9/8/06 (Sapa) Jakarta - Indonesia will allow foreign oil firms to sell biofuel domestically as the government ploughs ahead with plans to open up the renewable energy source industry, a local report said on Wednesday.

Under a draft regulatory package, multinational firms such as Petronas of Malaysia and Shell of the Netherlands can buy biofuel wholesale from domestic producers and sell to the Indonesian public for transport purposes, Bayu Krisnamurti, head of agriculture and marine affairs for the cabinet's economic team, was quoted as saying.

"That way, consumers will benefit from fair prices due to the competition, while on the other hand investors and growers will continue to be interested in biofuel production," he told The Jakarta Post.

Last week, Indonesian President Susilo Bambang Yudhoyono met with three Malaysian energy companies to encourage them to invest in Indonesia's budding bio-energy sector.

The government plans to construct eight bio-diesel plants and hopes that production output will reach 13 million tons per year by 2009, said Derom Bangun, executive chairman of the Indonesian Palm Oil Producers Association.

Biofuel is a renewable energy resource produced from crops such as castor oil plant, oil palm, cassava and sugar cane, all of which are abundant in Indonesia and many Southeast Asian nations.