BOGOR — A new study by researchers from UPN “Veteran” Jawa Timur finds that regional economic growth significantly increases locally generated revenue (Pendapatan Asli Daerah / PAD) in Bogor Regency, but not in Bandung Regency, despite both regions having strong tourism activity, large populations, and expanding economic sectors .
The research, conducted by Difa Tri Agustina and Syamsul Huda from the Department of Development Economics at UPN “Veteran” Jawa Timur, was published in the International Journal of Scientific Multidisciplinary Research (IJSMR) 2026. Using regression analysis based on secondary data from 2015 to 2024, the study examined how Gross Regional Domestic Product (GRDP), population size, and domestic tourist arrivals influence local revenue in the two regencies.
The results show that GRDP has a significant positive effect on local revenue in Bogor Regency, while population size and domestic tourist arrivals do not significantly contribute. In Bandung Regency, none of the three variables demonstrate a statistically significant influence on local revenue performance.
The findings suggest that strong economic potential alone does not automatically translate into higher fiscal independence for regional governments. Instead, effective revenue management and taxation systems play a critical role in converting economic activity into public income.
In Bogor Regency, the positive relationship between GRDP and local revenue reflects the presence of strong multiplier effects from industrial development, household consumption, and trade activity. Economic clusters in areas such as Sentul, Cibinong, and Gunung Putri contribute to expanding the regional tax base through hotel taxes, restaurant taxes, land transactions, and service-sector growth.
The region’s proximity to Jakarta further strengthens its economic integration with national markets, supporting infrastructure connectivity and encouraging investment flows that increase taxable economic output.
However, the study found that population growth does not significantly affect local revenue in Bogor Regency. Many residents commute daily to Jakarta for work and consumption activities, meaning that a large share of economic transactions occurs outside the region’s fiscal jurisdiction. As a result, increases in population size do not necessarily expand the local tax base.
Domestic tourism also shows no measurable contribution to regional revenue in Bogor Regency. Although the area attracts large numbers of visitors, most trips are short-duration visits without overnight stays, limiting hotel tax collections and reducing the fiscal multiplier effect of tourism spending.
A similar pattern appears in Bandung Regency, where GRDP, population size, and domestic tourist arrivals all fail to significantly influence locally generated revenue. The study explains that Bandung’s economy is dominated by agriculture and manufacturing sectors, whose tax revenues are largely centralized rather than retained by local governments.
Household consumption levels in the regency remain relatively modest, and industrial exports contribute more strongly to national rather than regional fiscal accounts. As a result, increases in economic output do not automatically strengthen local government revenue capacity.
Population growth in Bandung Regency also places additional pressure on regional spending for infrastructure, education, and public services without proportionally increasing tax contributions. Many residents work in low-wage sectors such as agriculture and factory labor, limiting their capacity to expand the local tax base.
Tourism likewise contributes less than expected to regional income. Major attractions such as Kawah Putih, Ranca Upas, and Tangkuban Perahu attract large visitor numbers, but many are managed by state agencies or private operators, meaning that revenue does not fully enter the regional government budget. Short visitor stays and supply-chain leakages further weaken tourism’s fiscal contribution.
Between 2015 and 2024, tourism-related taxes accounted for only about 4.1 to 6.3 percent of total local revenue in Bandung Regency, confirming that visitor activity alone cannot serve as a primary driver of fiscal growth.
The study concludes that regional governments must strengthen tax administration systems and improve coordination between economic sectors and fiscal policy to better capture the benefits of economic expansion. Aligning GRDP growth with effective tax collection strategies, improving tourism revenue channels, and supporting value-added processing industries are identified as key priorities for increasing regional financial independence.
These findings highlight a broader lesson for decentralization policy in Indonesia: regional economic strength does not automatically ensure fiscal capacity unless supported by efficient governance and integrated revenue management systems.
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