Indonesia delays B40 while GAPKI warns news 10% export tax will make country’s palm oil exports less competitive

Initially set to take effect on 1 January, officials confirmed a delay until February, giving businesses a six-week grace period to adapt, the 7 January report said.

In addition, the government announced that by 2026, the biodiesel blend would increase to B50, with plans to completely halt diesel imports, Reccessary wrote.

The biodiesel programme is aimed at reducing the country’s reliance on imported diesel while increasing demand for locally produced vegetable oils.

Although Indonesia’s Ministry of Energy and Mineral Resources (ESDM) vice minister Yuliot Tanjung said the mandatory B40 biodiesel blending policy officially started on 1 January, the first six weeks would serve as an adaptation period to give businesses time to use up their remaining stock of B35 biodiesel, while related technologies would be adjusted accordingly.

State-owned oil company Pertamina had already prepared two refineries to produce B40, the report said.

Meanwhile, the Indonesian Palm Oil Association (GAPKI) has raised concerns that a new 10% export duty on crude palm oil (CPO) would make exports of the commodity less competitive, The Star wrote.

On 19 December, the government announced that it would raise the CPO export from 7.5% to 10% to fund higher subsidies for biodiesel.

“Increasing the export levy will make Indonesian palm oil (exports) less competitive compared to neighbouring countries,” Gapki chairman Eddy Martono was quoted as saying on 22 December by Bloomberg Technoz.

The industry also raised concerns that the upgraded biodiesel programme, alongside the higher duty, would lower the overall volume of CPO exports, particularly against a backdrop of stagnant domestic production, The Star wrote on 25 December.

According to the US Department of Agriculture (USDA) Foreign Agricultural Service (FAS) January Oilseeds: World Markets and Trade report, the increase to B40 is expected to increase Indonesia’s industrial palm oil consumption by around 1M tonnes from the previous year to a record of 14.5M tonnes in 2024/25, reducing the amount of palm available for export.

Tags: Crude palm oil, biodiesel, palm oil, CPO, B40, exports, Indonesia