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Mohammad Abdul Mukhyi and the Study Team of PT. Surveyors
Indonesia (2022). Analysis of the Area of South Sumatra Industry
Growth Centers. Journal Eduvest. Vol 2(6): 1.134-1.141
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Eduvest Journal of Universal Studies
Volume 2 Number 6, June, 2022
p- ISSN 2775-3735- e-ISSN 2775-3727
ANALYSIS OF THE AREA OF SOUTH SUMATRA INDUSTRY
GROWTH CENTERS
Mohammad Abdul Mukhyi and the Study Team of PT. Surveyors Indonesia
Faculty of Economics, Gunadarma University, Indonesia
Email: [email protected]rma.ac.id
ARTICLE INFO ABSTRACT
Received:
May, 26
th
2022
Revised:
June, 13
th
2022
Approved:
June, 17
th
2022
The formation of an area with certain characteristics that have
the potential to grow and develop certain industries As a prime
mover for regional development and encourage increased
industrial and regional economic growth. The purpose of this
study is to analyze the South Sumatra Industrial Growth Center
Area in the development of industrial growth areas. The
approach taken is a qualitative analysis by looking at portraits
in the field. With the formation of this Industrial Growth Center
Area, it will become clearer the direction and strategy to be
carried out by the level I or level II district and city
governments, so that good strategies and planning can be
prepared to encourage economic development, especially in
the South Sumatra region, so that with the This WPPI can be
expected to provide progress and prosperity for the community
with a multiplier effect created.
KEYWORDS
Industrial Growth Center Area, Economic Growth,
Industrial Growth
This work is licensed under a Creative Commons
Attribution-ShareAlike 4.0 International
INTRODUCTION
The development of national industrial areas is aimed at accelerating the
spread and even distribution of industry as described in Government Regulation
No. 14 of 2015 concerning the National Industrial Development Master Plan
(RIPIN). One of the proposed strategies is the establishment of the Industrial
Growth Center Area (Moseley, 2013; Parr, 1999). The objective of WPPI is the
formation of an area with certain characteristics that have the potential to grow and
Mohammad Abdul Mukhyi and the Study Team of PT. Surveyors Indonesia
Analysis of the Area of South Sumatra Industry Growth Centers 1.135
develop certain industries (Li et al., 2015). As a prime mover for the development
of the region as well as encouraging increased industrial and economic growth in
other surrounding areas within a regional area, so that the industrial development
targets contained in the RIPIN can be achieved (Sun et al., 2015; Zorpas et al.,
2018).
In accordance with the mandate of Article 14 of Law no. 3 of 2014 concerning
Industry, the Government and Regional Governments shall accelerate the spread
and even distribution of industrial development throughout the territory of the
Unitary State of the Republic of Indonesia through Industrial Regions which are
carried out through:
a. Development of the Center for Industrial Growth (WPPI);
b. Development of Industrial Designated Areas (KPI);
c. Industrial Estate Development (KI); and
d. Development of Small and Medium Industry Centers (IKM Centers).
South Sumatra is known as the province of Bumi Sriwijaya, because the 7th
to 12th centuries AD this region was the center of the Sriwijaya Kingdom which
was also famous for the largest and strongest maritime empire in the archipelago.
Since independence until now, the province of South Sumatra has undergone 16
changes of leadership, consisting of 17 cities and regencies, with the capital city in
Palembang. South Sumatra is also known as Natural Resources (SDA), even being
the five largest oil and gas producing regions in Indonesia. A number of oil and gas
companies operate in several areas. Like; Musi Banyuasin, Banyuasin, Muara
Enim, Pali, and Lahat. South Sumatra is capable of producing 30,718 barrels of
crude oil per day and 10,339 barrels of condensate. All oil blocks located in South
Sumatra are managed by Pertamina, Medco, Talisman, Conoco Philips and Golden
Spike, and several other oil and gas companies.
Development is a conscious effort of humans to take advantage of the
environment in an effort to meet their needs (Mensah, 2019). With development,
human life and welfare can be improved (Abowd et al., 1997; Holtkamp et al.,
2016). Development goals can be achieved by taking into account various
problems, including:
1. Control of population growth and the quality of human resources.
2. Maintenance of environmental carrying capacity.
3. Control of ecosystems and species as resources for development.
4. Industrial development.
5. Anticipating the energy crisis as the main support for industrialization.
Regional development is one of the forms and methods of a region to achieve
the successful implementation of development. Based on the 2018 Government
Work Plan, regional development is aimed at growth and equitable development.
Regional development growth in 2018 was driven by the growth in the role of the
services sector, the manufacturing industry sector and the agricultural sector
(Roberts, 1996). The increasing contribution of these sectors is carried out in line
with the continued development of strategic areas in areas that are the main prime
movers (main growth drivers), including Special Economic Zones (SEZ), Industrial
Estates, Urban Areas (megapolitan and metropolitan), Tourism Areas and Areas
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based on agriculture and regional potential such as agropolitan and minapolitan
(Šlaus & Jacobs, 2011).
The Industrial Growth Center Area is an area designed with a pattern based
on industrial development by utilizing the potential of regional resources through
strengthening industrial infrastructure and connectivity with strong economic
linkages (Antrop, 2004; Kuang et al., 2016). Provinces/districts/cities that are not
included as WPPI, are given a role as a supporter of WPPI. Its role can be in the
form of: raw material provider, labor provider, research and development site,
provider of clean water sources and others.
The spatial development of WPPI needs to dig deeper into the locality aspect
in order to capture the industrial potential/regional advantages so that industrial
development can run more effectively (Cheng & Masser, 2003). The WPPI
development plan must also analyze industrial supporting infrastructure such as
information and telecommunications infrastructure, energy supply, human
resources and science and technology, institutional and policy systems as well as
logistics system infrastructure and those that support connectivity and synergy in
the context of expanding economic growth from the surrounding area (Er, 1997;
Henderson et al., 1995). Therefore, a master plan for the development of WPPI is
needed in the context of implementing the deployment of new industrial growth
centers in Sumatra and Kalimantan.
The purpose of this activity is to conduct an analysis of the Industrial Growth
Center Area (WPPI) in South Sumatra. The purpose of this activity is to analyze the
existence of the Industrial Center Development Area (WPPI) in South Sumatra in
the development of industrial growth areas. The target in this research is the
utilization of regional resource potential through strengthening industrial
infrastructure.
RESEARCH METHOD
An approach to the development of industrial growth centers based on regional
comparative advantage can be in the form of an integrated industrial estate development
with the following characteristics:
1. Infrastructure has been integrated with the logistics system;
2. Service oriented;
3. Industry specific education;
4. Established innovation center;
5. Pay attention to the environment;
6. Supported by an efficient and effective logistics system.
The industrialization approach is not just building factories but must be accompanied
by an increase in people's welfare. Industrialization is industrial development in order to
increase added value which must be accompanied by an increase in the economic prosperity
of the local community. The Industrial Growth Center Area Approach is also a form of
application of the Growth Center Concept.
The theory of the Growth Center is one of the popular regional development concepts
used, mainly because it is considered capable of promoting the efficient use of development
resources. The use of this theory is marked by the policy of establishing a number of areas
as growth centers, which are expected to be able to encourage the growth of other
surrounding areas.
Mohammad Abdul Mukhyi and the Study Team of PT. Surveyors Indonesia
Analysis of the Area of South Sumatra Industry Growth Centers 1.135
These Growth Centers generally have certain specializations/advantages compared
to other areas in the vicinity. Thus, if development resources are "injected" into the area,
Mohammad Abdul Mukhyi and the Study Team of PT. Surveyors Indonesia
Analysis of the Area of South Sumatra Industry Growth Centers 1.137
the added value generated will be greater, compared to the added value generated if these
resources are given to other regions that do not have advantages. In this context, excellence
can be translated into three things, namely:
1. Absolute advantages
2. Comparative advantages
3. Competitive advantages
Sustainable Development Approach
The development process is carried out with a short-term orientation, there will be a
wasted waste of resources. If this continues, then one day the available resources will run
out. If resources run out, then humans will also become extinct and human life will not
continue. To avoid this, a sustainable development approach has been developed. This
approach pays great attention to the principles of sustainable spatial and resource planning
that must be properly understood and implemented. But in full this approach seeks to
improve sustainability from various aspects, which include:
1) Sustainable Economically, that the pattern of handling development must be
economically sustainable,
2) Sustainable Socio Culture Political, that development must pay attention to
equitable development for people with various socio-cultural-political backgrounds.
That is, how various community groups can have equal access to development
outcomes and processes,
3) Sustainable Environmentally, that the pattern of development management must pay
attention to environmental sustainability.
The activities for the preparation of the WPPI Master Plan in the South Sumatra
corridor should be substantially integrated with the Identification of Potential Industrial
Areas. In the identification stage of industrial regional potential, data and information are
collected which are then concluded into a regional profile that contains information related
to (1) Affirmative industrial development policies, (2) Resources, (3) Infrastructure
Conditions and (4) sustainability of industrial development in an area. This zoning profile
is the first step that will be used to conclude:
a. What is the potential of the region,
b. The suitability of the Provincial RTRW in industrial development,
c. What infrastructure does the region have (and its planning),
d. How should districts/cities in one province be grouped into a single industrial
growth center or what we know as WPPI.
RESULT AND DISCUSSION
South Sumatra Province Development Direction
In the Long-Term Development Plan for the Province of South Sumatra for 2005-
2025, the development directions for the Province of South Sumatra have been set, namely:
1. Consolidating Economic Growth and Affirming the Direction of Economic
Development The existing economic conditions in South Sumatra Province
currently have shown good performance which is in line with the vision of South Sumatra
as a food and energy barn. To strengthen and confirm the direction of economic
development, 7 targets to be achieved are set, namely:
Regional economic growth of at least 6.5% per year.
Primary economic structure (agriculture and mining quarrying) supported by the
manufacturing sector.
Strengthening the leading sector of South Sumatra Province.
Strengthening the regional trade balance surplus.
Mohammad Abdul Mukhyi and the Study Team of PT. Surveyors Indonesia
Analysis of the Area of South Sumatra Industry Growth Centers 1.139
Reduction in unemployment.
Reduction of poverty and income inequality.
Improving the quality of human resources.
2. Increasing Community Independence and Welfare
The direction of increasing the independence and welfare of the community is
directed at the following:
Improving the quality and service of education.
Mastery of science and technology.
Improving public health status.
Residential and housing development.
Development of social welfare.
Employment.
3. Development Oriented To Sustainable Utilization of Resources
Energy and environmental management, which includes inventory and updating of data
on physical and environmental aspects, and development of energy resources.
Development of a fair and balanced spatial plan, which includes the development of
internal spatial planning through strengthening the system of internal settlement
centers, developing productive areas as an economic driver and through strengthening
protected areas as a sustainable development mechanism. As well as external
development directions through the development of the BELAJASUMBA regional
cooperation area and increasing regional linkages with the city system in South
Sumatra Province.
Development of transportation systems.
Development of network infrastructure.
Agricultural development to improve food security, through agricultural revitalization,
development and strengthening of agribusiness systems, as well as development and
strengthening of agricultural management institutions.
4. Development of an Honest, Fair, Clean and Responsible Government
Strengthening local government institutional capacity.
Improving the quality of public services.
Increasing regional financial capacity.
Increased community participation.
Disclosure of information and communication.
Local political development.
Local laws and regulations.
Community protection and disaster management.
Strengthening of regional order and security.
WPPI Vision and Mission of South Sumatra Province
VISION :
"WPPI South Sumatra with International Competitiveness with Superior Industrial
Resources".
To achieve the above vision, the WPPI development mission for South Sumatra
Province is formulated as follows:
1. Realizing the development of natural resource-based downstream industries;
2. Realizing the availability of superior and highly competitive industrial resources;
3. Increase economic growth and community welfare.
The target for developing the WPPI of South Sumatra Province is formulated as
follows:
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1. Industrial Territories, consisting of:
The realization of the use of industrial space in the Industrial Designated Area (KPI)
of South Sumatra
Compilation of Industrial Estate Planning in WPPI South Sumatra.
Availability of land for the development of Industrial Estates (KI) Gelumbang, PALI
and TAA
Development of KI Muara Enim, KI PALI, and KI TAA
Availability of land for IKM Centers to Support Downstream Industries
Development of IKM centers both inside and outside KI
2. Industry, consisting of:
The establishment of the prime mover industry (champion) in each KI
Development of downstream industries of rubber, palm oil, coffee and coal
commodities.
Development of Component Industry, Auxiliary Materials, Capital Goods and
Industrial Services to support downstream industries
Increasing the capacity and quality of the upstream rubber, palm oil, coffee and coal
industries in South Sumatra Province.
3. Socio-Economic, consisting of:
Increased job opportunities;
Increased growth of other sectors as a result of the multiplier effect;
Increased GDP and community welfare.
4. Industrial Resources, consisting of:
Increasing the quality of human resources (manpower, entrepreneurs & industrial
consultants);
Development of training centers and skills development for downstream rubber, palm
oil, coffee and coal industries;
Development of R&D related to downstream superior commodities;
Guaranteed supply of raw materials for downstream rubber, palm oil, coffee & coal
industries in a sustainable manner.
5. Supporting Infrastructure for Industrial Areas, consisting of:
Fulfillment of infrastructure needs in the energy and electricity sector.
Fulfillment of the need for terminal, port, and airport infrastructure.
Fulfillment of road and rail infrastructure needs.
Fulfillment of infrastructure needs for water resources.
Fulfillment of housing needs, hospitals, schools, shopping/commerce and others.
The leading industrial sectors in South Sumatra Province are rubber, palm oil and
coal raw materials. However, in its implementation there are several obstacles and
problems related to these leading industries, including:
The added value lost is too large, due to direct sales of raw materials, approximately
almost 40 percent. The biggest loss is the opportunity to absorb labor and the income of the
population is lost with a value equivalent to the lost value added. The added value that can
be achieved is the creation of employment opportunities, tax revenues, economic welfare
of the community, the most important thing is the multiplier effect created by the presence
of downstream industries.
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Inefficient industrial posture, where the industry with added value and low labor
absorption has a large share of total exports. In addition, this sector is not very good at
having supporting materials. However, for the type of industry that has a high ability to
absorb labor, and high added value, investment does not flow to this type of industry.
Publishing, Printing and Reproduction of Recording Media, Coal, Petroleum Refining and
Natural Gas Processing Industries, Goods from Petroleum Refining, and Nuclear Materials,
Chemicals and Goods from Chemicals and the Rubber Industry and Goods from Rubber
and Plastics have a production share of 1.07%. On
This type of industry has an added value of 74.94%. This shows that the direction of
investment has not been going well.
• Additional processing industry is lower than the additional volume of exploitation
of leading commodities, in large industries the number of additional industries does not
reach 10%. Compare this with the exploitation of raw materials such as coal, other mining
products, palm oil and rubber, which on average are sold (exported) by 30%. The type of
industry that does not directly manage existing natural resources and raw materials makes
entrepreneurs directly sell these superior commodities in the form of raw materials. In
addition, the difficulty of supporting materials and infrastructure causes the downstream
industry which accommodates all superior raw materials to not be carried out properly.
The selected downstream industry is not in line with the downstream industry
favored by the market. In order to increase the added value of regional superior
commodities and increase the capacity of the regional economy, of course, the transition
of the type of processing industry from an industry made from imported raw materials to
an industry with local raw materials will provide considerable benefits. However, the
unprepared infrastructure and the bureaucratic system will be one of the obstacles to the
implementation of the downstream industry based on superior local raw materials.
Supplementary (or auxiliary) raw materials are limited in the area This causes
difficulties in production, and hinders production.
Competitiveness and cruising range of downstream commodities have not been
maximized. Commodity competitiveness will depend on the prevailing exchange rate.
When the rupiah exchange rate strengthens, the competitiveness of commodities will be
high and when the rupiah exchange rate against foreign currencies weakens, the
competitiveness will be low because many other countries will use goods originating from
countries with cheaper prices.
Commodities with high competitiveness will be able to explore a wide market both
local, national and global markets. The exchange rate of the rupiah against the dollar in
general will greatly determine the level of competitiveness of downstream commodities, as
well as the level of cruising of the production of regional superior commodities.
Non-renewable natural resources as the main raw material and good quality Coal,
creating new demand for coal in raw form, is increasing every year. There is no downstream
industry that manages coal, so coal is only sold abroad.
CONCLUSION
This study concludes that with the formation of the WPPI, the directions and
strategies that will be carried out by the level I or level II district and city governments will
become clearer, so that a good strategy and planning can be prepared to encourage
economic development, especially in the South Sumatra region, so that by The existence
of this WPPI can be expected to provide progress and prosperity for the community with a
multiplier effect created. The suggestions that the author can give are the need for
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synchronization between central policies and regional policies, so that synergies can be
established, and what the central government does in line with local governments, this
synergy can be seen from the vision and mission carried out by each stakeholder.
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