Cluster Development for 11 Commodities





Directorate General of Agriculture, Ministry of Industry

CSBC experts involved

Agro Industry Sector Expert
1. Prof. E. Gumbira Said, MA.Dev
2. Dr. Ir. Sapta Raharja, DEA
3. Dr. Ir. Idqan Fahmi, M.Ec
4. Drs. Yudha Heryawan Asnawi, MM

Expert Cluster
1. Dr. Ir. Arief Daryanto, M.Ec
2. Prof. Dr. Ujang Sumarwan, M.Sc
3. Suhendi, SP, MM
4. Ir. Yudi Setiadi, MM

Planning Expert
1. Dr. Ir. Henny K Suwarsinah, M.Ec
2. Prof. Dr. Ir. Noer Azam Achsani, MS
3. Ir. Triyudi Widayanti, MM

Agro Industry Sector Expert
1. Dr. Ir. Aji Hermawan, MM
2. Prof. Dr. Ir. Anas Miftah Fauzi, M.Eng
3. Asep Taryana, S.TP. MM


Brief description
The aim of this research was to analyze the core competencies of the respective regions to define further development strategies. Since 2005, more industrial development is directed at the development of the cluster approach. Presidential Decree No. 28/2008 strengthened the legal basis of the cluster program. A cluster is defined as geographically agglomeration of firms that have various specialties establish mutually beneficial strategic partnership. Core industrial companies agglomeration that are concentrated regionally and globally interconnected or interact dynamically, either with related industries, supporting industries and supporting services, economic infrastructure and institutions in improving efficiency, creating collective assets and encourage innovation, so as to create competitive advantage.

The companies in the cluster benefit from the formation of collective efficiency:
a. Together, they created the “external economies”, which provide benefits to other firms (spillover) – “involuntary effects” because it joins the cluster (passive effects).
b. They carry out joint actions – effects that are active collaboration for companies that are members of the cluster (active effects).

Cluster development is intended to improve competitiveness. From a micro perspective, competitiveness is defined as sustained productivity growth that is driven by the quality of operations and business strategy, the quality of the business environment and conducive macroeconomic climate (Yener, 2002), whereas from a macro perspective, competitiveness shows the capabilities to produce goods and services as required by the international market as well as to maintain and increase the real income of the community in the long term (Garelli, 2002).

There are at least three issues as the reason of low competitiveness of Indonesian products. Those problems are (1). Productivity is low because there are no economies of scale. (2) Scope of Economies are limited to export markets, and (3) High costs economy. Cluster development strategy offers more effective and comprehensive economic development efforts that requires close cooperation between government, business, and educational institutions.

Various stages of cluster development have been carried out from stages of mobilization, diagnosis, strategy of cooperation to the implementation phase. The evaluation of cluster development should be carried out simultaneously in order to evaluate the implementation, results achieved and adjustment of further industrial development strategy.

The evaluation of agro industrial cluster development in general aims to measure the performance of clusters and to map the cluster position consists of 11 agro-industrial clusters, which are:

1) Palm Oil Processing Industry Cluster (Sei Mangkei-North Sumatera, Maloy-East Kalimantan  and Dumai-Riau)

2) Coconut Processing Industry Cluster (North Sulawesi)

3) Cocoa Processing Industry Cluster (Central Sulawesi and South Sulawesi)

4) Coffee Processing Industry Cluster (Aceh)

5) Fruit Processing Industry Cluster (West Java)

6) Paper Industry Cluster (West Java)

7) Furniture Industry Cluster (Central Java)

8) Sugar Industry Cluster (East Java)

9) Tobacco Industry Cluster (Nusa Tenggara Barat)

10) Marine Products Industry Cluster (Maluku)

11) Milk Processing Industry Cluster (Central Java)

Specifically, the purpose of evaluation of cluster development are as follows:
1. Obtain an overview of performance development of agro-industrial cluster that is currently running
2. Measure the performance of key elements of the development of agro-industrial cluster
3. Provide recommendation for further agro industrial cluster development strategy