CORE: B50 Implementation Must Account for CPO Export Opportunity Costs

The economist from the Centre of Reform on Economics (CORE), Yusuf Rendy Manilet, argues that the implementation of the B50 biodiesel mandate needs to consider the opportunity costs arising from the reduction in crude palm oil (CPO) exports. The evaluation of B50 implementation should be conducted more comprehensively, considering factors beyond diesel import savings to ensure the programme’s economic benefits are accurately measured.

The government previously estimated that the implementation of B50 could save foreign exchange reserves from reduced diesel imports by approximately Rp 157.28 trillion by 2026. On the other hand, the requirement for biodiesel incentives managed by the Indonesian Palm Oil Fund Management Agency (BPDPKS) is projected to reach around Rp 32 trillion.

Based on these calculations, the economic benefits of the programme are deemed to be greater than the direct costs incurred. However, Yusuf believes that these calculations do not yet fully reflect the overall economic cost.

According to him, import savings should be calculated alongside the potential reduction in foreign exchange earnings resulting from a portion of CPO production being diverted from export markets to the domestic market to meet biodiesel needs.

“The measure of the programme’s success is not enough to simply compare import savings with the amount of subsidies; it must also include the opportunity cost of the sacrificed exports,” he stated on Sunday (5/7/2026).

Furthermore, the fiscal success of the B50 programme is considered to be heavily influenced by global commodity price movements, particularly the price differential between CPO and petroleum-based diesel.