The Impact of Subsidized Maritime Transport Connectivity on Social Welfare in Eastern Indonesia: A System Dynamic Approach

Abstract The Indonesian government has implemented a maritime development strategy based on the “Transport Promotes the Trade” concept in the context of achieving Sustainable Development Goals, especially related to social welfare. This concept is expected to overcome welfare disparities between the Western and Eastern regions of Indonesia. Through the Subsidized Public Service Obligation (PSO) Maritime Transport program, which includes Pioneer Ships, Sea Tolls, and PSO Economic Passenger Ships, the government aims to improve inter-regional connectivity, open new trade routes, and enhance the welfare of communities in Eastern Indonesia. This research aims to evaluate the impact of subsidized maritime transport connectivity on social welfare in Eastern Indonesia. Using a system dynamics approach, this study analyses the changes in the connectivity index over times and its relationship with social welfare as measured by the Human Development Index (HDI). The findings of this research are expected to provide a deeper understanding of the interactions of welfare variables within the dynamic system, as well as the impact of changes in subsidized maritime transport connectivity on social welfare in Eastern Indonesia, increase in connectivity through the addition of ships results in an average increase of 0.009 in HDI.