Rina Oktaviani

Impact of a Lower Oil Subsidy on Indonesian Macroeconomic Performance, Agricultural Sector and Poverty Incidences: A Recursive Dynamic Computable General Equilibrium Analysis

Budget deficit, exchange rate fluctuation and high fuel world price provides a pressure on budget capacity to stimulate the Indonesian economy. The government has designed several fiscal policies, including reducing the fuel subsidy. The study objective is to analyse the impact of reducing fuel subsidy on macroeconomic variables, agricultural sector, and income distribution. The modification on the basic model, which is a recursive-dynamic CGE model, is made in this study. The data used in the model is of the Indonesian I-O Table 2000, The Indonesian Social Accounting Matrix 2000, National Household Survey data and parameter from some other sources. The results show that the reduction in fuel price subsidy tends to increase prices of industrial outputs that highly depend on fuel, such as transportation and fishery sectors. In contrast, the change in fuel price does not influence the price of paddy. Wage of skilled labor, land rent, and capital rent decline steadily in response to the change in fuel price. Households will lose their income following the reduction in fuel subsidy, which then decreases the welfare of households. Incomes are not evenly distributed within the society (household groups). An increased fuel price at consumer level declines the Indonesian real GDP. The government should give the compensation of reducing the fuel subsidy directly to the poor people. The compensation can also be given directly to the poor people through the development of infrastructure, which may solve some supply side bottlenecks in the economy.

ANALYSIS OF PROBABILITY FOR ACHIEVING THE REDUCTION OF DEFORESTATION RATE: FOREST TRANSITION THEORY APPROACH

Indonesia is a decentralized country so that each region implements its own development policy. The economic activity imposed by the regions has implications on the diverse dynamics of forest cover, indicated by the different rates of deforestation.. This paper aims to describe the dynamics of Indonesian forest cover by using forest transition hypothesis framework and analyze the factors that accelerate the decline in deforestation rates. Refering to land cover data for period of 2000-2013 and economic variables, model of ordered logistic regression (OLR) was developed by using maximum likelihood estimation method. The result showed that, provinces in Indonesia can be classified into three groups: high, medium and low. Share of forest cover and population density increase the probability in achieving low deforestation rate. Conversely, income per capita is indicated to be a factor that inhibits the decline in deforestation rates. Acceleration of the achievement of the decrease in deforestation rates can be done through (1) enhancing the clarity of tenure, (2) improving environmental policies such as development of environmental reward system, (3) increasing value added output to improve product competitiveness; (4) conservation and reforestation, and (5) improving agricultural technology.

Global Value Chain of Indonesian Pulp and Paper Industry

Global Value Chain (GVC) has been a global phenomenon since 1980s when export values no longer represented the actual benefit of a country’ economic measure. Furthermore, GVC measurement applying input-output table approach has quite rapidly developed. Given the fact that the role of Indonesian pulp and paper industry is increasingly important in the country’s economy, this study aimed at measuring the pulp and paper industry GVC in 1995 and 2011 as well as its position and participation in the global GVC using Inter-Country Input-Output (ICIO). The results show that GVC of Indonesias pulp and paper industry is generally in the form of value-added exports in intermediate absorption by direct importers and indirect final exports and also in the form of foreign value-added return in foreign countries in intermediate exports and also value-added exports in intermediate goods exports to the third countries. GVC Indonesia is also still dominated by domestic value-added compared to foreign value-added and remains in a “downstream” position and has decreased its GVC participation globally. In the future, it is important to strengthen GVC participation by maintaining greater ownership of domestic value- added in Indonesias pulp and paper industry. Keywords: global value chain, pulp and paper, Intercountry input-output, GVC position and participation

Analisis Jangkauan (Outreach) LKMS bagi Rumahtangga Miskin Sektor Pertanian di Perdesaan Bogor, Jawa Barat

The Objective of research to acknowledge the hypothesis: outreach islamic microfinance for the poor household of agricultural sector at rural Bogor West Java. The majority of the poor community in Indonesia stay at rural areas. Lack of access credit/financing generally seen as one of the main reasons why many people remain poor. Credit/financing as a powerful instrument to help poor people break out of the vicious cycle because it has the potential to improve income and savings, consequently, enhance capital accumulation, and reinforce high incomes, but providing credit to the poor of agricultural sector in many cases is a very costly activity. Bank isn’t interest to serve it. Hopefully, islamic microfinance institutions reaches to more the poor of agricultural sector. The average loan is the most commonly used to measure the degree of microfinance institutions (MFIs) outreach to poor customer segments, but it is very simple. Using the CGAP (Consultative Group to assist the poorest) method, the poverty multidimension of islamic microfinance outreach was measured. The result of study showed that islamic MFIs didn’t reach the poor household of agricultural sector at rural Bogor West Java.