ISEAI: B50 Programme Could Reduce State Foreign Exchange by US$2.7 Billion
The Indonesia Strategic and Economic Action Institution (ISEAI) has stated that the 50 percent biodiesel (B50) programme has the potential to reduce state foreign exchange earnings by US$2.7 billion per year due to a decline in CPO export volumes. This figure is based on the assumption of an average CIF Rotterdam CPO price of US$1,356 per metric tonne in early 2026.
ISEAI referenced data from the Indonesian Palm Oil Association (GAPKI), which projects that national palm oil exports will be cut by around 2 million tonnes in the second half of 2026, or close to 4 million tonnes in a full year.
“This creates a paradox: a policy intended to save foreign exchange on diesel imports is actually cutting export earnings from the nation’s flagship agricultural sector,” ISEAI stated in a written release on Friday, 10 July 2026.
ISEAI assesses that implementing the B50 programme amid stagnant raw material production will trigger a governance crisis for the palm oil commodity. “The direct impact of this allocation shift is a decline in Indonesia’s CPO export capacity to international markets,” said ISEAI senior analyst Rony P. Sasmita.
Based on ISEAI’s research, the B50 programme, which was inaugurated on 9 July 2026, is being implemented at a time when Indonesia’s crude palm oil (CPO) supply growth is stagnating. Over the past five years, ISEAI noted that Indonesia’s CPO production has plateaued in the range of 48-51 million tonnes per year due to the slow progress of the Smallholder Palm Replanting (PSR) programme and declining plantation productivity.
Although CPO production grew by 7.26 percent in 2025 to reach 51.66 million tonnes, domestic ending stocks shrank sharply by 19.79 percent to just 2.068 million tonnes due to very high domestic absorption.
Consequently, the increasing allocation of CPO for domestic needs, particularly for biodiesel (B50), will result in a decline in export capacity. Of the total domestic consumption of 2.141 million tonnes as of April 2026, the majority was used for biodiesel, with a requirement of 1.137 million tonnes. The second largest requirement was the food sector at 831,000 tonnes, while the oleochemical sector required around 173,000 tonnes.