The ILO and the Swiss Government continue to strengthen partnerships for Indonesia’s sustainable patchouli development

Digitalization and financial inclusion

The ILO and the Swiss Government continue to strengthen partnerships for Indonesia's sustainable patchouli development

The patchouli industry has emerged as a leading sector in Aceh Province in Indonesia, contributing significantly to local economic development and improving community welfare.

19 February 2026

ACEH, Indonesia (News) - The scent of patchouli has long been part of Aceh's economic identity. Now, through strengthened partnerships and digital innovation, the province is working to enhance its position in global markets while creating more opportunities for local communities.

The ILO, through its Promoting SME Enterprises through Improved Entrepreneurs' Access to Financial Services (Promise II Impact) project, has been supported by the Private Sector Development Division of the Swiss State Secretariat for Economic Affairs (SECO) in advancing the patchouli industry in Aceh over the past three years. By expanding access to finance through digitalization and strengthening production data systems and business processes across the patchouli value chain, the project helps enterprises improve productivity, transparency, and decision-making, while promoting decent work and local economic growth.

To further support this progress, representatives of SECO, accompanied by the ILO's Promise II Impact team, visited Aceh from 24-25 January to review the progress of the SECO-supported programme. The visit focused on assessing results and reinforcing collaboration to advance sustainable and inclusive development in Aceh's patchouli value chain.

The visit began at Syiah Kuala University (USK), where SECO and the ILO met with the Rector of USK, the Atsiri Research Center (ARC), provincial and local government representatives, academics, and private sector partners. Discussions centred on strengthening the patchouli ecosystem, particularly through the use of digital production data and enterprise resource planning (ERP) systems. These tools are helping businesses enhance traceability, improve operational efficiency, and increase their eligibility for financing.

ILO and SECO representatives join USK, ARC, the private sector, and local government officials during a coordination meeting on strengthening Aceh's patchouli value chain (01/2026). Photo credit: Hotli Simanjuntak/2026

Through its collaboration with the ILO, USK and ARC have further advanced USK's role as a socio-entrepreneurial university by bridging research, innovation, and community empowerment. By linking scientific expertise with practical field implementation, the partnership supports farmers and enterprises in adopting digital tools for better production planning, quality assurance, and market engagement.

"The collaboration with the ILO and SECO has reinforced USK's role as a socio-entrepreneurial university that connects research, innovation, and community empowerment," said Prof. Dr. Ir. Marwan, Rector of USK.

Provincial government representatives emphasized that the initiative aligns closely with Aceh's medium-term development priorities, particularly in downstream development and the creative economy. Strengthening local processing and value addition, they noted, is key to increasing household incomes and expanding employment opportunities in rural areas.

The delegation then travelled to Lhoong village, where patchouli farmers demonstrated how innovation is taking shape at the community level. During the field visit, farmers showcased the MyNilam application, which connects agricultural production data with business operations. By integrating farm-level data into digital systems, the application improves efficiency, strengthens traceability, and facilitates access to markets and financing, which are critical factors in meeting stringent international quality requirements.

A patchouli farmer in Lhoong village shares cultivation practices directly from the plantation. Photo credit: Hotli Simanjuntak/2026

However, challenges remain. Syaifullah Muhammad, Head of ARC, highlighted the need to scale up shared knowledge among patchouli farmers across Aceh to ensure consistent and high-quality oil production. He also pointed to the significant price gap between crude patchouli oil and refined products processed outside the province, underscoring the importance of expanding local value addition.

"If we can strengthen shared knowledge and local processing capacity, at least 20 per cent of crude patchouli oil could be processed locally, increasing value for Acehnese communities," he said.

Looking ahead, sustained investment in farmer upskilling, digitalization, and stronger market linkages will be essential to achieving this goal. "Through this project, the ILO is working with partners to ensure that digitalization translates into real benefits for farmers. It means better productivity, stronger market access, and more decent work opportunities," added Djauhari Sitorus, the ILO's Promise II Impact Project Manager.

The SECO visit reaffirmed that strong partnerships, combined with innovation and local ownership, are central to building a more resilient and inclusive patchouli sector in Aceh.

Christian Brändli, head of SECO's Private Sector Development, expressed appreciation for the strong local commitment to the project's implementation.

"We would like to thank Syiah Kuala University and the provincial and local government authorities for their determination and leadership in implementing this project. Their commitment is essential to ensuring that digital innovation and improved access to finance deliver tangible benefits for farmers and enterprises," he said