Mohd Dan Jantan

THE IMPACT OF DIVERTING A FUEL SUBSIDY TO THE AGRICULTURAL SECTOR ON INCOME DISTRIBUTION AND POVERTY

The government has been implemented various policies and programs to promote growth and at the same time to alleviate poverty. However, there is a problem of budget deficit as a result of a big expenditure on subsidy, especially the subsidy on fuel. Thus, the government tries to staggeredly reduce fuel subsidy and at the same time compensate poor households in the form of direct cash aid. It is found that this policy has a negative impact on macro-economic performance and an increase in poverty level, income disparity, and the depth of poverty. As an alternative to disbursement of direct cash aid to the poor in lieu to a reduction in fuel subsidy, our study tries to analyze if the government diverts fuel subsidy to the agricultural sector. Thus, the objective of this study is to analyze the impact of diverting fuel subsidy to food crops agricultural sector on income distribution and poverty using the Computable General Equilibrium (CGE) analysis. To evaluate the disparity in income distribution, this study employs the beta distribution function developed by Decaluwe, et al. (1999). To analyze poverty incidence for each household group, we follow the Foster, Greer and Thorbecke (FGT) method. Households are grouped into four categories, urban non-poor, urban poor, rural non-poor, and rural poor households. This study conducts three simulations based the percentage of reduction in fuel subsidy.Our simulation results reveal that diverting of fuel subsidy by 43.2 percent to food crops sub-sector resulting in an increase in income of the urban non-poor, rural poor and rural non-poor. Also, these simulation shows that diverting of subsidy is able to reduce head count index of the poor households in rural area.

The Regional Patterns of Manufacturing Industries in Java Region, Indonesia

Empirical studies on geographical distribution of manufacturing in Indonesia demonstrate that manufacturing are localized in major metropolitan areas as well as a set of emerging regions. The objective of the paper is to investigate the patterns of manufacturing industries located in the three biggest region in Java namely West, Central and East of Java. Further, the study aim to explore whether regional specialization and industrial concentration patterns had changed during the 1998-2007. Based on the contribution analysis, the study found that distribution of manufacturing in Java was concentrated only in several areas. Turning to concentration index based on the Herfindahl-Hirschman Index (HHI), the study show that during 1998-2007, Java’s region became more specialized and industry became more concentrated.

DAMPAK KEBIJAKAN FISKAL TERHADAP KINERJA EKONOMI DAN ANGKA KEMISKINAN DI INDONESIA

Pemerintah secara berkelanjutan merancang kebijakan-kebijakan untuk mempercepat pertumbuhan ekonomi dan menurunkan angka kemiskinan. Tapi, pemerintah menghadapi beberapa kendala seperti meningkatnya defisit yang berpotensial memberikan dampak pada penentuan skala prioritas sebagaimana pro dan kontra yang terjadi di dalamnya. Berdasarkan pertimbangan tersebut, kebijakan ekonomi haruslah direvisi dan didesain ulang untuk memenuhi tuntutan pro pertumbuhan, pro lowongan kerja, dan pro kemiskinan. Secara umum, penelitian ini bertujuan untuk mengkaji dampak perluasan dan kontraksi kebijakan fiskal pada kinerja ekonomi di Indonesia. Untuk mencapai tujuan dari penelitian ini, perubahan indikator makroekonomi, kinerja sektor ekonomi, dan perubahan angka kemiskinan dan distribusi pendapatan dikaji dengan menggunakan model Computable General Equilibrium (CGE). Untuk mengevaluasi kesenjangan distribusi pendapatan, fungsi distribusi beta yang digunakan diadopsi dari Decaluwe, et al. (1999). Studi ini menggunakan metode Foster, Greer, dan Thorbecke (F-G-T) dan Cockburn (2001) untuk mengevaluasi angka kemiskinan di setiap kelompok rumah tangga. Hasil dari penelitian ini menunjukkan dampak dari meningkatnya subsidi lebih baik daripada dua kebijakan fiskal sebelumnya. Walaupun kebijakan transfer pendapatan memberikan dampak positif untuk meningkatkan pendapatan rumah tangga di pedesaan dan menurunkan angka kemiskinan, di sisi lain kebijakan ini memiliki dampak negatif dalam mengurangi GDP.