Development of Palm Oil Industrial Cluster in Indonesia: An Analytic Network Process Study

The study describes interrelationship among development of Indonesian palm oil industrial cluster, transaction cost, networks effect, and supply chain integration with competitiveness of business and economic environment. From the recent Indonesian perspective, development of industrial cluster performance needed strong foundation of business and economic environment competitiveness that technically manifested by supporting infrastructure upgrading, hence facilitating supply chain integration occurence through network externality. The succeed of future industrial cluster were influenced by cluster performance through networks effect and decreasing of transaction cost along with business and economic environment competitiveness improvement. Policy implication needed was the policy that will be to develop and to strengthen coordination within sectors and clusters rather than economic special pattern. Business implication from this study reveals the importance of supporting infrastructure as a prerequisite for successful of industrial cluster development, and critical to implement governance structure (agent) for palm oil industrial cluster advancement.