Impact of Biodiesel Mandatory to Foreign Exchange Efficiency

The implementation of Biodiesel 20 (B20) is believed to affect foreign exchange efficiency, particularly, in oil and gas sector which over the last six years has reached US$5.4 billion, whereas non oil and gas sector produces US$4.4 billion surplus. Coordinating Minister for the Economy Darmin Nasution said that since the Limited Cabinet Meeting has decided to consistently apply the use of B20, the Government has a strong foundation to immediately eliminate current account deficit. “Of course it cannot happen in a week since it has to pass preparation and transition periods,” Darmin said as quoted by Setkab.go.id (20/7/2018). Currently, the Minister explained, Biodiesel 20 is implemented for public transports in Public Service Obligation (PSO) sector. A part from PSO, there is also non-PSO that can be used for trains, power plants, ships, and heavy equipment for mining. Based on the data of Ministry of Energy and Mineral Resources, the total is 16.2 kilolitres. This is what will be implemented now,” Darmin said. Implementation of B20 may also increase the price of CPO (Crude Palm Oil), that is expected to automatically increase oil palm farmers` income. According to the minister this impact has been felt when B20 implemented for the first time in 2016. Only in 1-2 hours after the decision was made, CPO price was moving up. ***