Professor of the Faculty of Economics and Business, Universitas Brawijaya, Prof. Dwi Budi Santoso, S.E., M.S., Ph.D. said that the tourism sector can continue to be developed in East Java to boost the economy in the Golden Indonesia 2045
Prof. Dwi said that in the last decade, the highest economic growth rate ever achieved by East Java was 6.6 percent, and had never reached 8 percent. So that in 2045 it is expected to be achieved through strengthening the tourism sector in East Java. “This shows that the challenges towards Golden Indonesia 2045 are very large, especially with global challenges,” said Prof. Dwi in the EJAVEC webinar at FEB UB on Thursday (4/17/2025).
The Golden Indonesia 2045 is a discourse that has been touted since 2023 through a press release from the Coordinating Ministry for Economic Affairs of the Republic of Indonesia. Reported from the ekon.go.id report on Thursday (6/15/2023) in realizing the vision of “Golden Indonesia 2045” the government launched the National Long-Term Development Plan (RPJPN) for 2025-2045.
Therefore, Dwi said that the tourism sector in East Java could be one of the efforts to advance the economy, especially in East Java. Dwi said that, theoretically, the tourism sector has an extraordinary multiplier effect that can encourage interaction between sectors in the economic system. The multiplier impact of this sector is very broad, including job creation, resource utilization, strengthening workforce skills and expertise, increasing collaboration in various fields or cross-disciplinary sectors, and encouraging trade and investment flows. Furthermore, every expenditure in the tourism sector triggers a domino effect that stimulates demand in other economic sectors, thereby increasing regional income.
“Theoretically, we make the direct effect of tourism actually on transportation, hotels, food, and labor,” explained Dwi.
Furthermore, Dwi also explained that, theoretically, if components such as transportation, hotels, and food businesses grow, they will encourage the number of labor demands. However, Dwi emphasized that various efforts are needed to realize this. In Solow’s theory of economic growth, it can be identified that the economy is not always straight and continues to fluctuate. “The economy does not continue to rise or fall, but there are contractions and expansions,” said Dwi.
Dwi also added that in Solow’s theory, economic progress occurs through increased capital from investment. Every investment certainly has costs, and as long as the costs are still lower than the benefits or profits obtained, the available savings will continue to be invested. At this stage, the economy is in an expansionary condition, marked by an increase in economic output per capita. This process will continue until the investment profit reaches zero. If investment is forced after this point, the economy will enter a condition called overheated, where investment costs become higher than available savings. To cover this difference, public consumption must be reduced, which ultimately causes the economy to contract. In conditions like this, investors will reduce their investment, and the economy will slowly return to a point of equilibrium or what is known as a steady state. Steady state is the optimal point of the regional economy, where the fluctuation of the regional economy will occur around that point in the long term.
Therefore, the main focus of the government should be to encourage the formation of a new steady state with a higher level of capital and output. To achieve this, the key strategy that needs to be done is to increase investment efficiency. the government also needs to reduce investment costs to a minimum, either through simplifying regulations, improving infrastructure, or creating a conducive business climate. As efficiency increases and costs decrease, the upper limit of economic growth will be pushed further, creating opportunities for regions to move out of the old steady state and into a new, higher growth path.
Dwi also illustrated that if the 38 cities and regencies in East Java have the same steady state, then naturally their economic levels will form a convergence. That is, the reduction in increasing disparities between regions.
However, in fact, 38 cities and regencies in East Java have different steady states, so that poor areas in East Java find it difficult to catch up with the regional economy or large city areas such as Surabaya. This difference is likely caused by unequal initial socio-economic conditions, such as access to infrastructure, quality of human resources, and regional fiscal capacity. As a result, the regional economy is divided into several groups or clubs, where each group moves towards its own different steady state points.
“Because of the different steady states, the regions or areas form clubs with regional categories with the same steady state, which is called club convergence with different growth centers,” added Dwi.
More specifically, Dwi explained that tourism development needs to consider regional characteristics, whether it has a tourism base or not. For example, Batu City, which already has a strong foundation in the tourism sector, no longer requires massive development of basic facilities, but needs to focus on increasing attraction and supporting services (ancillary). This is in line with its position which may have entered a phase of economic slowdown, where the main strategy is no longer building tourism infrastructure, but attracting as many tourist visits as possible through innovation and strengthening destination value.
In closing, Dwi said that there are several indicators or indexes that can be used to measure the performance of the tourism sector, including the contribution of the accommodation, transportation, and food and beverage sectors to the GRDP, as well as the percentage of domestic and foreign tourist visits.
“From several of these indexes, the percentage of domestic and foreign tourist visits is an indicator that the tourism sector in East Java has good competitiveness,” concluded Dwi. (REV/UB PR/ Trans. Iir).
