POTENTIAL APPLICATIONS OF DYSAMS IN INDONESIA:

REGIONAL PERSPECTIVE

Prepared by:Sumedi Andono Mulyo, Ph.D

Head of Division on Regional Social Economic Analysis

Ministry of National Development Planning/ National Development Planning Agency (Bappenas)

Seminar on Lesson and Tools for Economic Recovery and

Employment Creation from Indonesia

Coordinating Ministry for Economy and ILO

Jakarta, 30 November 2010

CURRENT ISSUES

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• Quadrant I: pro-growth & pro-poor– Maintaining economic performance

(Sumut, Jambi, Kalteng, Sulsel, Sulbar)

• Quadrant II: low growth, but pro-poor– Increasing productivity and value

added (Aceh, Riau, Sumsel, Bengkulu, Babel, Jateng, Jatim, Bali, NTT, Kalbar, Kalsel, Kaltim)

• Quadrant III: low growth & less pro-poor– Increasing productivity and value

added mainly labor intensive activities to involve poor people (Lampung, DIY, NTB, Maluku, Maluku Utara)

• Quadrant IV: pro-growth, but less pro-poor– Promoting small-scale and medium

enterprises, and labor intensive industries (Sumbar, Kepri, Banten, DKI, Jabar, Sulut, Gorontalo, Sulteng, Sultra, Papua Barat, Papua)

ECONOMIC GROWTH VS POVERTY REDUCTION

Note: Y Axis= Poverty reduction on average 2005-2009 X Axis= Growth of GRDP on average 2005-2009

Sources: Calculated from BPS 3

• Quadrant I: pro-growth & pro-job– Maintaining economic performance

(Papua, Kepri, Sulbar, Sultra, Sulsel, Gorontalo, Papua Barat, Sumbar, dan Sumut)

• Quadrant II: low growth, but pro-job– Increasing productivity and value added

(Riau, Jatim, Kalbar, Bali, Jabar)

• Quadrant III: low growth, less pro-job– Accelerating local economic

development to improve productivity and create more jobs (Lampung, Babel, Bengkulu, Kaltim, Aceh, Sumsel, Jateng, Kalsel, DIY, Maluku, Sultra, NTT dan NTB)

• Quadrant IV: pro-growth, but less pro-job– Improving the quality of growth by

creating more jobs (DKI Jakarta, Sulut, Sulteng, Banten, Malut, Jambi)

ECONOMIC GROWTH VS UNEMPLOYMENT REDUCTION

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Note: Y Axis= Unemployment reduction on average 2005-2009 X Axis= Growth of GRDP on average 2005-2009

Sources: Calculated from BPS

REGIONDEKON + TP FUND BALANCED

(PERIMBANGAN) FUND

FOREIGN DIRECT INVESTMENT

AVERAGE 2005-2009

(Rp.Million)

SHARE

(%)

AVERAGE 2005-2009

(Rp.Million)

SHARE

(%)

AVERAGE 2005-2008(US$

Million)

SHARE

(%)

SUMATERA 37.213 15,65 62.138 27,65 1.133 11,29 JAWA-BALI 157.630 66,31 78.519 34,94 8.516 84,91 KALIMANTAN 11.721 4,93 30.487 13,57 283 2,82 SULAWESI 15.950 6,71 23.811 10,60 76 0,76 NUSA TENGGARA 5.995 2,52 9.965 4,43 8 0,08 MALUKU 4.278 1,80 5.889 2,62 7 0,07 PAPUA 4.942 2,08 13.890 6,18 5 0,05 TOTAL 237.729 100,00 224.698 100,00 10.030 100,00

INTERREGIONAL RESOURCES ALLOCATION

Source: Calculated from Ministry of Finance, Bank Indonesia, BPS and BKPM

REGIONDOMESTIC

INVESTMENTBANKING CREDIT BANKING CREDIT

FOR SMALE-SCALE AND MEDIUM

BUSINESS

AVERAGE 2005-2008(Rp.

Billion)

SHARE(%)

AVERAGE 2007-2009(Rp.

Billion)

SHARE(%)

AVERAGE 2007-2009(Rp.

Billion)

SHARE(%)

SUMATERA 8.400 31,52 193.749 15,44 117.393 18,79 JAWA-BALI 14.729 55,26 913.352 72,78 408.768 65,43 KALIMANTAN 1.916 7,19 67.483 5,38 33.704 5,40 SULAWESI 1.402 5,26 56.483 4,50 43.281 6,93 NUSA TENGGARA 21 0,08 12.436 0,99 11.971 1,92 MALUKU 0,3 0,00 4.006 0,32 3.523 0,56 PAPUA 185 0,70 7.442 0,59 6.068 0,97 TOTAL 26.654 100 1.254.951 100 624.708 100,00

Distribution of Balanced Fund (%):1. Jawa-Bali and Sumatera: 62,592. Kalimantan: 13,573. Sulawesi: 10,604. Maluku and Nusa Tenggara: 9,305. Papua: 6,18

Distribution of Balanced Fund (%):1. Jawa-Bali and Sumatera: 62,592. Kalimantan: 13,573. Sulawesi: 10,604. Maluku and Nusa Tenggara: 9,305. Papua: 6,18

Distribution of Banking Credit (%):1. Jawa-Bali and Sumatera: 88,222. Kalimantan: 5,183. Sulawesi: 4,504. Maluku and Nusa Tenggara: 1,215. Papua: 0,59

Distribution of Banking Credit (%):1. Jawa-Bali and Sumatera: 88,222. Kalimantan: 5,183. Sulawesi: 4,504. Maluku and Nusa Tenggara: 1,215. Papua: 0,59

Distribution of Dekon+TP Fund (%):1. Jawa-Bali and Sumatera: 81,692. Kalimantan: 4,933. Sulawesi: 6,714. Maluku and Nusa Tenggara: 4,325. Papua: 2,08

Distribution of Dekon+TP Fund (%):1. Jawa-Bali and Sumatera: 81,692. Kalimantan: 4,933. Sulawesi: 6,714. Maluku and Nusa Tenggara: 4,325. Papua: 2,08

Distribution of FDI (%):1. Jawa-Bali and Sumatera: 86,782. Kalimantan: 7,193. Sulawesi: 5,264. Maluku and Nusa Tenggara: 0,085. Papua: 0,70

Distribution of FDI (%):1. Jawa-Bali and Sumatera: 86,782. Kalimantan: 7,193. Sulawesi: 5,264. Maluku and Nusa Tenggara: 0,085. Papua: 0,70

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COMBINATION OF ECONOMIC GROWTH AND JOBS CREATION

ScenarioHigh Jobs Creation Low Jobs Creation

Java-Bali and Sumatera

Kalimantan, Sulawesi, Nusa

Tenggara, Maluku, and Papua (KTI)

Jawa-Bali and Sumatera

(KBI)

Kalimantan, Sulawesi, Nusa

Tenggara, Maluku, and Papua (KTI)

High Economic Growth

Jawa-Bali and Sumatera (KBI)

Manufacturing and trade

Capital intesive industry, and telecommu-nication and information services

Kalimantan, Sulawesi, Nusa Tenggara, Maluku, and Papua

Agribusiness,Agroindustry, Tourism

Mining industry

Low Economic Growth

Jawa-Bali and Sumatera (KBI)

Agriculture, Fishery, Tourism

Stagnation

Kalimantan, Sulawesi, Nusa Tenggara, Maluku, and Papua

Fishery, Agriculture

StagnationRegional competitiveness productivity, effcientcy and value added Harmonization and policy coordination on agriculture, fishery, forestry,

manufacturing and trade sectors

Regional competitiveness productivity, effcientcy and value added Harmonization and policy coordination on agriculture, fishery, forestry,

manufacturing and trade sectors 6

WHAT WE ARE DOING

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REGIONAL DEVELOPMENT PERSPECTIVE

Interregional Coordination and

Cooperation

Monitoring and Evaluation

Data Base and Information System

Best Practices

Information

Regional Development Strategy and

Scenario

Monitoring RPJMN

2010-2014

Targeting and Monitoring for

Annual Plan(RKP)

Investments: Government, Private and Banking

Policies, Programs and Activities with Performance Indicators

Disaggregate Analysis of the

Impacts of National Policy on

Regions

Interregional Linkage Model

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Interregional Computable

General Equilibrium Model (IRCGE Model)

MultiregionalEconometric Model

Penyusunan RPJMN

2015-2019

Penyusunan dan Monitoring Pelaksanaan

RKP

Interregional Linkages

Model

Polic

y A

naly

sis

an

d P

olic

y

Evalu

atio

n: S

cen

ario

an

d

Targ

etin

gSpatial

Plan: National, Main Island and Province

Policies, Programs and Activities with Performance Indicators

Investments: Government, Private and Banking

MODELING FOR REGIONAL DEVELOPMEN PLANNING

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AgentBasedModel

Spatial Dynamic

Model

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OPTIMAZING RESOURCES ALLOCATION INTO DIFFERENT REGIONS

54797.00 (minimum)

245594.00

398937.00 (median)

639154.00

1339115.00 (maximum)

Pembangunan Wilayah SUMATERA

Pembangunan Wilayah JAWA-BALI

Pembangunan Wilayah NUSA TENGGARA

Pembangunan WilayahMALUKU

Pembangunan WilayahPAPUA

Central Government

Local Gov.

Local Gov.

Local Gov.

Local Gov.

Local Gov.

(+)

Dekon/TP Funds + Transfer Fund + Otsus Fund + Loan/Grant + Private Investment + Banking

(-)

(+) (+) (+) (+)

(-)

(-)

(-)(-)

Resource Allocation to Accelerate Regional Development (+)

(+)

(+)(+)

(+)

Local Government Expenditure = Local Economic Investment

Interregional resource allocation to improve productivity, create more jobs, produce more value added and reduce poverty

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Pembangunan Wilayah KALIMANTAN

Pembangunan WilayahSULAWESI

Local Gov.

Local Gov.

(+)(+)

Building and developing growth centre in the regions (outside Jawa-Bali)Building and developing growth centre in the regions (outside Jawa-Bali)

REGIONSDEKON + TP FUND BALANCE FUND FOREIGN DIRECT

INVESTMENTDOMESTIC

INVESTMENTBANKING CREDIT BANKING CREADIT FOR

SMALL-SCALE AND MEDIUM INDUSTRIES

AVERAGE 2005-2009

(Rp. Million)

SHARE(%)

AVERAGE 2005-2009

(Rp. Million)

SHARE(%)

AVERAGE 2005-2008

(US Million)

SHARE(%)

AVERAGE 2005-2008(Rp. Billion)

SHARE(%)

AVERAGE 2007-2009(Rp. Billion)

SHARE(%)

AVERAGE 2007-2009(Rp. Billion)

SHARE(%)

SUMATERA 37.213 15,65 62.138 27,65 1.133 11,29 8.400 31,52 193.749 15,44 117.393 18,79

JAWA-BALI 157.630 66,31 78.519 34,94 8.516 84,91 14.729 55,26 913.352 72,78 408.768 65,43

KALIMANTAN 11.721 4,93 30.487 13,57 283 2,82 1.916 7,19 67.483 5,38 33.704 5,40

SULAWESI 15.950 6,71 23.811 10,60 76 0,76 1.402 5,26 56.483 4,50 43.281 6,93

NUSA TENGGARA 5.995 2,52 9.965 4,43 8 0,08 21 0,08 12.436 0,99 11.971 1,92

MALUKU 4.278 1,80 5.889 2,62 7 0,07 0,3 0,00 4.006 0,32 3.523 0,56

PAPUA 4.942 2,08 13.890 6,18 5 0,05 185 0,70 7.442 0,59 6.068 0,97

TOTAL 237.729 100,00 224.698 100,00 10.030 100,00 26.654 100 1.254.951 100 624.708 100,00

DISTRIBUTION OF RESOURCES AMONG REGIONS

Source: Calculated from Ministry of Finance, Bank Indonesia, BPS and BKPM

1. Resources allocation during 2005-2009 has concentrated in Jawa-Bali.2. Need reorientation of national resources allocation (non-market intervention) to

accelerate regional development in Papua, Maluku, Nusa Tenggara, Kalimantan dan Sulawesi, and Sumatera such as:(1) “Location switching” on government investment from Jawa-Bali to Papua, Maluku,

Nusa Tenggara, Kalimantan dan Sulawesi, and Sumatera.(2) “Strengthening Public-Private Partnership” for Jawa-Bali.(3) “Promoting Regional Banking” in Papua, Maluku, Nusa Tenggara, Kalimantan,

Sulawesi, and Sumatera.11

WHAT WE CAN UTILIZE DYNAMIC SAM (DYSAMS)

12

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MODEL STRENGTHS WEAKNESSESDeterministic Approach

1. Input-Output Table (National or Interregional)

• Inter-sectoral analysis

• Forward and backward linkages

• Only commodities flows, but not covering income flows

• Unlimited supply assumption

2. SAM (National or Interregional)

• Commodities• Income flows among

different institution

• Unlimited supply assumption

3. CGE (Single Region and Multiregion)

• Integrated sectoral and regional analysis

• Post fact analysis

Stochastic Approach

1. Multiregional Econometric

• Interregional linkages

• Projection

• Statistical and non-statistical error

Mixed Approach

1. Spatial Dynamic • Introducing space • Complex and need huge data

2. Agent Based • Involving individual behavior into analysis

• Complicated

VARIOUS TOOLS FOR MODELINGVARIOUS TOOLS FOR MODELING

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What we can do with DySAMsWhat we can do with DySAMs

What we can’t do with DySAMsWhat we can’t do with DySAMs

1.Understanding the possible impacts of various public investments on labor market.

2.Identify government strategies and public spending to effectively increase employment and productivity, and reduce poverty.

1.Understanding the possible impacts of various public investments on labor market.

2.Identify government strategies and public spending to effectively increase employment and productivity, and reduce poverty.

1.Understanding the possible impacts of various public investments on labor market in different regions.

2.Identify government strategies and public spending to effectively increase employment and productivity, and reduce poverty in different regions.Since Jawa-Bali and Sumatera have dominated Indonesian economy, one single policy (with assumption single price for all regions) will be benefited for these regions. We need to capture regional dimension of national policies. Therefore, we need more information and more interregional analysis.

1.Understanding the possible impacts of various public investments on labor market in different regions.

2.Identify government strategies and public spending to effectively increase employment and productivity, and reduce poverty in different regions.Since Jawa-Bali and Sumatera have dominated Indonesian economy, one single policy (with assumption single price for all regions) will be benefited for these regions. We need to capture regional dimension of national policies. Therefore, we need more information and more interregional analysis.

CAN DO AND CAN’T DO WITH DySAMsCAN DO AND CAN’T DO WITH DySAMs

WHAT NEXT

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1. Continuing partnership and collaboration between GOI and international organizations (ILO, WB, JICA, CIDA, ADB, SIDA, KOICA, etc), and between Kemenko, Bappenas, Minsitry of Finance, Bank Indonesia, BPS, other line ministries, local governments, universities and research institutes.

2. Strengthening policy dialogues and policy forum on modeling and policy formulation.

3. Building the capacity of local governments in doing policy analysis, and preparing development scenarios and strategies.

4. Improving data and information system including efforts to build, update and publish Interregional Input-Output (IRIO) Table, Interregional Social Accounting Matrix (IRSAM) and Interregional Computable General Equilibrium Model IRCGE).

1. Continuing partnership and collaboration between GOI and international organizations (ILO, WB, JICA, CIDA, ADB, SIDA, KOICA, etc), and between Kemenko, Bappenas, Minsitry of Finance, Bank Indonesia, BPS, other line ministries, local governments, universities and research institutes.

2. Strengthening policy dialogues and policy forum on modeling and policy formulation.

3. Building the capacity of local governments in doing policy analysis, and preparing development scenarios and strategies.

4. Improving data and information system including efforts to build, update and publish Interregional Input-Output (IRIO) Table, Interregional Social Accounting Matrix (IRSAM) and Interregional Computable General Equilibrium Model IRCGE).

AGENDAAGENDA

THANK YOU.

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CURRICULUM VITAEName : Sumedi Andono Mulyo, Ph.DPlace/Date of Birth : Yogyakarta, January 21, 1965Home Address : Komplek Bappenas, Jl. Pertiwi II

No.18 Blok A105, RT 03/RW01, Kedaung, Sawangan, Depok-

16516 HP: 085-880-596-992

Office Address : Ministry of National Development Planning/

National Development Planning Agency

Jl. Taman Suropati No. 2-4 Jakarta-10310

Tel.: 021-3193-4195 Fax: 021-3193-4195 E-mail: sumedi@bappenas.go.id sumedi1965@yahoo.co.id

EDUCATION1. Postdoctoral. Graduate School of International

Development, Nagoya University, Japan. Oct-Dec. 2006

2. Doctor of Philosophy. Department of Urban Engineering, the University of Tokyo, Japan. April 2001-Mar. 2004.

3. Master of Arts, Graduate School of International Development, Nagoya University, Japan. Apr 1997-Mar. 1999.

4. Postgraduate Diploma, Institute of Developing Economies Advanced School, Tokyo, Japan. Sept. 1994‑Mar. 1995.

5. Bachelor, Faculty of Economic, University of Gadjah Mada. June 1984‑July1989.

WORKING EXPERIENCEMinistry of National Development Planning/National Development Planning Agency

1. Head of Division, Directorate of Regional Development. Jan 2006-now

2. Head of Division, Directorate of Less-develop Region and Special Areas. May 2004-Jan. 2006

3. Head of Division, Bureau of Community Empowerment. Dec. 2000-May 2004

4. Head of Division, Bureau of District and Rural Development. May 1999 –Dec. 2000

5. Head of Section, Bureau of District and Rural Development. Marc 1994 –Jan. 1997

6. Planner, Bureau of Economic and Statistical Analysis, 1991‑March1994