Economist: B50 Implementation Must Account for Export Opportunity Costs

Economist Yusuf Rendy Manilet from the Center of Reform on Economics (CORE) has stated that the implementation of the mandatory B50 biodiesel programme needs to consider the opportunity costs arising from reduced exports of crude palm oil (CPO). Yusuf explained that the evaluation of the B50 implementation must be conducted more comprehensively by considering factors beyond savings on diesel imports to ensure the programme’s economic benefits are accurately measured. The government previously estimated that implementing B50 could save foreign exchange from reduced diesel imports by approximately Rp157.28 trillion in 2026. Meanwhile, the incentive requirements for biodiesel managed by the Palm Oil Plantation Fund Management Agency (BPDPKS) are projected to reach around Rp32 trillion. However, Yusuf assessed that these calculations do not yet fully reflect the overall economic costs. According to him, import savings should be calculated alongside the potential reduction in foreign exchange earnings, as part of CPO production is diverted from the export market to the domestic market to meet biodiesel needs. “The measure of the programme’s success is not sufficient by merely comparing import savings with the amount of subsidies, but must also include the opportunity cost of sacrificed exports,” he said.