THE ECONOMIC CONDITIONS

OF EAST JAVA PROVINCE & SURABAYA CITY

Prepared to fulfill the project assignment in the Business English Course B

Course Lecturer:
Priyo Widodo S.Pd., M.Pd.

Prepared By:
Delvina Putri Andika (230810201094)
Figo Aditya Pratama (230810201105)
Sendy Ade Saputra (230810201176)

BUSINESS ENGLISH COURSE

FACULTY OF ECONOMICS AND BUSINESS
UNIVERSITY OF JEMBER
2024
 FOREWORD

Praise and gratitude to the presence of God Almighty, who has bestowed His grace
and guidance, enabling the author to complete the paper entitled “Economic Conditions of
East Java Province and Surabaya City.” This paper is prepared to fulfill one of the
assignments for the Business English course.
In this paper, the author aims to discuss the general economic conditions of East Java
province and the specific economic conditions of Surabaya city. With the completion of this
paper, the author expresses gratitude to Mr. Priyo Widodo S.Pd., M.Pd., as the supervising
lecturer for Business English, for guidance in preparing this paper.
The author acknowledges that there may be shortcomings and errors in the
preparation of this paper. Therefore, the author sincerely accepts constructive criticism and
suggestions for the improvement of this paper. Hopefully, this paper can be beneficial and
broaden the readers’ understanding of the economic conditions in East Java province and
Surabaya city.

Jember, 20th March 2024

Group 1

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 TABLE OF CONTENTS

COVER .....................................................................................................................................i
TABLE OF CONTENT ............................................................................................................ii
FOREWORD ...........................................................................................................................iii
CHAPTER 1 INTRODUCTION ..............................................................................................1
1.1 Background .......................................................................................................................1
1.2 Purpose of Writing Paper ..................................................................................................1
CHAPTER 2 DISCUSSION .....................................................................................................3
2.1 The Profile of East Java Province .....................................................................................3
2.2 The Economic Growth Rate of East Java Province ..........................................................4
2.3 Factors that Influence the level of economic growth in East Java ....................................4
2.4 Poverty and Unemployment Rates in East Java ................................................................5
2.5 Efforts to Reduce the Poverty Rate in East Java Province ................................................5
2.6 The provincial government’s efforts to enhance economic development in East Java .....6
2.7 UMR in Surabaya City ......................................................................................................7
2.8 Cost of Living in Surabaya City ........................................................................................8
2.9 Surabaya’s Economic Growth Rate ...................................................................................9
2.10 Surabaya’s Economic Support Sector ...............................................................................9
2.11 Unemployment Rate in Surabaya City ............................................................................10
2.12 Efforts Made by The Surabaya City Government to Create Job Opportunities ..............10
CHAPTER 3 CONCLUSION .................................................................................................12
REFERENCE ..........................................................................................................................13

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 CHAPTER 1
INTRODUCTION

1.1 Background
Indonesia is an archipelagic country with diverse cultural heritage, abundant natural
resources, and significant economic potential. Amidst the dynamics of the national economy,
East Java Province and Surabaya City, as the provincial capital, play pivotal roles in
contributing to Indonesia’s economic growth. Therefore, it is crucial to understand the
economic conditions in East Java and Surabaya as integral parts of the national economic
development.
East Java is one of the largest provinces in Indonesia with a substantial population and
abundant natural resources. Additionally, Surabaya, as the economic hub of East Java, holds a
strategic position as the largest port city in Eastern Indonesia, significantly impacting trade
and industry in the region.
However, despite their immense potential, the economic conditions in East Java and
Surabaya face various challenges and dynamics, such as commodity price fluctuations, the
need for infrastructure improvement, and socio-economic issues like income inequality and
unemployment.
In this context, research on the economic conditions in East Java and Surabaya
becomes relevant to provide a deeper understanding of the factors influencing economic
growth, the policies implemented, and the efforts made to address challenges and leverage
existing potentials.With a comprehensive understanding of the economic conditions in East
Java and Surabaya, it is hoped that better contributions can be made in formulating
sustainable and inclusive economic development policies, both at the regional and national
levels.

1.2 Purpose of Writing Paper

1. Understanding East Java Province in general.
2. Knowing the economic growth rate of East Java from year to year.
3. Identifying factors influencing the economic growth rate.
4. Understanding the Poverty and Unemployment Rates in East Java.
5. Understanding efforts to reduce the poverty rate in East Java Province.
6. Identifying the provincial government's efforts to enhance economic development in
East Java..
7. Knowing the current Minimum Wage in Surabaya.
8. Understanding the cost of living in Surabaya at present.
9. Knowing Surabaya’s Economic Growth Rate.
10. Identifying Surabaya’s Economic Support Sector.
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11. Understanding the poverty rate and unemployment rate in Surabaya.
12. Knowing the efforts of the Surabaya city government in increasing job opportunities
and reducing unemployment rates.

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 CHAPTER 2
DISCUSSION

2.1 The Profile of East Java Province

East Java Province is geographically located between 11.100 East Longitude –
11.404’ East Longitude and 7.012’ South Latitude – 8.048” South Latitude, with a total area
of 47.963 km2 covering two main parts: mainland East Java and the Madura Islands. The
mainland area of East Java covers 88.70 percent or 42.541 km2, while the Madura Islands
have an area of 11.30 percent or 5.422 km2. Its population in 2023 reached 41.416.407
people.
Administratively, East Java is divided into 29 regencies and 9 cities, with Surabaya as
the provincial capital. This makes East Java the province with the highest number of
regencies/cities in Indonesia. East Java is divided into 4 Regional Coordination Boards
(Bakorwil): Bakorwil I Madiun covering Madiun City, Madiun Regency, Magetan Regency,
Ponorogo Regency, Ngawi Regency, Trenggalek Regency, Tulungagung Regency, Blitar City,
Blitar Regency, and Nganjuk Regency. Bakorwil II Bojonegoro covering Bojonegoro
Regency, Tuban Regency, Mojokerto City, Kediri City, Kediri Regency, Jombang Regency,
and Lamongan Regency. Bakorwil III Malang covering Malang City, Malang Regency, Batu
City, Pasuruan City, Pasuruan Regency, Probolinggo City, Probolinggo Regency, Lumajang
Regency, Jember Regency, Bondowoso Regency, Situbondo Regency, and Banyuwangi
Regency. Bakorwil IV Pamekasan covering Surabaya City, Sidoarajo Regency, Gresik
Regency, Bangkalan Regency, Sampang Regency, Pamekasan Regency, and Sumenep
Regency. The organizational structure of the East Java Provincial Government consists of the
Regional Secretariat with 11 Bureaus and the Regional DPRD Secretariat, 20 Agencies,
Inspectorate, 1 Board, 12 Regional Technical Institutions, 4 other Institutions, and 5 Regional
Hospitals.
East Java holds a strategic position in the industrial sector as it is sandwiched between
two major provinces, Central Java and Bali, making it a center for industrial and commercial
growth.
The majority of the population of East Java is of Javanese ethnicity, although entities
in East Java are more heterogeneous. Javanese people are spread almost throughout the
mainland of East Java. Generally, Javanese people adhere to Islam, while some adhere to
Christianity, Catholicism, Hinduism, and Buddhism. East Java has unique arts and culture,
with Reog and Ludruk being one of the most famous arts. Besides its globally renowned arts,
the greatness of East Java is also reflected in its diverse cultures, including Karapan Sapi, a
bull race unique to Madura, inspired by farmers plowing fields with oxen, which is a tradition
of the Madurese people.

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 The people of East Java have a strong commitment to virtuous values. This is
expressed in the proverb “Jer Basuki Mawa Beya,” which means that sacrifice is necessary
to achieve happiness. Instructing Javanese people to always work hard in pursuing their
dreams.

2.2 The Economic Growth Rate of East Java Province

The economy of East Java in 2023 grew by 4.95 percent. Quoting the East Java
Provincial Statistics Agency (BPS Jatim) website on Monday (5/2/2024), Head of BPS Jatim,
Zulkipli, stated that, in terms of production, the highest growth occurred in the Electricity and
Gas Provision sector, which grew by 23.70 percent.

“From the expenditure side, the highest growth occurred in the Non-Profit Institutions
Serving Households Consumption Expenditure or PK-LNPRT component, which grew by
10.30 percent,” he said.

Meanwhile, the economy of East Java in the fourth quarter of 2023 compared to the
fourth quarter of 2022 grew by 4.69 percent. In terms of production, the highest growth
occurred in the Electricity and Gas Provision sector, which grew by 28.70 percent. From the
expenditure side, the highest growth occurred in the Non-Profit Institutions Serving
Households Consumption Expenditure (PK-LNPRT) component, which grew by 16.13
percent.
Furthermore, the economy of East Java in the fourth quarter of 2023 compared to the
third quarter of 2023 experienced a contraction of 0.89 percent. In terms of production, the
highest growth occurred in the Accommodation and Food Service Activities sector, which
grew by 7.70 percent. From the expenditure side, the highest growth occurred in Government
Consumption Expenditure (P-KP) component, which grew by 9.84 percent.
The economy of East Java in 2023, measured by Gross Regional Domestic Product
(GRDP) at current prices, reached Rp2,953.54 trillion, with a per capita GRDP of 71.12
million rupiah.

2.3 Factors That Influence The Level of Economic Growth in East Java
1. The Effect of Government Expenditures on Economic Growth
Government spending on development will indirectly have an effect on increasing
economic growth. The greater the level of government spending in policies both in
terms of development, improving the quality of education, and so on, the impact will
be on improving the quality of people's living standards. Expenditures made include
improving infrastructure, education, health, and so on.

4
 2. The Effect of Poverty on Economic Growth
Poverty has a negative influence on economic growth. Poverty has a low effect on a
country's per capita income. The low income of a country will have an impact on the
lack of consumption, production and investment levels in society, resulting in a
decrease in economic growth.

3. The influence of the human development index on economic growth

The human development index is a description of the development of quality of life in
society which is related to a decent life, knowledge and public health. The Influence
of the Human Development Index on Economic Growth The human development
index is a description of the development of quality of life in society which is related
to a decent life, knowledge and public health.

4. The influence of education on economic growth

Education has a positive influence on economic growth, increasing knowledge, and
the formation of a more modern civilization. National income can also be increased
through education.

2.4 Poverty and Unemployment Rates in East Java

• Poverty level
In East Java, the poverty level has decreased consistently. Based on data from BPS
(Central Statistics Agency) of East Java Province, the poverty rate will be 10.35% in
2023. When compared with 2022 with a nominal poverty rate of 10.38% and 2021 of
11.40%. The comparison of poverty rates in 2022 and 2023 is only 0.3% different and
when compared with 2021 it is 1.02%-1.05%.

• Unemployment rate
In East Java the unemployment rate has also decreased consistently. Based on data
from the Central Statistics Agency (BPS), the unemployment rate is at 4.88% or 1.17
million. When compared with previous years such as 2022 at 5.49% and 2021 at
5.74%, unemployment has decreased quite significantly by 0.61% compared to 2022
and 0.86% compared to 2021.

2.5 Efforts to Reduce the Poverty Rate in East Java Province.

So far, the East Java Provincial Government has also initiated the Eradication of
Extreme Poverty through social assistance for 22,186 extremely poor families in 15
Districts/Cities, with each family receiving assistance worth Rp. 1,500,000 to be used as
capital for business.
In addition, the East Java Provincial Government has also initiated the Uninhabitable
House Renovation Program (Rutilahu). Since 2019 to 2023, renovations have been carried
out on 33,745 housing units with a total budget of 402 billion in collaboration with the V
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Brawijaya Military Command and the V Surabaya Naval Base, and Electrification Program
or electricity connection for 16,780 Poor Households (2019 to 2023).
The reduction of poverty in East Java is also driven by the increase in the income of
poor residents through productive business activities supported by MSME capital.
Some of these programs include Prokesra with a maximum ceiling of Rp. 50 million
per debtor, which has realized cheap loans for 8,941 Micro Small Enterprises (MSEs) with
interest subsidies. Thus, ultra-micro and micro entrepreneurs only bear a 3 percent annual
loan interest burden with a maximum credit term of 36 months.
In addition, business assistance for ultra-micro entrepreneurs handed over by
Governor Khofifah during 2022 and 2023 to 6,478 micro-entrepreneurs with values ranging
from Rp 600,000 to Rp. 2,200,000, financed by the East Java Provincial Baznas.
Along with the Distribution of Village Fund BLT 2023 as of November 2023 has been
distributed to 308,155 Beneficiary Families (KPM) worth Rp935,075 Billion (84.29%),
where the Village Fund for BLT is a minimum of 10 percent and a maximum of 25 percent
for Families in the Desil 1 category of the Percepatan Penghapusan Kemiskinan Ekstrem
(P3KE) Pensasaran Data Acceleration Program.
In addition, the distribution of PKH in the second quarter of 2023 reached 99.40
percent or 1,512,592 beneficiary families out of a total target of 1,521,705 beneficiary
families. With a assistance nominal of Rp. 1,121 Trillion.

2.6 The provincial government's efforts to enhance economic development in East Java.
East Java Governor Khofifah Indar Parawansa emphasizes that efforts to improve the
welfare of the community remain the primary focus in the development of East Java Province
in 2023. This particularly pertains to addressing extreme poverty, education and human
resource development, as well as reducing the stunting rate.
This is also in line with the theme and seven priorities of the East Java Provincial
Government’s Work Plan (RKPD) for 2023, which include enhancing and distributing the
quality of human resources and fostering inclusive and sustainable economic transformation
to support regional competitiveness in embracing the era of trade and service industries based
on agriculture.
Governor Khofifah stated that, based on the 2023 RKPD, East Java’s development
priorities are outlined in 7 aspects:
1. First: Revitalizing grassroots economy through increasing value-added in the
secondary sector and tourism.
2. Second: Strengthening connectivity between regions to promote equitable
development outcomes and improve infrastructure services.

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 3. Third: Enhancing the quality of education, healthcare, productivity, and
competitiveness of the workforce, as well as poverty alleviation.
4. Fourth: Promoting social care and preserving local cultural values.
5. Fifth: Enhancing food self-sufficiency and managing energy resources.
6. Sixth: Improving disaster resilience and environmental quality.
7. Seventh: Enhancing peace, public order, and improving the quality of public
services for the community in East Java.

2.7 UMR in Surabaya City

UMR stands for Upah Minimum Regional (Regional Minimum Wage). It is the lowest
wage that applies in a province, covering the districts or cities within it. The increase in UMR
can occur annually due to various factors. The governor sets the UMR as a reference for labor
income in a region. However, the current term for minimum wage has been changed to UMP
and UMK.
Specifically, Upah Minimum Provinsi (UMP) refers to level I regions, while Upah
Minimum Kabupaten/Kota (UMK) refers to level II regions. However, the term UMR is more
widely recognized by the public compared to UMP or UMK. Basis for Determining UMR in
Surabaya The determination of UMR usually refers to the Decent Living Needs (KHL) based
on:
• Needs
• Development capacity
• Consumer price index
• Company sustainability
• Market conditions
• General wages
• Economic level
• Per capita income.
However, the increase in UMP in 2024 used a minimum wage calculation formula
influenced by economic growth variables, specific indices, and inflation. This is also in line
with the central government regulation, Government Regulation No. 51 of 2023 concerning
Amendments to Government Regulation No. 36 of 2021 concerning Wages. According to this
regulation, the increase in UMP must take into account statistical data from the Central
Statistics Agency (BPS).
In calculating the UMR in East Java in 2024, some provincial data used as references
are:
- Average monthly per capita expenditure of Rp 1,323,486
- Number of household members is 3.53

7
- Household members who work are 1.66
- East Java’s economic growth from 2021 to the third quarter of 2023 was 4.96%
- Combined inflation data from September 2022 to September 2023 was 3.01%.
Taking these factors into consideration, the East Java Provincial Government stated
that the amount of UMP for 2024 is Rp 2,165,244.30. This increase of 6.13% is stated in the
East Java Governor’s Decree Number 188/606/KPTS/013/2023 concerning the East Java
Provincial Minimum Wage for the Year 2024. The amount of UMR in Surabaya for 2024.
Based on East Java Governor’s Decree Number 188/656/KPTS/013/2023 concerning the
Minimum Wage for Districts/Cities in East Java Province for the Year 2024, Surabaya City
still holds the highest UMK (Regional Minimum Wage) in East Java.
The UMR (Regional Minimum Wage) for Surabaya in 2024 reaches Rp 4,725,479.
This amount has increased by Rp 200,000 from the previous year’s UMK, which was Rp
4,525,479, or approximately 4.42%.
The governor’s decision also states that the 2024 UMK for East Java applies to
workers with less than 1 year of employment. If employers have already paid wages
exceeding the latest UMK determination, they are prohibited from reducing or decreasing
wages, or paying wages lower than that amount.
Comparison of UMR in Surabaya with the previous year
• UMR Surabaya in 2022 : The UMR Surabaya in 2022 was set at Rp 4,375,479. There
was a difference of 1.74% or an increase of Rp 75,000 compared to the UMK in 2021.
• UMR Surabaya in 2021 : The UMR Surabaya in 2021 was Rp 4,300,479. This figure
actually increased by Rp 100,000 compared to the UMK in 2020.
• UMR Surabaya in 2020 : Meanwhile, the UMR Surabaya in 2020 reached Rp
4,200,479. This figure experienced an increase of up to Rp 329,426.39 from the UMK
Surabaya in 2019.
• UMR Surabaya in 2019 : UMR Surabaya in 2019 was still below Rp 4 million,
specifically at Rp 3,871,052.81.

2.8 Cost of Living in Surabaya City

The everage cost of living in Surabaya City is :
• Family of four estimated monthly costs: Rp 26,619,418
• Single person estimated monthly costs: Rp 11,027,283
Living in Surabaya, where the cost is quite high, entails significant expenses.
Actually, the cost of living in Surabaya depends on each individual; some may have higher
expenses while others may have lower ones.

8
2.9 Surabaya’s Economic Growth Rate
Surabaya - Mayor of Surabaya, Eri Cahyadi, said that the economy of the city of
Surabaya throughout 2023 will experience significant growth of more than 5 percent.
"This growth exceeds the East Java economy, and above the national economic
growth average," said Eri Cahyadi, Saturday (09/12/2023). Eri said
That the trigger for the economic growth of the city of Surabaya was more influenced
by the increase in the Human Development Index (HDI), with the indicator being the
emergence of new private universities in Surabaya.
"Then also the influx of foreign and domestic investment, as well as ease of business
licensing are indicators of Surabaya's economic growth throughout 2023," he explained.
According to him, the Surabaya City Government is focused on improving Human
Resources (HR) from various sectors.
"As is known, the calculation we have is that the HDI for the city of Surabaya could
continue to rise but it could also be inferior to other regions," explained Eri. "Surabaya has
many universities, so having universities also increases the HDI of a region," he explained.

2.10 Surabaya's economic support sector

Surabaya is known as a city of services and trade, Surabaya is a business city with various
activities taking place. Trade has been the main activity of the city of Surabaya since the
Majapahit era, colonial times, until now. Trading activities in Surabaya not only serve
national needs, but are starting to develop into an international trading city.
There are several pillars and several locations that make the city of Surabaya a trading
city, namely as follows:
1. Modern Market
The modern market is the main pillar in trade in the city of Surabaya. Attractive
appearance, comfortable atmosphere, fixed prices are the advantages of the Modern
Market and this is in accordance with the conditions of activity in the city area. Many
Modern Markets in the center and outskirts of the city make it easy for people to
access Modern Markets, and will continue to grow along with increasing investment
in Surabaya.

2. Harbor
Tanjung Perak is a very important Port in Indonesia, because the port is a center for
collectors and distributors of goods. Several industrial areas such as Margomulyo,
Berbek, SEER are connected to the Tanjung Perak port.

3. Office
Surabaya also has office centers. Offices are spread both in the center and outskirts of
9
 Surabaya. In the city center, there are the Intiland guest house, BRI Tower, Bumi
Mandiri, and others. Apart from that, office centers are developing rapidly in the West
Surabaya area, office and business areas in Graha Family and the Supermall Pakuwon
shopping center.

2.11 Unemployment Rate in Surabaya City

Unemployment in Surabaya has seen many individuals finding employment, resulting
in a decline in the Open Unemployment Rate (TPT). According to data from the Central
Statistics Agency (BPS) of Surabaya, the TPT in Surabaya during the Covid-19 pandemic in
2020 was at 9.79 percent. Subsequently, in 2021, the TPT decreased to 9.68 percent, and by
2022, it further dropped to 7.62 percent. Finally, in 2023, there was another decrease,
bringing the TPT to 6.76 percent.

2.12 Efforts Made By The Surabaya City Government to To Create Job Opportunities
The Surabaya City Government is committed to continually expanding labor-
intensive programs by creating employment opportunities for low-income families through
the support and empowerment of Micro, Small, and Medium Enterprises (UMKM). This
aligns with the directive from the President of the Republic of Indonesia, Joko Widodo,
instructing every regional leader to increase labor-intensive programs.
Surabaya Mayor Eri Cahyadi stated that these labor-intensive programs aim to
alleviate poverty and assist those who lost their jobs due to Covid-19. He emphasized the
crucial role of UMKM in driving Indonesia’s economy and assured that the city government
would continue to generate employment through labor-intensive programs.
To ensure the ongoing production of Surabaya’s UMKM, Mayor Eri encourages both
the community and Civil Servants of the city government to use UMKM products, such as
shoes, bags, and school uniforms. Additionally, he highlighted that the city government not
only opens job opportunities through UMKM empowerment but also works to enhance the
quality of UMKM products to reach a broader market.
Mayor Eri emphasized the city government’s commitment to support and promote
Surabaya’s UMKM, including assisting in promoting their products to the banking sector,
Regional-Owned Enterprises (BUMD), and all investors in Surabaya. Despite this, he urged
the youth in Surabaya, especially those from low-income families, not to be passive and
expressed the hope that they would persist in their efforts. The city government remains
dedicated to job opportunities for them.
Furthermore, the Surabaya City Government (Pemkot) also launched the Link and
Match ASSIK (Arek Suroboyo Ready to Work) website-based application at the Surabaya
City Youth Hall on Friday (24/6/2022). Through this application, Surabaya residents can
search for various job vacancies by accessing the Link and Match ASSIK website-based
10
application. Companies or industries claim it’s easier to find prospective employees in
Surabaya because applicants don’t need to bring various documents, they only need to fill out
personal data and choose from available job vacancies.
Companies or industries prioritize residents with Surabaya ID cards. Here, the role of
the Surabaya City Government together with stakeholders is crucial in collaborating to
eradicate unemployment and poverty.
Through this application, many companies claim to need skilled, reliable, and
competent workers, especially those who are Surabaya ID cardholders.

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 CHAPTER 3
CONCLUSION

The economy of East Java and Surabaya City has shown positive growth in recent
years, driven by various sectors such as industry, trade, and services. Surabaya, as the
provincial capital and the main economic hub, significantly contributes to the overall
economic growth of East Java. The Surabaya City Government has implemented various
measures to improve the welfare of the population, including initiatives such as launching the
Link and Match ASSIK application to reduce unemployment.
Despite progress in economic growth, challenges such as economic disparities
between urban and rural areas and structural unemployment persist and require collaboration
between the government, private sector, and the community.

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