The International Labour Organization and the Banda Aceh City Government have signed a Memorandum of Understanding to strengthen the micro, small and medium enterprises ecosystem and support the Perfume City Programme, according to an ILO news release dated April 23, 2026. The partnership focuses on the patchouli value chain, as Aceh is recognized as one of the world’s top producers of patchouli oil, a plant cultivated in the region for centuries and a key ingredient in global perfumery.
The collaboration is part of the ILO’s Promise II Impact Project, funded by the Government of Switzerland, which aims to promote financial inclusion and expand access to financing for MSMEs using a value chain approach. Banda Aceh was chosen for its significant patchouli potential, which supports downstream processing and adds value through the Perfume City initiative.
The programme addresses challenges faced by MSMEs, including limited financing, market access, business capacity and digitalization. It includes three focus areas: enhancing MSME capacity through training in entrepreneurship, business management, product development and quality standards; developing patchouli-based derivative products and expanding domestic and international market access; and strengthening coordination among local government, MSMEs, academia and the private sector.
Mayor Illiza Saaduddin Djamal welcomed the partnership as a concrete step toward making Banda Aceh a globally competitive Perfume City. Simrin Singh, ILO Director for Indonesia and Timor-Leste, stated that the collaboration ensures MSMEs, including patchouli entrepreneurs, have better access to financing, markets and capacity building, contributing to an inclusive, productive value chain ecosystem capable of creating decent jobs. The collaboration is expected to create tangible impacts for local MSMEs, expand economic opportunities and position Banda Aceh as a model for sustainable commodity-based economic development.
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