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JAKARTA – The processing of palm oil presents a significant pathway for Indonesia's Micro, Small, and Medium Enterprises (MSMEs) to enhance product value and expand their reach into international export markets. This strategic focus on developing export-oriented palm oil derivative products is seen as crucial for fostering a sustainable national palm oil industry.
Eisha Maghfiruha Rachbini, Director of the Program at the Institute for Development of Economics and Finance (INDEF), highlighted the immense potential for palm oil-based MSMEs across Indonesia. Rachbini noted that these enterprises can innovate a diverse range of palm derivative products, spanning from the food sector (oleofood) to chemicals (oleochemical) and even bioenergy.
Indonesia's palm oil downstreaming program has already yielded over 193 distinct types of derivative products. This progress has had a tangible positive impact on the national economy, including increasing Fresh Fruit Bunches (FFB) prices for farmers, creating more employment opportunities, and stimulating broader economic ripple effects. 'The potential of palm oil-based MSMEs is very large. In the future, it is necessary to increase MSMEs that are able to provide added value from palm oil products or commodities,' Rachbini stated in Jakarta on Monday, August 24.
Rachbini strongly encouraged palm oil-based MSMEs to sharpen their competitive edge and actively pursue entry into the international market. She pointed out that MSMEs' current contribution to the national export value remains relatively low, at approximately 15 percent, a figure that has shown stagnation. Rachbini believes that palm oil, as one of Indonesia's key export commodities, can significantly elevate this contribution. 'The contribution of MSMEs to exports is only around 15 percent and its value is stagnant, not growing. In the future, it needs to be improved,' she emphasized.
With a doctorate in international economic policy studies from Waseda University, Japan, Rachbini further urged MSMEs to integrate into the global supply chain for palm oil-based products. She explained that such involvement would drive business transformation, boost productivity, and ensure product quality aligns with stringent global standards. 'Because when MSMEs enter the global market, whether as exporters or suppliers of global value chains, they will produce with global market standards and qualifications. This will encourage MSMEs to be more efficient in production and encourage them to rise in class,' she elaborated.
Rachbini expressed confidence that palm oil-based MSMEs possess the capability to meet global market standards, particularly given the demonstrated success of the palm oil downstream program in substantially increasing product value. Generally, palm oil processing can multiply the economic value of products by three to ten times. For high-value products like vitamin E and specific oleochemicals, this added value can exceed 30 times.
However, she stressed the importance of continued government support and assistance for export-oriented MSMEs. This crucial support should encompass strengthening financial capacity, providing incentives, and offering technical assistance to enhance productivity and reduce production costs. 'The challenge of becoming an exporter is quite large for MSMEs. Moreover, to penetrate the global market which has a large barrier in the midst of limitations in financial capacity and production from MSMEs,' Rachbini cautioned.
The government, through the Plantation Fund Management Agency (BPDP), has already been actively promoting the development of export-oriented palm oil-based MSMEs. This initiative is integral to strengthening Indonesia's national palm oil industry and fostering its sustainable growth. Rachbini further suggested that the government could bolster support by mapping potential markets, identifying prospective buyers, and facilitating business matching opportunities between MSMEs and global partners. 'Representatives of Indonesia abroad, trade attaches, and ITPC need to be more active in mapping market potential for export MSMEs,' she concluded.
Source: VOI.ID