10/06/2026 (CGTN) - Despite being producers of oil and gas, Malaysia and Indonesia are net importers of petroleum, and are being hit by the global fuel crisis. Both governments are trying to support their populations by subsidizing petrol – in Malaysia's case, by around 1.8 billion US dollars a month. As the world's biggest producers of palm oil, the two countries are also moving to reduce their dependence on imported fuel with palm-based biofuel. Rian Maelzer reports from Kuala Lumpur.

This plant outside Kuala Lumpur takes crude palm oil, refines it and then turns it into biofuel, which is then blended with petroleum-based diesel to be sold at the pumps.

Compared to Indonesia which uses the highest blend of biofuel of any country, Malaysia has been slower to ramp up its use.

RIAN MAELZER Kuala Lumpur "Indonesia recently increased the blend of palm biofuel in its diesel mix from 40 to 45 per cent, while Malaysia has just increased its ratio to 15 per cent and is targeting 30 per cent by 2030."

TEE LIP TENG President, Malaysian Biodiesel Association "We produced 20 million tonnes of palm oil CPO last year. So, we have about three million tonnes of local demand locally for food sector, oleochemicals, animal feed industries. So we have a huge surplus of 17 million tonnes of palm oil supply that we can easily tap into."

Using that surplus for biodiesel also helps stabilize palm oil prices, benefiting big producers and smallholders alike, boosting tax revenue, and cutting the country's fuel import bill.

GEOFFREY WILLIAMS Economist "The government's moved very quickly, actually. They've had these plans in place. They know how to do it. For one reason or another, it hasn't been attractive. The oil price hike that we've seen at the moment and the explosion in the subsidy bill, that's a real catalyst to make these changes."

There is some debate over turning food products like palm oil, as well as competing oils such as soy or rapeseed into fuel. But producers say there is abundant supply of palm oil for both purposes.

They also note that unlike petroleum, palm oil is a renewable and sustainable fuel source.

TEE LIP TENG President, Malaysian Biodiesel Association "There's still a lot of potential that what we can do in terms of the industry, biodiesel as a product, to help not just Malaysia. We can also help the China's, the India's and all to achieve energy security, to meet ESG goals."

Opportunity from crisis for the world's second biggest producer of palm oil. Rian Maelzer, CGTN, KL.

https://news.cgtn.com/news/2026-06-09/VHJhbnNjcmlwdDkxMDA2/index.html