Improving Business Environment to Strengthen the Competitiveness of Patchouli Oil Industry in Aceh Jaya Regency

Abstract

Historically, Aceh was formerly a major patchouli oil-producing area in Indonesia. Lamentably, this time the market migration has shifted to Sulawesi, which is the central producing island, and only slightly material originating from Aceh. Though the pattern is unfavorable, many buyers have sought Aceh patchouli, scientifically proven that it can produce quality oil with low acid content and high patchouli alcohol. Aceh has its innate characteristic that is suitable for patchouli plants, so that almost all areas in Aceh have the potential to cultivate patchouli. The selection of Aceh Jaya as the research location was due to Aceh Jaya representing a very strategic district and quite affordable for various parties. At present, the interest of farmers to cultivate patchouli in Aceh Jaya has considerably decreased, even though the market demand for patchouli oil is quite high. Massive market demand is not enough to make farmers eager to cultivate patchouli. In the current cycle, farmers rely more on the patchouli oil price. The uncertain oil price affects the amount of patchouli oil produced. The limited capital resource represents the major problem that makes the oil produced thin out. Hence, interviews with experts using Porter Diamond Model were conducted to determine the major factors inhibiting the current condition. The results reveal the total values that most influencing current conditions are human resource (4), capital resource (4), unstable selling prices (4), patchouli distiller (3), similar industries with large and complete capacities (3.6), develop a roadmap for patchouli development in Aceh Jaya (3.4), and business climate (3). Then, the selected factors are elaborated into 25 conditions using a SWOT analysis. From the analysis, the weaknesses of current patchouli oil production are determined by experts, namely, poor accessibility (0.17), lack of farmers (0.61), limited capital (0.61), the use of simple technology (0.49), and no partnership with suppliers (0.18). In the further step, using the SWOT matrix, strategies were identified in the W-T strategy or defensive strategy. Elements include financial institution accessibility, technology advancement, partnerships, and counseling, training, and mentoring. Finally, the survival strategy is elaborate using AHP with a priority element: financial institution accessibility (0.3111). Then, the high priority of the actors involved is producers (0.3690). Lastly, the factor that indicates the increase in the business environment is the capital resource (0.3742).