Indonesia has sought to reassure Pakistan that its plan to increase domestic biodiesel blending requirements will not come at the expense of palm oil exports to overseas markets.
Jakarta currently enforces a B40 policy, which requires biodiesel sold domestically to contain 40 per cent palm oil. The government is preparing to raise this mandate to B50 later this year, increasing the blend ratio to 50 per cent. Despite the higher domestic demand implied by the move, Deputy Trade Minister Dyah Roro Esti Widya Putri said exports to international buyers, including Pakistan, would remain unaffected.
Addressing Pakistani business representatives at a conference in Karachi, Dyah Roro said Indonesia’s biodiesel programmes, including the proposed B50 rollout, would not disrupt palm oil shipments abroad. She emphasised that export commitments would continue to be met even as domestic biofuel use expands.
Pakistan ranks as Indonesia’s third-largest overseas market for palm oil, after China and India. Trade figures show that Indonesian exports to Pakistan were close to $3.5 billion during January–November 2025. Of this total, nearly $2.8 billion fell under the “animal fats and vegetable oils” category, highlighting the importance of palm oil in bilateral trade.
Indonesia currently enjoys tariff parity with Malaysia in the Pakistani market under a preferential trade arrangement that has been in place for more than a decade. Looking ahead, Jakarta is seeking to conclude negotiations on a comprehensive economic partnership agreement (CEPA) with Pakistan by 2027, a deal that would typically involve deeper tariff reductions and broader market access.
Data from the Indonesian government illustrates the scale of its biodiesel programme. In 2025, B40 biodiesel production reached 14.2 million kilolitres, surpassing the initial target of 13.5 million kilolitres. The policy helped the country save an estimated Rp 130.2 trillion (about $7.7 billion) in foreign exchange, while reducing carbon emissions by nearly 38.9 million tonnes of carbon dioxide equivalent. Converting crude palm oil into biodiesel also generated around Rp 20.4 trillion ($1.2 billion) in added economic value.
Earlier this month, Energy Minister Bahlil Lahadalia said the B50 mandate could be introduced in the second half of 2026, subject to the completion of technical trials. He added that the higher biodiesel blend, together with the operation of the $7.4 billion Balikpapan refinery project, could enable Indonesia to eliminate its reliance on imported diesel fuel.
