Analysis of Kudus Regency's Leading Sectors: The Risks of Excise Tax on The Cigarettes Industry
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This study examined the economic structure of Kudus Regency and its vulnerability to tobacco excise policy shocks using Location Quotient (LQ) and Shift-Share analyses. Employing a descriptive quantitative approach with secondary time-series data from Statistics Indonesia (BPS) for 2023–2024, the study identified the manufacturing sector as the only economic base sector, with an average LQ of 2.296, while the other 16 sectors were classified as non-base sectors primarily serving local demand. The Shift-Share analysis revealed a substantial erosion of the manufacturing sector's competitive advantage, as indicated by a negative Differential Shift of IDR 989.29 billion, suggesting that the sector grew considerably more slowly than the corresponding sector in Central Java Province. This decline was associated with cumulative increases in Tobacco Products Excise (Cukai Hasil Tembakau [CHT]) rates, which increased production costs and reduced profitability. The Kudus Regency Government reported economic growth of only 2.78% in the first semester of 2025, considerably below the national average. Despite these challenges, several non-base sectors showed promising trends, with Construction and Other Services recording positive Differential Shifts of IDR 90.48 billion and IDR 73.74 billion, respectively, indicating potential opportunities for economic diversification. These findings underscore the need for strategic investment in economic diversification and the effective allocation of Tobacco Products Excise Revenue-Sharing Funds (Dana Bagi Hasil Cukai Hasil Tembakau [DBH CHT]) toward workforce development and non-tobacco enterprises to foster a more resilient regional economic structure.
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