Kuala lumpur: Indonesia's decision to delay the implementation of the B50 biodiesel mandate presents Malaysia with a short-term opportunity to increase palm oil exports as the commodity's price is kept stable by the move, according to an academic.
According to BERNAMA News Agency, Dr Chong Siew Huay, a senior lecturer at the Faculty of Business and Management, Universiti Teknologi MARA (UiTM), explained that the postponement means Indonesia will absorb less crude palm oil (CPO) domestically for biodiesel than originally planned, as the country retains the B40 mandate for now.
Dr Chong noted that with Indonesia absorbing less CPO domestically, more palm oil would be channelled into international markets, creating opportunities for Malaysia to increase exports, particularly in markets where Indonesia is a direct competitor. She highlighted that this development could ease pressure on palm oil supply in the global market, helping to maintain stable domestic and export conditions. Prices are likely to stabilize or rise more slowly than previously anticipated, as reduced domestic demand lessens upward pressure on CPO prices.
Chong emphasized that Malaysia's long-term competitiveness in the global palm oil market would depend on several factors such as productivity, the development of value-added products including refined palm oil and oleochemicals, as well as sustainability practices, rather than relying solely on Indonesia's policy decisions.
She further explained that Indonesia's decision to delay the B50 rollout was driven mainly by fiscal sustainability concerns. Higher biodiesel blending ratios would substantially increase subsidy requirements, especially during periods of high CPO prices and uncertain global energy markets. Moving from B40 to B50 would heighten the government's exposure to price volatility and budgetary pressure, raising concerns over fiscal capacity and economic stability.
From a technical perspective, Dr Chong mentioned that higher biodiesel blends pose greater challenges in fuel stability and compatibility, especially for older vehicles and heavy machinery. This would require adjustments across fuel systems, engines, logistics networks, and regulatory frameworks.
She added that higher blending mandates would significantly increase Indonesia's domestic demand for palm oil, potentially pushing up prices for food-related palm oil products and creating inflationary pressure, particularly on cooking oil. Dr Chong concluded that in developing countries, governments must balance energy and industrial policy goals with inflation control, fiscal sustainability, and social welfare considerations. The delay does not rule out a future move to B50, but reflects a cautious, step-by-step approach to avoid technical, economic, or social disruptions that could arise from moving too quickly.