Analysis of The Impacts and Causes of The Informal Economy on The Island of Nunukan

Abstract

Nunukan Regency, North Kalimantan, the Informal Economy phenomenon is very complex. It is a community response to the economic and social challenges faced in border areas, and also presents challenges for the government. It is influenced by a variety of factors, such as limited capital and accessibility to resources from neighbouring countries, such as Malaysia. The Informal Economy is often a way of survival for local communities in border areas. The activities of the Informal Economy include smuggling of consumer goods, subsidized fuel oil, illegal cross-border trade, and even migrant workers. There is also illegal buying and selling of foreign currency. While these activities contribute to the livelihood of local communities, their impact on economic and social stability cannot be ignored. The informal economy can trigger various types of unfair business competition, lead to potential loss of tax revenue for the state, and also provide opportunities for illegal activities such as smuggling or even migrant workers. This research shows how the impacts and causes of the informal economy affect various aspects of life on Nunukan Island.