Indonesia is the biggest archipelago country located in the Pacific Ocean that consists of more than 17,000 islands around the equator lines. However, the unintegrated infrastructure built in the entire region in Indonesia caused a huge economic gap that led to 60% of the entire country’s economy relying on production in Java island. Not only that, Indonesia is situated on the ring of fire. As a combined result of the imbalanced economic structure and its geographical location, the country is prone to both natural and man-made disasters, which result in significant financial and non-financial damages. The economic loss reported in journals and news reflect the amount of money worth the damage due to the disaster, but did not portray indirect loss or spillover to the rest of the non-directly affected regions due to supply chain activity. The identification of both direct and indirect loss are critical since there are economic transactions in between all regions and are linked together as documented in the Multi Regional Input Output table. In this research, data of production loss caused by the disaster were processed into an Input Output table through the partial Hypothetical Extraction Method to quantify the entire loss experienced after the disaster. Further research will include the total loss after substitution through import between regions. The result shows that total loss in each case presented was higher than the official report due to supply chain loss. Due to the findings, recommendations of policy were raised to help the government disburse the rehabilitation funding to areas outside originated disaster region and create efficient measures to minimize financial loss of disaster in the future.

Indonesia is the biggest archipelago country located in the Pacific Ocean that consists of more than 17,000 islands around the equator lines. However, the unintegrated infrastructure built in the entire region in Indonesia caused a huge economic gap that led to 60% of the entire country’s economy relying on production in Java island. Not only that, Indonesia is situated on the ring of fire. As a combined result of the imbalanced economic structure and its geographical location, the country is prone to both natural and man-made disasters, which result in significant financial and non-financial damages. The economic loss reported in journals and news reflect the amount of money worth the damage due to the disaster, but did not portray indirect loss or spillover to the rest of the non-directly affected regions due to supply chain activity. The identification of both direct and indirect loss are critical since there are economic transactions in between all regions and are linked together as documented in the Multi Regional Input Output table. In this research, data of production loss caused by the disaster were processed into an Input Output table through the partial Hypothetical Extraction Method to quantify the entire loss experienced after the disaster. Further research will include the total loss after substitution through import between regions. The result shows that total loss in each case presented was higher than the official report due to supply chain loss. Due to the findings, recommendations of policy were raised to help the government disburse the rehabilitation funding to areas outside originated disaster region and create efficient measures to minimize financial loss of disaster in the future.

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