Surabaya, Tuesday, August 12, 2025 — Professor of the Faculty of Economics and Business, Universitas Airlangga (FEB UNAIR), Prof. Dr. Rudi Purwono, SE., M.SE., in the EJAVEC 2025 Conference and Winner Announcement emphasized the importance of the five pillars of East Java's economic development. These pillars include productivity, innovation, inclusiveness, development, and resilience to global shocks. According to him, these five aspects will significantly determine the direction of East Java's economic growth going forward.

Prof. Rudi explained that Indonesia's productivity still lags behind Asian countries like Japan, South Korea, and China. Total national factor productivity has tended to slow down over the past five decades. "If we look at total factor productivity, Indonesia, compared to Malaysia, Japan, Korea, and China, is still far behind on average," he said.

He explained that from 1960 to 2012, factors influencing productivity included education, urbanization, investment, institutions, and economic complexity. However, in the 1995–2012 period, demographics emerged as the dominant factor. Gender equality and innovation were also considered important pillars that should not be overlooked.

Low investment in research and development (R&D) is also a concern. Indonesia's R&D budget remains very small compared to South Korea, Japan, and China. "If we look at research and development, its contribution to our GDP is still very low," he stressed.

He believes that the quality of human resources (HR) is also key. Data shows that from 1971 to 2022, the development of HR quality has been in line with productivity. However, the level of investment in information and communication technology (ICT) remains relatively low. Prof. Rudi emphasized the importance of increasing investment in the ICT sector to accelerate the transformation of the national industry.

Furthermore, he highlighted the use of technology by companies in Indonesia. Surveys show that only six percent of companies have adopted advanced technology, while 64 percent still rely on basic technology. Yet, technology can contribute up to 70 percent to boosting efficiency and productivity. "This situation serves as a reminder for all of us to continue encouraging industry to improve its ability to adapt to technology," he said.

In the context of East Java, industrial areas are growing rapidly in the northern coastal areas, such as Surabaya, Gresik, and Lamongan, connecting them to Semarang and Jakarta. However, the southern regions, such as Malang and its surroundings, remain relatively underdeveloped. Prof. Rudi urged prioritizing development in the southern region to ensure equitable development.

In terms of infrastructure, he assessed Java's transportation system as relatively comprehensive, ranging from toll roads and railways to ports. He emphasized that long-distance logistics is most effective using railway lines directly connected to ports. Regarding energy, electricity demand for industry in East Java continues to increase and is approaching production capacity. He believes this needs to be addressed to prevent investment.

Bappenas has mapped East Java's industrial clusters, including petrochemicals, metallurgy, maritime, agro-industry, and fisheries. Its industrial corridors include food and beverages, tobacco, wood, paper, and chemicals. Agro-industry is considered superior due to its strong agricultural base and significant employment, although technology adoption in this sector remains limited to the intermediate level.

Concluding his presentation, Prof. Rudi emphasized that MSMEs continue to make a significant contribution to the East Java economy. Support for MSMEs comes from various parties, including Bank Indonesia, the Ministry of Finance, and the Department of Cooperatives and Industry. Financing, mentoring, and export facilitation programs continue to be rolled out. In fact, the provincial government is encouraging every regional institution to develop innovations involving MSMEs.

Supporting productivity, innovation, and MSMEs aligns with the sustainable development agenda, particularly SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure). By strengthening these pillars, East Java is expected to build a more resilient, inclusive, and globally competitive economic foundation.

Author: Dhamar Gandhang Panji N. (E-Radio FEB UNAIR)