Blue Economy Policy Model in Encouraging

Regional Growth in South Sulawesi

1
Yusuf M, 2Samsir A, 3Siswan T, 4Ilyas M, 5Riana A.D, 6Saru A., 7Mubariq
A, 8Desta P

Department of Agribusiness, Faculty of Fisheries, Cokroaminoto University, Makassar,

South Sulawesi, Indonesia. Corresponding author: yusufhalim2014@gmail.com

Abstract. Indonesia has a high potential for marine and fisheries resources. However, they have not
become the central pillar of national development, and their contribution is lower than any other sector.
Thus, a development model is needed to encourage the growth of marine and fisheries resource-based
sectors as a pillar of national development. The blue economy model is a development model that can be
implemented in national development, as well as a business model that prioritizes innovation, job
creation, community welfare improvement, and quality environment development. The blue economy has
been the mainstream of contemporary development. The present study aims to formulate a blue
economy policy to encourage regional economic growth in South Sulawesi. The study implemented a
quantitative approach by using dynamic system analysis techniques. The results of the South Sulawesi
Blue Economy Sector Policy simulation show that the electricity sector output encourages growth in other
sectors, including fisheries, through the existence and development of cold storage, ice factories, and the
processing food beverages industry (fish, seaweed, etc.). It is expected in 2024, the fishery value
production will reach IDR2,103,198,311,690 or increase by around 35,20% from the BAU model, that is,
only reach IDR1,555,653,527,508. However, caution is needed. The increase in fisheries production will
influence a multiplier effect on the electricity sector, which will cause a slow decline in fish stocks in
2031, from 4,687,940.18 tons to 4,647,032 tons. The difference is 92 tons or 40,907,26 tons (around
0.87%).
Key Words: fisheries, marine resources, blue economy, PDRB, fish stocks

Introduction. Indonesia's natural resources have great potential for developing fisheries
and marine sectors (Nurkholis et al 2016). The enormous potential resources in both
sectors are considered the principal capital in regional and national development (Firdaus
& Rahardian 2018). The development of marine has a broader exploration than land since
it has a rich diversity and great potential to be developed (Gani et al 2022). Moreover,
almost 60% of Indonesia's population lives in coastal areas and islands with various
livelihoods, including fishermen. Even though some sectors like fisheries, transportation,
and mining have developed in marine and coastal areas, they still face an obstacle in
managing these areas due to technological limitations (Kunarso 2011). The government's
efforts in developing Indonesian fisheries and maritime affairs are outlined in a maritime
vision that the sea is the nation's future. Moreover, the vision is interpreted into three
development pillars: sovereignty, sustainability, and prosperity (Pudjiastuti 2017).
Coastal and marine development policies are related to poverty-handling programs since
most of these are rural, remote, and underdeveloped areas (Samsir 2015). On the other
hand, the development of the fisheries sector must be carried out optimally and
sustainably, starting from the upstream, namely fishing (El Fajri et al 2021; Hermawan et
al 2021a; Hermawan et al 2021b; Yulinda et al., 2020; Hutajulu et al 2019a; Hutajulu et
al 2019b), including port infrastructure (Danial et al 2020), and cultivation (Eddiwan
2021), the system and social order of society that applies in it (Hasbi et al 2022).
South Sulawesi Province is one of the regions in Indonesia that has extensive
coastal and marine areas. The areas cover Makassar Strait, Flores Sea, and Bone Bay, as
well as small islands in the Spermonde and Takabonerete areas, with a coastline of

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around 1,980 km and seawater area of around 48,000 km2 (Mosriula 2018). Based on
data from the Central Statistics Agency (BPS), the production of the marine capture
fisheries sub-sector in South Sulawesi is relatively large, as its growth is in a stagnant
stage. From 2018 to 2020, the average production was 353.94 tons per year and only
contributed to national production around 5.22%. Meanwhile, the contribution value was
relatively small compared to other sectors. Thus, the sector is often marginalized
compared to other national development sectors.
The Ministry of National Development Planning (Bappenas) created The
Indonesian Blue Economy Development framework for Indonesia's economic
transformation, including the marine sector. The approach aims to be the national pillar
that is reflected in the National Long-Term Development Plan (RPJPN) 2005 – 2025, as
well as to create Indonesia as a strong, sovereign, and developed country through the
sustainable development programs implementation. Furthermore, the framework also
aims to emphasize the importance of good marine management to achieve the
sustainable development program and to support global initiatives in reaching the 2030
sustainability development goals points 7, 8, 9, 14, and 17. The Indonesian Blue
Economy Development framework is comprehensive and integrated into marine
resources development sectors, as is done by the Philippines through creating policy
based on challenges and opportunities (Mendoza & Valenzuela 2017). Likewise,
Seychelles in Eastern Africa, an island country, implements the Blue Economy
Development by mapping a new development path (Senaratne 2020). In Thailand, the
Blue Economy Development is utilized as a tool or approach to direct the future of
Thailand based on the past and present (Koondee et al 2022). In Nigeria, the Blue
Economy Development approach aims to achieve the goals of the maritime sector
(Igbozurike 2020). Furthermore, in Indonesia, several studies have been conducted, such
as the economic impact on developing capture fisheries (Kusdiantoro et al 2019), the
Blue Economy Development implementation for fisheries sustainability (Misuari et al
2015), the alternative policies based on blue economy for the skipjack (Katsuwonus
pelamis) fishery management of Jayapura City, Papua, Indonesia (Hutajulu et al 2021),
the development of the Blue Economy based on economic activities (Adriadi et al 2022),
and the potentials and challenges of the Blue Economy Development in supporting
economic growth (Nasution 2022).
The 2022 United Nations Ocean Conference in Lisbon considers that strengthening
a sustainable ocean-based economy and managing coastal ecosystems are essential for
the country's development. It is based on the world's coastal population, which
contributes significantly to the global economy, around $1.5 trillion per year, and is
expected to reach $3.0 trillion in 2030 (Šabić & Vujadinović 2017). The Blue Economy
Development is essential for small islands developing states (SIDS), including Indonesia,
by ensuring a healthy marine ecosystem, the availability of livelihoods, and encouraging
targeted economic growth in vital sectors, such as fisheries and aquaculture, tourism,
energy, shipping and port activities, seabed mining, renewable energy, and marine
biotechnology. The Blue Economy Development regards marine resources as an essential
asset since it provides food security, nutrition, employment, devizen, and tourism. It is in
line with the World Bank (2017), which defines the Blue Economy as environmentally-
based marine resource utilization to support economic growth, prosperity, livelihoods,
and marine ecosystem preservation. Furthermore, the blue economy development
prioritizes the three pillars of sustainable development, including environmental,
economic, and social. It aims to create job opportunities, uplift the community welfare
fairly, and maintain the support and quality of the environment (Spalding 2016). The
blue economy can also integrate sustainable land- and sea-based socio-economic
development to achieve ecological, economic, and social goals (Kathijotes 2013). It also
implies a new development by prioritizing sustainability, resource preservation, and
survival of the earth. The blue economy development implementation is vital since the

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fisheries management main issue is the low contribution to economic growth, both
regional and national levels. Thus, it is essential to create the blue economy policy to
encourage regional economic growth, including in South Sulawesi.

Material and Method

Description of the study sites. The study was conducted in marine resources-based
cities and districts in South Sulawesi, including Makassar, Maros, Pangkep, Barru, Pare-
Pare, Pinrang, Takalar, Jeneponto, Bantaeng, Bulukumba, Selayar, Sinjai, Bone, Wajo,
and Luwu. These 14 cities and districts were chosen considering their highest marine
resource potential, and the majority of people there make their living around coastal and
marine areas.
Types and sources of Data. The data involved primary and secondary data. Primary
data was obtained from the field or respondents, including data on the utilization of
marine resources and their relationship with other sectors. It is in line with Yusuf et al
(2020) that primary data is the data obtained through the field of study or respondents.
Meanwhile, the secondary data is obtained through literature, including the Provincial
level of Gross Regional Domestic Product (GRDP), the Regency or city level of Gross
Regional Domestic Product (GDRP) per sector (52 sectors), and the national maritime of
Gross Domestic Product for 12 clusters.

Method of Collecting Data. The data were collected through desk study, survey
(interview), and field observation techniques. Yusuf et al (2021) state that these
techniques of data collection are generally applied in research. The desk study was
intended to obtain secondary data from related government departments, such as the
Central Bureau of Statistics, Fisheries Department, Energy and Mineral Resources
Department, Sea Transportation Department, Tourism Department, and South Sulawesi
Regional Revenue and Regional Planning Development Department. Meanwhile, the
survey technique was utilized by interviewing the respondents to obtain data on activities
done by utilizing marine resources. The interview is one of the most used instruments to
obtain primary data (Creswell 2010). Further, the observation technique aimed to gain
the primary data through observing marine resources of the community and related
sectors.

Data Analysis Method. The data were analyzed by applying the dynamic system
analysis method. The dynamic system analysis is basically based on causality (cause-
and-effect) in constructing a complex system model to recognize and understand the
dynamic behavior of the system. In other words, the analysis is more focused on
increasing the system patterns and behavior that emerge from structure. Sterman
(1984) states that the main hypothesis in a dynamic system is the persistent or
continuous dynamic tendencies in a complex system originate from a casual structure
that forms the system. Dynamic systems can illustrate complex and dynamic actual
conditions more simply and examine the components' behavior in a system that is close
to an actual condition. Muhammadi et al (2001) state that a dynamic system is a
comprehensive, dynamic, and integrated system approach and enables to simplify of
complicated and complex problems without eliminating the main elements of the object
concern. It is further stated that dynamic systems can describe complex and dynamic
actual conditions in a simpler form and examine the behavior of the components in the
system in order to approach actual conditions. Meanwhile, according to Muhammadi et al
(2001), a dynamic system is a comprehensive, dynamic, and integrated system approach
and is able to simplify complicated and complex problems without eliminating the main
elements of the object of concern. According to Sterman (2000), two essential things
must be considered in developing a dynamic system model. First, the model represents
actual conditions; second, the model must be specific to solve certain issues.
Furthermore, there are two dynamic system characteristics. They are causality between
variables and the feedback. The model construction in the study was the relationship

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model between macro and micro variables, in which the relationship between sectors
shows a multiplier effect. The model construction is visually illustrated as follows:
Coef.
+ Growth

+ +

Fish STock B1 Harvest Output/

(Yield) Income
- + +

+ +
- Coef.
+ Price
Catch +
Carrying
Capacity Mortality + +
+
Coldstorage +
+
+ Quality of Fish

Electricity
+ Ice
Factory
Wholesale Retail
+ Trade
+ Food & Beverage
Coef. Output Industry
Multiplier + Diversification of
Product +

Figure 1. Causal Loop Diagram (CLD) Model of South Sulawesi Blue Economy Policy

The test needs to be done to ensure the model's level of validity. Model validation
involves structure and output validation. Structure validation was done by testing each
structure formed to examine its accordance with the theory or anti-theory. Hartisari
(2007) states that structure validation is done by checking the model structure
consistency with the descriptive knowledge system involved in the process of the model
being constructed. Meanwhile, output validation aims to ensure that the extent of model
output is compatible with actual output; thus, it can meet the requirements of a scientific
model based on facts. Various model behavior tests can validate the developed model.
According to Tasrif (2007), model testing must be done by the recommended statistical
method. Visual and statistical validation has also been utilized by Hartisari (2007)
through the development of a dynamics system. Sterman (2000) states that a robust
model requires a particular variety of tests to uplift the user's trust in the model's ability
to represent the system. Trust becomes the basis for the model's validity. If the model's
validity has been achieved, the further stage can be used to construct effective policies.
One of the commonly used validation methods for measuring error level is Mean Absolute
Percent Error (MAPE) or the absolute error percentage of the average (Sterman 2000).
Furthermore, de Myttenaere et al (2016) state that MAPE measures accuracy forecasting
methods to determine the percentage deviation of estimation results. The MAPE is useful
when the hypothesis variable is quite significant (Vhai & Draxler 2014). Moreover,
McKenzie & Tuck (2015) state that MAPE intends to measure the accuracy of forecasting
by comparing the output analysis and the database (existing value). The following is the
formula utilized to calculate MAPE:

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Which:
At = the actual value
St = the forecast value
n = total number of observations
If the actual value is equal to the forecast value, then MAPE is zero, or it means
very accurate. Thus, the smaller the MAPE value, the more accurate the prediction model
developed. In other words, forecasting is close to the actual condition. The decision on
the accuracy of the forecast (prediction model) obtained is based on the criteria
developed by Khair et al (2017) as follows:
Table 1. Forecast accuracy criteria based on MAPE values

MAPE-values Criteria
Highly Accurate
MAPE ≤ 10% Forecast
10% < MAPE ≤ 20% Good Forecast
20% < MAPE ≤ 50% Reasonable Forecast
MAPE > 50% Inaccurate Forecast

If the model is valid to use as an estimator, then a modeling scenario will be

done. The modeling scenario is done with two models. The first one is the existing model
simulation, commonly called Business As Usual (BAU) simulation. It is the model
simulation without changing the model, both structure and data (built values
assumption). The second one is a simulation scenario. It is a simulation that changes the
model, both structure and the data that is being constructed, to obtain a better model.
The simulation results then become policy recommendations for the study conducted.

Results.
Simulation analysis of the Blue Economy policy in South Sulawesi was applied
through a dynamic system modeling approach. The model developed in this study was a
model related to the main sectors, namely the electricity and fisheries sectors, the link
among emerging sectors such as the food and beverage industry sectors, and the
wholesale and retail trade sectors. The simulation model was developed through the
output of the electricity sector on the fisheries sector, which has a high potential for
marine resources and is highly developed as a leading sector that not only produces high
economic value but also absorbs large amounts of labor and has highly multiplier effects
on input and output.

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 Pulse of CC

Carrying Capacity

Fish Stock Existing

Rate of Stock Rate of Yield Rate of CC
Delay of CC

Delay Time of CC

Coef_Fish Growth
Coef CC

Coef_Yield
Output of Fisheries
Yield without
Sector
Electricity Input

Coldstorage Value of Fish

without Electricity
Input Wholesale Retail
Trade

Electricity
Price of Fish without
Rate of Electricity Fish Quality Electricity Input

Coef_Electricity
ICe Factory

Diversification of
Product

Food and Beverage

Industry

Figure 2. Stock Flow Diagram (SFD) of South Sulawesi Blue Economy Model Sector

The model above illustrates the output of the electricity sector has a direct
influence on the fisheries sector, particularly on energy supply for the construction of cold
storage, ice factories, and the food industry and minimum raw materials for fishery
commodities, such as seaweed, fish canning, etc. The existence of cold storage and ice
factories will significantly influence the fish quality. Thus, it creates price stability. The
blue economy policy simulation shows the multiplier effect of the electricity sector can
generate growth in other sectors, particularly the sectors that utilize the electricity
sector's output, such as the food and beverage industry sector, the fisheries industry
sectors (ice factories, and cold storage), and the fisheries processing industry from raw,
semi-raw, to processed materials. The existence of high electricity output encourages the
sector's growth, including in fisheries. The available energy supply encourages the
development of cold storage, ice factories, and food and beverage industries based on
fishery raw materials resources (fish and seaweed). The development of the fisheries
industry (cold storage, ice factories, and processing industries) also supports the price
stability of the fish. It can be seen in the following graphic, as follows:

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 5,500

5,000

Price of Fish without Ele ctricity Input

4,500 Price of Fish with Ele ctricity Input

4,000

2021222324252627282930313233343536373839404142434445

Figure 3. Fish price simulation

Figure 3 shows the fish price in the BAU model fluctuates more than in the
simulation model. The price stability will significantly influence the value and output of
the fisheries sector. The price stability in the simulation model with electricity output was
due to the available energy supply that encouraged the fishing industry development,
particularly cold storage and ice factories. Both of them will maintain the fish quality.
Cold storage will accommodate large quantities of caught fish while maintaining its
quality. Mulyaningtyas et al (2020) state that the capacity of cold storage is one of the
critical factors in reducing the variance in average fish prices, particularly in the peak
season. Cold storage brings a balance between supply and demand. Consequently, it
brings the fish price stability. According to Hanafiah & Saefuddin (2006), during peak
season, the supply is abundant, and the price decreases drastically. Meanwhile, during
the lean season, the supply is lower, and the price is relatively high. The condition can be
avoided by using cold storage to maintain the availability of fish supplies throughout the
year. Furthermore, the availability of ice facilitates the fishermen and distributors to
obtain ice to maintain the quality of fish after being caught until it reaches the
consumers.
One of the main factors of the instability of fish prices is the difficulty of
maintaining the fish quality. The low-quality fish have relatively low prices, and vice
versa. The price fluctuation in the BAU model is very huge, around IDR3,500 to 5,000.
The range was IDR1,500, higher than the range in the simulation model, around IDR2,00
(IDR4,800-5,000). The fish price stability will provide high profits for fishermen and
consequently increase the fisheries' value. It is illustrated in the graphic below as follows:

14,000,000,000

12,000,000,000

10,000,000,000

8,000,000,000 Value of Fish without Electricity Input

Value of Fish with Electricity Input
6,000,000,000

4,000,000,000

2,000,000,000

2021222324252627282930313233343536373839404142434445

Figure 4. Value fish simulation

The stable fish price can provide higher profits. It can be seen in the graphic
above which SIM (simulation) fisheries value graph is higher than the BAU fisheries

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value. This is due to the fish price stability in SIM. Meanwhile, the fish price is relatively
fluctuate or less stable in BAU. Good quality fish will have a reasonable selling price, and
vice versa. It is in line with Pasaribu et al. (2014) that the most influential factor on the
flying fish (Decapterus Russelli) price at the Nusantara Brondong Port, Lamongan
Regency, is the fish quality. Fish is prone to rapid quality decline. The lower quality of fish
will reduce the price. According to Tambani (2008), the fishery products characteristics
are seasonal, perishable, and quickly damaged, the changes in stock quantity, and the
availability of substitute materials. Thus, factors such as supply, demand, and quality are
essential. The stability and high value of the fisheries sector will bring a multiplier effect
on other sectors, such as wholesale and retail trade sectors, both domestic and import.
Furthermore, it also increases the community's income, such as fishermen. It also
increases labor absorption in various derivative sectors, such as the fisheries industry
sector of processing and production (facilities and infrastructure, etc.). However,
fisheries' output is also significantly determined by fish resource stocks and catches. It is
illustrated in the graph below:

7,000,000

6,000,000

5,000,000
Fish Stock Ex isting
4,000,000
Fish Stock Models
3,000,000 Yield without Electricity Input
Yield with Electricity Input
2,000,000

1,000,000

2021222324252627282930313233343536373839404142434445

Figure 5. Fish stocks and catches

The graph above shows the fish stocks decrease when the fish catches increases.
It is due to an increased catch coefficient caused by an increase in output from the
electricity sector. It influences the growth and development of the fishing industry, such
as cold storage, ice factories, processing industry, and food and beverage industry (fish
canning, seaweed industry, food and beverages).

Conclusions. The results of the South Sulawesi Blue Economy Sector Policy simulation
show that the electricity sector output encourages growth in other sectors, including
fisheries, through the existence and development of cold storage, ice factories, and the
processing food beverages industry (fish, seaweed, etc.). It is expected in 2024, the
fishery value production will reach IDR2,103,198,311,690 or increase by around 35,20%
from the BAU model, that is, only reach IDR1,555,653,527,508. However, caution is
needed. The increase in fisheries production will influence a multiplier effect on the
electricity sector, which will cause a slow decline in fish stocks in 2031, from
4,687,940.18 tons to 4,647,032 tons. The difference is 92 tons or 40,907,26 tons
(around 0.87%).

Acknowledgements. Thank you to the Conservation Strategy Fund (CSF) for providing
research funding through GWA IV Grant Agreement No.GA02-CSFIDN-GWAIV-2022. We
also thank the research team, Muhammad Yusuf (LPPM UCM), Andi Samsir (Makassar
State University), and Siswan Tiro (Katalis Association). Our thank is also sent to the
South Sulawesi Province Maritime and Fisheries Service, Mr. Muhammad Ilyas, the Head
of the Department, for the full support, and our mentors in this study, Mr. Mubariq
Ahmad and Cristy Desta Pratama (CSF Indonesia).

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Received: 23 October 2023. Accepted: 27 November 2023. Published online: 18 December 2023.
Authors:
Muhammad Yusuf, Department of Agrobusiness, Faculty of Fisheries, Cokroaminoto University of Makassar, St.
Perintis Kemerdekaan Km 11, Makassar, 90245 South Sulawesi, Indonesia, e-mail: yusufhalim2014@gmail.com
Andi Samsir, Department of Economics Development, Faculty of Economy and Businness, State University of
Makassar, St. Pendidikan I No.27, Tidung, Kec. Rappocini, Kota Makassar, Sulawesi Selatan 90222
Perintis Kemerdekaan Km 11, Makassar, 90245 South Sulawesi, Indonesia, e-mail: andi.samsir@unm.ac.id
Siswan Tiro, Perkumpulan Katalis Indonesia, St. Faisal X No.8, Makassar, South Sulawesi, Indonesia, e-mail:
siswannoltujuh@gmail.com
Muhammad Ilyas, Dinas Kelautan dan Perikanan, Provinsi Sulawesi Selatan, St. Bajiminasa No. 12 Makassar
Sulawesi Selatan, Indonesia, e-mail: ilyasgowa70@gmail.com
Andi Dyna Riana, Department of Agrobusiness, Faculty of Fisheries, Cokroaminoto University of Makassar, St.
Perintis Kemerdekaan Km 11, Makassar, 90245 South Sulawesi, Indonesia, e-mail: dynariana78@gmail.com
Amran Saru, Department of Pengelolaan Sumberdaya Pesisir Terpadu, Post Graduate Scholl, Hasanuddin
University, Jl. Perintis Kemerdekaan, Km.10. Tamalanrea Makassar, 90245, South Sulawesi, Indonesia, e-mail:
amransaru@ymail.com
Mubariq Ahmad, Conservation Strategy Fund, Graha Simatupang, Tower 2C, 4th Floor Jl. TB. Simatupang, Kav.
38 Pasar Minggu, Jakarta Selatan , Indonesia, e-mail: mubariq@conservation-strategy.org
Christy Desta Pratama, Conservation Strategy Fund, Graha Simatupang, Tower 2C, 4th Floor Jl. TB.
Simatupang, Kav. 38 Pasar Minggu, Jakarta Selatan, Indonesia, e-mail: desta@conservation-strategy.org
How to cite this article:
Yusuf M., Samsir A., Tiro S., Ilyas M., Riana A.D., Saru A., Ahmad M., Pratama D.C., 2023 Blue Economy Policy
Model in Encouraging Regional Growth in South Sulawesi. AACL Bioflux 9(5):1090-1100.

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