Indonesia may implement B45 biodiesel mandate first instead of B50, says Ivy Ng
13/01/2026 (The Edge Malaysia), Kuala Lumpur - Indonesia is likely to implement a 45% biodiesel blend (B45) mandate in the second half of the year, instead of moving directly to B50, due to fiscal constraints arising from low crude oil prices which increase the fiscal cost of biodiesel subsidies, said CIMB Securities head of research Ivy Ng Lee Fang.
Speaking at the Palm Oil Economic Review and Outlook Seminar 2026 on Tuesday, Ng said funds used to support Indonesia’s biodiesel programme are being depleted as the price gap between palm oil and gasoil has widened to about US$366 (RM1,482) per tonne.
“In response, Indonesia is considering raising the palm oil export levy to sustain its biodiesel mandate. However, given the lack of details and the downgrade in crude oil price forecasts to around US$50–US$60 per barrel for 2026, I have turned slightly bearish on the likelihood of Indonesia implementing B50 in the near term,” she said.
Ng said if sufficient funding or capacity cannot be secured, the rollout of B50 could be pushed back to later 2026.
“However, we cannot rule it out entirely, given Indonesia’s strong track record in progressing from B30 to B40,” she added.
Ng's comments followed the Indonesian government’s statement earlier on Tuesday that it is still reviewing the proposed B50 biodiesel mandate and will decide whether to proceed based on the price gap between crude oil and CPO, according to a Reuters report.
Ng said moving to B45 instead of B50 would result in a much smaller demand boost, adding about 850,000 tonnes of palm oil demand in 2026. By comparison, a full implementation of B50 in the second half of the year would raise incremental palm oil demand by around 3.4–3.6 million tonnes, from current blending levels of 15.65 million kilolitres (or 13.6–14.3 million tonnes).
Ng projects average CPO prices to ease to around RM4,000 per tonne in 2026, from RM4,300 in 2025.
In contrast, Malaysian Palm Oil Board director-general Datuk Dr Ahmad Parveez Ghulam Kadir said earlier at the seminar that average CPO prices could remain firmer at around RM4,200–RM4,300 per tonne, as Indonesia’s B40 mandate continues to absorb large volumes of palm oil, tightening global supply.
Concerns over Indonesia’s land seizure plans
Ng also expressed concern over Indonesia’s plans to expand land seizures, which could affect Malaysian plantation companies with estates in the country. Jakarta announced this week that it will seize an additional 4–5 million hectares of illegally controlled oil palm plantations as part of a broader crackdown on corruption and unlawful forest land use.
“At this moment, based on discussions with companies under our coverage, none have had land seized yet, although some are facing issues and are in negotiations with the government. As such, we do not see a material near-term impact on listed plantation companies, even though there are concerns that some estates could eventually be affected,” Ng said.
The key market concern is how any seized land would be managed and whether productivity levels can be maintained, she said.
“If affected plantation companies become less willing to invest — whether in infrastructure, replanting or fertiliser — Indonesia’s palm oil supply growth also could slow over the next few years. Further, when we talk about the outcome of land seizure and potential financial penalties, it worries me a bit because this could strain companies’ working capital and delay replanting programmes, especially given the ageing profile of many estates there,” she added.