw materials)
Tendency of Lower Global Demand and higher domestic market
Competitiveness Specialization
Food Security Agriculture region vs Non-Agriculture
Trade Flows between Regions in Indonesia
Source : Solihin, Dadang (2010)
>> Higher Intra-regional and Lower Inter-regional Trade
Sumatera
GDP share : 23 %
Kalimantan
GDP share : 9.1%
Sulawesi
GDP share : 4.6%
Java & Bali
GDP share : 59.4%
Nusa Tenggara
GDP share : 1.5%
Maluku & Papua
GDP share : 2.4%
Source : BPS ( 2010)
REGIONAL GAP “Success breeds Success”
>> Concentration of Economic Activities Java & Sumatera
>> Lower Connectivity/ Accessibility for region outside Java & Sumatera High Cost Transportation
>> Concentration of high scale industry and investment in java
>> Regional income disparity
>> Low level of productivity Low investment
attractiveness
>> Excessive Migration from low regional economichigher regional economic
Effect
The numbers of industries that have high competitiveness
• Major industries and supporting industries
Opennes of region to interregional trade
• Economic expansion will give spread effect to other regions
Regional infrastructure
• Transportation networks, ports, airport, telecommunications and energy
The distribution chain Different Price Among Regions
• Distribution/ transportation cost
The size of domestic market demand and supply capabilities
Role of local Government...
Industrial Area
Integrated Economic Development Zone (KAPET)
Special Economic Zone (KEK)
The increasing economic activity encourage equality and convergence distribution of income per capita across regions
To spread of economic development outside Java and Sumatera (12)
The development of special zone to perform the functions of economy and acquire certain facilities (68)
Agglomeration of industry in particular area (22)
Integrated Economic Development Zone (KAPET)
1 : Agricultural Sector; 2 : Plantation Sector; 3 : Fishery Sector; 4 : Forestry Sector; 5 : Mining Sector; 6 : Tourism and Industrial Sector
MP3EI
Public Service
Competitiveness
Public Welfare
Purpose
Law Number 32/2004
AcceleratorPERPRES 32/2011
- Development of economic potential through 6 economic corridors- Strenghtening of national connectivity
the Master Plan for Acceleration and Expansion on Indonesia’s Economic Development
Expand Domestic Trade
1 Corridors RG increases 3.4 times to $473 billion by 2030
2 Corridors RG increases 4.2 times to $1,282 billion by 2030
3 Corridors RG increases 2.6 times to $152 billion by 2030
4 Corridors RG increases 4.4 times to $94 billion by 2030
5 Corridors RG increases 4.3 times to $76 billion by 2030
6 Corridors RG increases 6.3 times to $83 billion by 2030
The Development of Large Islands Regional Zoning
Regional Development Specialization
Sumatera Center of industrial production and processing of agricultural, plantations, fisheries, national energy, trade center and tourism
Java-Bali Agriculture, manufacturing, services and tourism
Kalimantan Plantation, animal husbandry, fisheries, processing of forest products, and mining
Sulawesi Agriculture, plantation, fisheries, trade, services and tourism
Nusa Tenggara, Maluku, and Papua Plantation, Fisheries, and animal husbandry
Interregional trade among regions becomes interregional trade among countries
Consistency of the Implementation of MP3EI
Regional economic zone Improve Productivity Local Government support
Regulation of domestic competition (betweenregions)
Improve the product’s quality to be superior to similar products from other regions
Penetrate new markets or increasing domestic market share
Create new investment that is more productive and more competitive
(1) Regional Cooperation and development of business networks
(2) Optimize the Development of Economic Zone
(3) Politicall Will of Local Government to Encourage IRT
(4) Improve interregional linkages through the strengthening of regional infrastructure
(5) Enhance regional competitiveness through the development of leading sector in each region
(6) Encourage more investments outside of java and Sumatera
>> the end <<