Palm oil-based MSMEs urged to boldly enter the global market
The potential of palm oil-based micro, small, and medium enterprises is enormous. Going forward, there is a need to increase the number of MSMEs capable of adding value to palm oil products or commodities.
Economist Eisha Maghfiruha Rachbini is encouraging palm oil-based micro, small, and medium enterprises to improve their competitiveness and boldly enter the international market.
According to her, the development potential of palm oil-based MSMEs in Indonesia is very large, as they can develop various palm oil derivative products ranging from food (oleofood), chemicals (oleochemical), to bioenergy.
However, the Programme Director of the Institute for Development of Economics and Finance stated that the contribution of MSMEs to the national export value is currently still relatively low, at around 15 percent, and therefore needs to be increased going forward.
“Palm oil commodities can be one of the sectors that drive an increase in the contribution of MSMEs to export value. Moreover, palm oil is one of Indonesia’s leading export commodities,” said Eisha in her statement in Jakarta on Monday.
She added that the palm oil downstreaming programme has now produced more than 193 types of derivative products, thereby having a positive impact on the national economy, ranging from an increase in fresh fruit bunch prices at the farmer level, expansion of employment opportunities, and the creation of a broader chain of economic effects.
“The potential of palm oil-based MSMEs is very large. Going forward, there is a need to increase the number of MSMEs capable of adding value to palm oil products or commodities,” she said again.
In addition, she also stated that MSME players need to be strengthened so that they can become part of the global supply chain for palm oil-based products.
She explained that the involvement of MSMEs in the global supply chain can drive business transformation, increase productivity, and strengthen product quality in accordance with global standards.
When MSMEs enter the global market, either as exporters or suppliers in the global value chain, she continued, they will produce according to global market standards and qualifications, thereby encouraging MSMEs to be more efficient in production.
Eisha believes that palm oil-based MSME players have the opportunity to meet these global market standards and qualifications, especially when reflecting on the success of the palm oil downstreaming programme, which has significantly increased the added value of products.
In general, palm oil downstreaming can increase the economic value of products by between three and ten times, she said, while the added value for high-value products such as vitamin E and certain oleochemicals can reach more than 30 times.
Nevertheless, she hopes that the government will continue to provide assistance and support to export-oriented MSMEs, whether in the form of strengthening financial capacity, providing incentives, or technical assistance to boost productivity and lower production costs.
“The challenge of becoming an exporter is quite significant for MSMEs. Moreover, penetrating the global market, which has considerable barriers, is difficult amid the limited financial and production capacity of MSMEs,” she said.
So far, the government, through the Plantation Fund Management Agency, has continued to encourage the development of export-oriented palm oil-based MSMEs.
This is part of efforts to strengthen the national palm oil industry, while also promoting the development of a sustainable industry.
Eisha added that the government can strengthen support for export-oriented MSMEs through mapping potential markets, identifying potential buyers, and facilitating business matching between MSME players and business partners in the global market.
“Indonesian representatives abroad, trade attachés, and ITPCs need to be more active in mapping market potential for exporting MSMEs,” she said.