PALMOILMAGAZINE, JAKARTA — Indonesia’s palm oil–based biodiesel policy needs to remain flexible rather than rigid, as overly strict implementation could backfire on the palm oil industry and the broader national economy, according to the Komisi Pengawas Persaingan Usaha (KPPU).
KPPU Commissioner Eugenia Mardanugraha cautioned that inflexible policy measures risk creating unintended negative consequences. She cited research conducted by Pranata UI, which indicates that raising the mandatory biodiesel blend 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 deliver short-term gains for certain stakeholders, it could ultimately erode the global competitiveness of Indonesian palm oil,” Eugenia said.
The KPPU believes policy flexibility is essential if Indonesia is to avoid falling behind key competitors such as Malaysia, Brazil, and Thailand, which have already adopted more adaptive biodiesel mandate frameworks.
Malaysia, in particular, is seen as having successfully managed its biodiesel policy through a flexible system. The neighboring country is able to adjust palm oil allocations between domestic consumption and exports in response to global price movements, without disrupting price stability at the farmer level or undermining foreign exchange earnings.
This adaptive approach has given Malaysia a competitive edge. When Indonesia enforces strict biodiesel mandates, Malaysia is often 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 key price reference for global CPO futures.
By contrast, Indonesia risks losing some degree of 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 let slip away,” Eugenia said. (P2)
