Palm Oil Becomes Government's Focus to Drive Growth
The government is targeting 5.5% economic growth in 2026, relying on strategic sectors including the palm oil industry. Deputy for State-Owned Enterprise Management and Development at the Coordinating Ministry for the Economy, Ferry Irawan, stated that the sector can capitalise on this momentum alongside the planned implementation of the B50 biodiesel programme in July 2026.
“Up to Q4 2025, growth remains strong at 5.39%. The palm oil industry certainly plays a role there,” Ferry said at the Energy Series Investortrust forum at the Aryaduta Hotel, Jakarta, on Thursday, 30 April 2026.
He explained that in 2025, the palm oil industry’s contribution to the national gross domestic product (GDP) reached 3.5%. With this achievement, the palm oil sector is seen as one of the keys to achieving the 5.5% economic growth target.
On the other hand, Ferry assessed that B50 implementation could drive production increases while strengthening the palm oil industry’s performance. Additionally, this programme has the potential to reduce solar imports, resulting in significant foreign exchange savings.
B50 is a mixture of 50% vegetable fuel based on crude palm oil (CPO) and 50% diesel. This fuel will be used for heavy equipment, ships, and trains.
Ferry said that in 2025, foreign exchange savings from the biodiesel programme reached Rp 133.3 trillion, projected to increase to Rp 139.8 trillion in 2026. Meanwhile, the added value from CPO was recorded at Rp 20.92 trillion in 2025 and is estimated to rise to Rp 21.94 trillion in 2026.
Palm oil export performance also shows a positive trend. Ferry said that throughout 2025, the export value reached around US$40 billion with a volume of 38.84 million tonnes, an increase of 11.15% compared to the previous year.
Ferry added that besides driving economic growth, the biodiesel programme can create jobs. “Besides economic growth, we are also promoting job creation,” he said.
Previously, the Chairman of the Indonesian Palm Oil Entrepreneurs Association (Gapki), Eddy Martono, stated that B50 biodiesel implementation requires an additional CPO volume of up to 1.7 million tonnes. According to him, domestic capacity is currently still sufficient. However, the B50 mandate is being implemented amid a flattening production trend.
The government has set full implementation of this biofuel starting 1 July 2026. “If B50 this year alone adds around 1.5 to 1.7 million tonnes,” Eddy said after the launch of the 45 Years of Gapki book in Central Jakarta, on Wednesday, 30 April 2026.
If fully implemented for a year, Eddy predicts the additional absorption will be around 3 to 3.5 million tonnes. He stated that current palm oil production conditions are stagnant. When the mandate is applied and export demand increases, overseas sales may not necessarily be fulfilled.
Nevertheless, he said domestic needs remain the priority. To ensure supply remains adequate, producers have no choice but to increase productivity. Thus, B50 implementation can be sustainable and even improved.
The total safe volume of crude palm oil production, with B50 implementation, is around 60 million tonnes or more. Eddy stated that this figure can actually be achieved. “As long as smallholder palm rejuvenation runs well,” he said.