Key Sectors in The Economy of Riau Province

5.5 Key Sectors in The Economy of Riau Province

Rammusen 1956 explained that the determination of a key sector in the economy could be based on the categories of input-output analysis such as linkage analysis, dispersion or multiplier effects. In the development of a region economics, the appearance of sectors that nearly qualify as key sectors is needed. Based on Total Output Multiplier TOM and Total Income Multiplier TIM analysis for the sectors in the economy of Riau Province, it can be determined what sector are the key sectors that need to develop further in Riau Province. TOM is the sum of the output multiplier Type I and output multiplier Type II while TIM is the sum of the income multiplier Type I and income multiplier Type II.Industry of food products, beverages and tobacco products placed in the first position on both TOM and TIM analysis with the total of TOM is 4.52597 and the total of TOM and TIM is 11.6291. Pulp industry placed in the top ten priority of key sectors whether in TOM analysis or TIM analysis. The TOM for pulp industry is 3.81672 or at sixth position while the TIM is 3.87338 or at seventh position, and the overall total multiplier of pulp industry in the economy of Riau Province is 7.69010 or placed in the sixth priority of key sectors in Riau Province.Paper industry is not in the top ten priority sectors in Riau Province, because the TOM is only 2.96680 or placed at sixtenth position and for the TIM is 2.26129 or placed at twentieth position. Overall the paper industry has the value of total multiplier of 5.22809 or placed at eighteenth priority in key sectors of Riau Province. Table 5.12 TOM and TIM Key Sectors Analysis Sector TOM Rank TIM Rank Total Priority Agriculture 3.00274 15 3.83497 8 6.83771 11 Wood 2.52304 19 2.57145 15 5.09449 19 Other forest products 2.24008 21 5.59627 2 7.83635 5 Mining and Quarrying 2.28754 20 2.27642 19 4.56396 21 Industry of Food Products, Beverages and Tobacco Products 4.52597 1 11.6291 1 16.15515 1 Industry of Textiles and Wearing Apparel 4.14031 3 2.61044 14 6.75075 12 Industry of Wood and Furniture 4.02323 4 3.06031 12 7.08354 8 Pulp Industry 3.81672 6 3.87338 7 7.69010 6 Paper Industry 2.96680 16 2.26129 20 5.22809 18 Paper Products Industry 3.56735 11 4.89218 5 8.45953 4 Mining Industry 2.86946 18 2.17826 21 5.04772 20 Industry of Fertilizer and Chemical Products 3.23342 13 2.34143 18 5.57485 17 Industry of non-metallic Products 4.34750 2 5.68891 3 10.03641 2 Industry of Fabricated Metal Products 3.70251 7 3.20290 11 6.90541 10 Other Industries 3.58396 10 2.43345 17 6.01741 15 Electricity, Gas, and Water Supply 3.63951 8 3.03715 13 6.67666 13 Construction 3.41988 12 2.52107 16 5.94095 16 Trade, Hotels and Restaurants 3.08388 14 4.33011 6 7.41399 7 Transport and Communications 3.63786 9 3.41178 10 7.04964 9 Financial Institutions, Leasing and Corporate Services 2.92455 17 3.59924 9 6.52379 14 Services 3.92838 5 5.25366 4 9.18204 3 Others 2.00000 22 0.00000 22 2.00000 22 Source: Riau Province Input- Output Table, 2010 calculated Pulp industry has more priority than paper industry for the development of the industry. The top ten sectors should be develop further to faster the economic growth of Riau Province. The paper industry, even though it does not has high priority, it still has the ability to improve the economy of Riau Province by contributed to the GRDP of Riau Province. Therefore, pulp and paper industry is consider as the sector that needs to be develop further.

VI. CONCLUSIONS AND SUGGESTIONS

6.1 Conclusions

Based on the analysis of the Input-Output Table of Riau Province in 2010, the role of pulp and paper industry in the economy of Riau Province can be conclude as follows: 1. In the output structure, pulp industry value is 35,525,195 million rupiah while paper industry value is 4,233,851 million rupiah. In the demand structure, the intermediate demand for pulp industry is 16,591,780 million rupiah while for paper industry is 2,446,353 million rupiah. The gross value added for pulp industry is 18,211,169 million rupiah while for paper industry is 2,323,999 million rupiah. As for the investment, pulp industry value is 647,874 million rupiah while paper industry value is 228,476.99 million rupiah. The value of nett export-import for pulp industry is 17,494,714.99 million rupiah while for paper indutry is 666,256 million rupiah. Overall, the value of pulp industry is higher than paper industry in term of output structure, demand structure, gross value added, investment, and export-import. 2. Based on the linkage analysis, pulp industry has higher linkages to other sectors or to the sector itself whether directly or directly and indirectly than paper industry. 3. Judging from the dispersion analysis, pulp industry has the high ability to attract upstream sectors with a value of 1.10025 and has the low ability to attract its downstream sectors by 0.91889, while paper industry has low