Oil palm plantations located in 190 regencies are an economic sector based on local resources. One of the important actors in oil palm plantations is the family-run oil palm business (part of SMEs). The progress of the family-run oil palm business increased rapidly from only 142,000 in 1990 to 2.2 million units in 2016 (Figure 1). The development of these oil palm SMEs is revolutionary and has been carried out without burdening the government budget.
Aside from oil palm farmers, many activities in the supply of goods and services related to oil palm plantations and their employees involve SMEs. Activities such as the procurement of fertilizers, pesticides, plantation tools and machinery, transportation of fresh fruit bunches (FFB) and CPO, the need for foodstuffs, especially food for employees and the need for stationery and other supplies involve local SMEs. The more developed and mature oil palm plantations the more SMEs are involved in oil palm plantations.
Based on a PASPI study (2014), the average number of SMEs that supply goods and services for oil palm plantations has grown from 565 to 707 SMEs per 100,000 hectares of productive trees (TM), both results of the increase in the area size of TM and the age of TM (Figure 2).
The participation of SMEs in the palm oil industry, either as oil palm plantation actors or as oil palm plantation suppliers, has created new SME communities in rural areas. These new SME communities are more qualified because they have developed on their own initiative, are self-financing and are based on local resources.
In other words, oil palm plantations encourage the development of local SMEs in all 190 regencies. In fact, oil palm plantations can only grow rapidly with the support of local SMEs