Seno Wulung 1), Sutarto 2), Siti R. Umah3)
Leather industry is a potential industry in Indonesia since it can absorb large number of workers, since it has high value product and utilizes renewable resources. This research is intended to analyze general equilibrium influenced by policy adjustment in leather industrial sector. It uses computable general equilibrium (CGE) model. For analyzing purposes, we use General Algebraic Modelling Systems (GAMS). The result indicates that Gross Domestic Product (GDP) increased by 0.004% as well as decreasing of import tariff policy by 25 %. The Model shows that increasing of investment also increases GDP by 0.017%. The models also indicate that household and government consumption increased when government decreased the import tariff and increased the investment. Even though GDP and consumption increase, this model indicates decreasing Indirect tax income (NITAX). In term of indirect tax income, increasing investment reduces indirect tax smaller than decreasing import tariff policy.