Factor analysis of the oleochemical industry in downstream industrial development based on palm oil: Evidence from Lampung Province

Abstract

The development of the palm oil downstream industry in the form of the oleochemical industry is one of the potential industries in Indonesia. The industry is supported by the potential of raw materials based on palm oil which is spread in several provinces in Indonesia. Lampung Province is one of the provinces that depends on regional income and exports from palm products. The development of palm oil products such as oleochemicals is important for maintaining the resilience of the oleochemical products supply for hygiene products during the COVID-19 pandemic, such as soap, hand sanitizer, detergent and so on. The demand for oleochemicals is growing by an average of 12% every year. In addition, Indonesia is an oleochemical exporting country with an increasing demand until 3.87 tons in 2020 or US$ 2.57 billion and demand growth by 21% from 2019. However, the development of the oleochemical industry in Lampung Province has not shown a significant increase. The aim of this study is to determine internal and external factors in the oleochemical industry development in Lampung Province. This research is expected to be a guide in determining the direction of strategies and policies for the oleochemical industry development in Lampung. The method used in this research is a literature study to collect factors related to the development of the palm oil industry, surveys and expert interviews. Factor analysis uses decision-making analysis methods by IFE (Internal Factor Evaluation) and EFE (External Factor Evaluation) matrices. The results of the matrix analysis show that the most influential internal factors are the quality and continuity of the quantity of raw materials. External factors show that the commitment of the government has the most influence on the development of the oleochemical industry in Lampung Province.