This Indonesian Neighbour Accelerates Processing Palm Oil into Fuel, 19 Factories Prepared to Produce 1.5 Million Litres per Month
Malaysia is increasingly aggressive in promoting the use of palm-based biodiesel as a strategy to suppress diesel prices while strengthening national energy resilience. The local government now has 19 biodiesel factories capable of producing around 1.5 million litres per month.
This expansion step serves as a strong signal that the Indonesian neighbour is serious about positioning biofuel as one of the mainstays of national energy, especially amid global oil price fluctuations and world energy supply uncertainties.
Malaysia’s Deputy Prime Minister, Datuk Seri Dr Ahmad Zahid Hamidi, stated that the biofuel production development has been presented to the National Economic Action Council and involves collaboration between government institutions and private plantation companies.
According to Ahmad Zahid, the 19 facilities currently produce biodiesel blends ranging from B15 to B50. The government also plans to optimise production by utilising sludge or residue from crude palm oil (CPO) production.
“About 35 percent of this sludge can be fully utilised to produce biofuel as well as Jet A1,” he said, as quoted from The Star on Monday, 20 April 2026. “This initiative has already begun, and MTEN has in principle accepted the proposal,” he added.
The utilisation of palm waste is considered a strategic step because it not only increases industrial efficiency but also opens new opportunities in the development of plant-based aviation fuel.
Jet A1 is the main fuel for commercial aircraft, so its development potential can expand Malaysia’s biodiesel market into the aviation sector.
Ahmad Zahid added that the government will coordinate with various related institutions and companies to keep production costs low through synergies among the 19 factories.
“With mass production, we hope the overall costs will decrease and prices will become more competitive,” he said.
According to him, a larger production scale will help reduce operational costs while making biodiesel prices more competitive with conventional fossil fuels. He also emphasised that the viability of biodiesel is no longer just theory.
Various trials have been conducted, including pilot projects with the national energy company PETRONAS and several vehicle manufacturers. “In my view, as I have stated before, there is no doubt about the capability of this biofuel. It will help stabilise and reduce diesel prices in this country,” he said.