Kuala Lumpur: Indonesia has postponed the launch of its B50 biodiesel blending programme this year, pointing to technical preparedness issues and limited funding, according to market observers, reports Borneo Post.
Analysts at TA Securities Bhd said the delay highlights deeper structural concerns rather than a short-term timing issue. These include the need to stabilise the country’s biodiesel funding mechanism, narrow the widening cost gap between biodiesel and conventional diesel, improve transport and storage systems, and ensure the industry is fully ready to handle higher blending levels.
From a regional trade angle, the research firm noted that Malaysia currently has an advantage in crude palm oil exports. Lower export duties in Malaysia help reduce overall costs and allow greater pricing flexibility. By comparison, Indonesia’s higher export levy raises export costs. While this levy supports domestic subsidy programmes, it also reduces Indonesia’s ability to compete on price in overseas markets.
Indonesia had earlier planned to introduce the 50 per cent biodiesel blend in the second half of 2026. However, recent reports indicate the government has chosen to defer the rollout. At the same time, it is moving ahead with plans to raise the palm oil export levy from 10 per cent to 12.5 per cent from March 1, 2026, a move aimed at strengthening government revenue and supporting wider policy objectives.
TA Research said the decision to delay the mandate was not unexpected, as concerns have been growing over whether subsidy funding would be sufficient. The price difference between biodiesel and fossil diesel has continued to widen, placing additional strain on public finances. These pressures are further compounded by reports of a budget shortfall in 2024.
Data cited by the research firm show that biodiesel margins in Indonesia have been volatile over the past decade and heavily reliant on subsidies. Margins were mostly negative between 2015 and 2017, briefly turned positive in 2018 and 2019, and weakened again in 2020 and 2021 due to low oil prices. They surged in 2022 during the global energy crisis, before easing to near break-even levels in 2023 and 2024. Losses returned in 2025 and early 2026, estimated at around 200 US dollars per tonne, suggesting the government would need to cover this gap through subsidies.
Overall, the analysts said Indonesia’s biodiesel programme remains unprofitable without government support, and higher blending targets would likely raise subsidy requirements and increase fiscal risks.
In contrast, Malaysia’s lower crude palm oil export duty gives its producers a cost advantage of about 103.2 US dollars per tonne compared with Indonesia’s planned 12.5 per cent levy. This reduces effective export costs for Malaysian producers and gives them more flexibility in global markets.
As a result, Malaysian exporters are seen as better placed to gain market share, particularly in price-sensitive destinations such as India. Indonesian exporters, meanwhile, face a trade-off between higher levy contributions to fund domestic biodiesel subsidies and maintaining their competitiveness in international markets.
