Regional Industrial Evolution of Palm Oil Industry in Indonesia & Malaysia

In recent years, world economy has proven as a powerful means for developing countries to promote economic growth. However, developing countries such as Indonesia and Malaysia to some extent have developed their economy from resources base sector. The goal in this paper therefore, is to highlight how Indonesia and Malaysia can move their position from producers of primary products to become lead countries in processed palm oil industry. In many important aspects, the development of palm oil sector is connected with institutional environment and historical events that is embedded in countries’ economic system. For this reason, regions’ competitiveness in palm oil industry requires the rebuilding and improvement of obsolete structures and institutions that allows palm oil sector to escape from “lock-in” situation.