1. 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 1

2. CURRENT ISSUES 2

3. ECONOMIC GROWTH VS POVERTY REDUCTION
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)
Note: Y Axis= Poverty reduction on average X Axis= Growth of GRDP on average Sources: Calculated from BPS 3

4. UNEMPLOYMENT REDUCTION
ECONOMIC GROWTH VS
UNEMPLOYMENT REDUCTION
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)
Note: Y Axis= Unemployment reduction on average X Axis= Growth of GRDP on average Sources: Calculated from BPS 4

5. INTERREGIONAL RESOURCES ALLOCATION
DEKON + TP FUND
BALANCED (PERIMBANGAN) FUND
FOREIGN DIRECT INVESTMENT
AVERAGE
(Rp.Million)
SHARE
(%)
(US$ Million)
SUMATERA
37.213
15,65
62.138
27,65
1.133
11,29
JAWA-BALI
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
100,00
10.030
Distribution of Dekon+TP Fund (%):
Jawa-Bali and Sumatera: 81,69
Kalimantan: 4,93
Sulawesi: 6,71
Maluku and Nusa Tenggara: 4,32
Papua: 2,08
Distribution of Balanced Fund (%):
Jawa-Bali and Sumatera: 62,59
Kalimantan: 13,57
Sulawesi: 10,60
Maluku and Nusa Tenggara: 9,30
Papua: 6,18
Source: Calculated from Ministry of Finance, Bank Indonesia, BPS and BKPM
REGION
DOMESTIC INVESTMENT
BANKING CREDIT
BANKING CREDIT FOR SMALE-SCALE AND MEDIUM BUSINESS
AVERAGE
(Rp. Billion)
SHARE
(%)
SUMATERA
8.400
31,52
15,44
18,79
JAWA-BALI
14.729
55,26
72,78
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
100,00
Distribution of FDI (%):
Jawa-Bali and Sumatera: 86,78
Kalimantan: 7,19
Sulawesi: 5,26
Maluku and Nusa Tenggara: 0,08
Papua: 0,70
Distribution of Banking Credit (%):
Jawa-Bali and Sumatera: 88,22
Kalimantan: 5,18
Sulawesi: 4,50
Maluku and Nusa Tenggara: 1,21
Papua: 0,59 5

6. COMBINATION OF ECONOMIC GROWTH AND JOBS CREATION
Scenario
High Jobs Creation
Low Jobs Creation
Java-Bali and Sumatera
Kalimantan, Sulawesi, Nusa Tenggara, Maluku, and Papua (KTI)
Jawa-Bali and Sumatera
(KBI)
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
Agriculture, Fishery, Tourism
Stagnation
Fishery,
Agriculture
Regional competitiveness  productivity, effcientcy and value added 
Harmonization and policy coordination on agriculture, fishery, forestry,
manufacturing and trade sectors 6

7. WHAT WE ARE DOING 7

8. 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
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 8 8

9. MODELING FOR REGIONAL DEVELOPMEN PLANNING
Policies, Programs and Activities with Performance Indicators
Interregional
Computable
General Equilibrium
Model (IRCGE Model)
Penyusunan dan
Monitoring
Pelaksanaan
RKP
Policy Analysis and Policy Evaluation: Scenario and Targeting
Spatial
Dynamic
Model
Spatial
Plan: National,
Main Island
and Province
Interregional Linkages
Model
Agent
Based
Model
Penyusunan
RPJMN
Multiregional
Econometric Model
Investments: Government, Private and Banking 9 9

10. OPTIMAZING RESOURCES ALLOCATION INTO DIFFERENT REGIONS
Dekon/TP Funds + Transfer Fund + Otsus Fund + Loan/Grant + Private Investment + Banking
Central Government
(+)
(+)
(+)
(+)
(+)
(+)
(+)
Local Gov.
Local Gov.
Local Gov.
Local Gov.
Local Gov.
Local Gov.
Local Gov.
Resource Allocation to Accelerate Regional Development
Local Government Expenditure = Local Economic Investment
(+)
(+)
Pembangunan Wilayah SUMATERA
(+)
Pembangunan Wilayah KALIMANTAN
(+)
Pembangunan Wilayah
MALUKU
(-)
(-)
Pembangunan Wilayah
SULAWESI
(-)
(+)
(-)
Pembangunan Wilayah
PAPUA
Pembangunan Wilayah JAWA-BALI
(-)
Pembangunan Wilayah
NUSA TENGGARA
Interregional resource allocation to improve productivity,
create more jobs, produce more value added and reduce poverty 10 10
Building and developing growth centre in the regions (outside Jawa-Bali) 10

11. DISTRIBUTION OF RESOURCES AMONG REGIONS
DEKON + TP FUND
BALANCE FUND
FOREIGN DIRECT INVESTMENT
DOMESTIC INVESTMENT
BANKING CREDIT
BANKING CREADIT FOR SMALL-SCALE AND MEDIUM INDUSTRIES
AVERAGE
(Rp. Million)
SHARE
(%)
(US Million)
(Rp. Billion)
SUMATERA
37.213
15,65
62.138
27,65
1.133
11,29
8.400
31,52
15,44
18,79
JAWA-BALI
66,31
78.519
34,94
8.516
84,91
14.729
55,26
72,78
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
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
100,00
10.030
26.654
100
Source: Calculated from Ministry of Finance, Bank Indonesia, BPS and BKPM
Resources allocation during has concentrated in Jawa-Bali.
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:
“Location switching” on government investment from Jawa-Bali to Papua, Maluku, Nusa Tenggara, Kalimantan dan Sulawesi, and Sumatera.
“Strengthening Public-Private Partnership” for Jawa-Bali.
“Promoting Regional Banking” in Papua, Maluku, Nusa Tenggara, Kalimantan, Sulawesi, and Sumatera. 11

12. WHAT WE CAN UTILIZE DYNAMIC SAM (DYSAMS)12

13. VARIOUS TOOLS FOR MODELING Deterministic Approach
STRENGTHS
WEAKNESSES
Deterministic 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
3. CGE (Single Region and Multiregion)
Integrated sectoral and regional analysis
Post fact analysis
Stochastic Approach
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 13

14. CAN DO AND CAN’T DO WITH DySAMs
What we can do with DySAMs
Understanding the possible impacts of various public investments on labor market.
Identify government strategies and public spending to effectively increase employment and productivity, and reduce poverty.
What we can’t do with DySAMs
Understanding the possible impacts of various public investments on labor market in different regions.
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. 14

15. WHAT NEXT 15

16. AGENDA
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.
Strengthening policy dialogues and policy forum on modeling and policy formulation.
Building the capacity of local governments in doing policy analysis, and preparing development scenarios and strategies.
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). 16

17. THANK YOU. 17

18. CURRICULUM VITAE Name : Sumedi Andono Mulyo, Ph.D
Place/Date of Birth : Yogyakarta, January 21, 1965
Home Address : Komplek Bappenas, Jl. Pertiwi II No.18 Blok A105,
RT 03/RW01, Kedaung, Sawangan, Depok-16516
HP:
Office Address : Ministry of National Development Planning/
National Development Planning Agency
Jl. Taman Suropati No. 2-4 Jakarta-10310
Tel.: Fax:
WORKING EXPERIENCE
Ministry of National Development Planning/National Development Planning Agency
Head of Division, Directorate of Regional Development. Jan 2006-now
Head of Division, Directorate of Less-develop Region and Special Areas. May 2004-Jan. 2006
Head of Division, Bureau of Community Empowerment. Dec May 2004
Head of Division, Bureau of District and Rural Development. May 1999 –Dec. 2000
Head of Section, Bureau of District and Rural Development. Marc 1994 –Jan. 1997
Planner, Bureau of Economic and Statistical Analysis, 1991‑March1994
EDUCATION
Postdoctoral. Graduate School of International Development, Nagoya University, Japan. Oct-Dec. 2006
Doctor of Philosophy. Department of Urban Engineering, the University of Tokyo, Japan. April 2001-Mar
Master of Arts, Graduate School of International Development, Nagoya University, Japan. Apr 1997-Mar
Postgraduate Diploma, Institute of Developing Economies Advanced School, Tokyo, Japan. Sept. 1994‑Mar
Bachelor, Faculty of Economic, University of Gadjah Mada. June 1984‑July1989. 18