InfoSAWIT, JAKARTA — A rigid approach to biodiesel policy implementation could generate negative impacts on the palm oil industry and the national economy, warned Eugenia Mardanugraha, a member of the Komisi Pengawas Persaingan Usaha (KPPU).

According to Eugenia, research conducted by Pranata UI indicates that increasing the biodiesel mandate to B50 could push international crude palm oil (CPO) prices up by as much as USD 159.32 per metric ton. “While such an increase may provide short-term benefits for certain stakeholders, it could simultaneously erode the global competitiveness of Indonesian palm oil,” she said.

KPPU views policy flexibility as essential to prevent Indonesia from falling behind competing countries such as Malaysia, Brazil, and Thailand, which have already adopted more adaptive biodiesel mandate frameworks.

Malaysia, in particular, is regarded as successful in managing its biodiesel policy through a flexible system. The Malaysian government can adjust palm oil allocations between domestic consumption and exports in response to global price dynamics, without disrupting farmer-level price stability or foreign exchange earnings.

This flexible approach has given Malaysia a competitive advantage. When Indonesia enforces a rigid biodiesel policy, Malaysia is able to fill export supply gaps and capitalize on rising global palm oil prices. The presence of Bursa Malaysia Derivatives (BMD) further strengthens Malaysia’s bargaining position as a global price reference for CPO futures.

By contrast, Indonesia risks losing part of its influence over global pricing, despite remaining the world’s largest palm oil producer by volume. “When our policies are too rigid, global markets adjust quickly. Other countries seize the opportunities that we relinquish,” Eugenia concluded. (T2)

For more details, read InfoSAWIT Magazine, November 2025 edition.