PALMOILMAGAZINE, JAKARTA — The Indonesian government is preparing a strategic policy to ensure sufficient crude palm oil (CPO) supply for domestic needs ahead of the 50% biodiesel blending program (B50) rollout in 2026. One of the key options under consideration is the implementation of a Domestic Market Obligation (DMO) for palm oil companies, which could temporarily reduce export volumes.
Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, explained that the DMO scheme is being considered to secure adequate CPO supply for biodiesel production without relying heavily on exports.
“If domestic CPO demand increases, there are only two options: open new plantations or apply a DMO policy to a portion of our exports,” Bahlil said after signing a memorandum of understanding at the ESDM Ministry Office in Jakarta, Tuesday (October 14, 2025).
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The DMO policy requires producers to prioritize domestic supply before exporting. If applied to the palm oil sector, part of Indonesia’s CPO export allocation would be redirected to meet the B50 mandate—one of the government’s flagship programs aimed at reducing diesel imports and strengthening national energy security.
In addition to the DMO option, the government is also reviewing two alternative strategies: intensifying productivity on existing palm oil plantations and opening new plantation areas to bolster biodiesel feedstock supply.
“If the chosen option involves trimming exports, the key will be maintaining balance between domestic and international demand,” Bahlil added, as quoted by Palmoilmagazine.com from Antara on Wednesday (October 15, 2025).
Similarly, Minister of Agriculture Andi Amran Sulaiman affirmed the government’s full support for the use of CPO in biodiesel production. He noted that the B50 program will require an additional 5.3 million tons of CPO annually.
Also Read: Indonesia Prepares B50 Biodiesel Implementation, Aiming to End Diesel Imports by 2026
“Our total CPO production is around 46 million tons per year. About 20 million tons are processed domestically, while 26 million tons are exported. So, part of that export volume will be redirected to support B50,” Amran explained after a limited cabinet meeting with President Prabowo Subianto at the Presidential Palace on Thursday (October 9, 2025).
The B50 program, scheduled to begin in the second half of 2026, is expected to significantly reduce diesel imports and reinforce Indonesia’s position as a leading producer of palm oil–based green energy. While the policy may temporarily impact exports, it will expand domestic market opportunities for the national palm oil industry.
Through this initiative, the government aims to balance national energy security, export performance, and the long-term sustainability of the palm oil sector. However, the final decision on whether to implement the DMO scheme, intensify plantation productivity, or expand plantation areas will depend on the results of inter-ministerial assessments. (T2)
