ANNOUNCEMENT 15 Aug 2018

On 15 August 2018, the Indonesian President issued regulation 66/2018 introducing a local bio-component requirement for diesel sales.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Presidential regulation 66/2018 (in Bahasa Indonesia)
https://peraturan.bpk.go.id/Home/Details/89957/perpres-no-66-tahun-2018

Secondary Source (in English)
http://www.thejakartapost.com/news/2018/08/21/producers-call-forclear-b20-productionallocation.html

Press release by the Coordinating Ministry for Economic Affairs (from 13 September 2018, in Bahasa Indonesia)
https://ekon.go.id/berita/view/pantau-b20-pemerintah-tekan.4204.html

Inception date: 01 Sep 2018 | Removal date: open ended

Local sourcing

The presidential regulation 66/2018 introduces a requirement for locally-sold diesel to contain a minimum bio-component of 20% (so-called "B20 biodiesel mix"). As stated in the preamble of the regulation, it is meant to foster the growth of the local palm oil industry.

In a press release from 13 September 2018, the Indonesian Coordinating Ministry for Economic Affairs stated that "the B20 mandatory expansion is designed to be able to reduce oil fuel imports, as well as save foreign exchange. In the end, the government wants to reduce the trade balance deficit" (own translation).

This intervention is classified as a de facto local content requirement, as foreign palm oil imports are unlikely to be able to compete with local ones, as Indonesia is by far the biggest producer, followed by Malaysia (which shares a palm oil cartel with Indonesia covering over 85% of world production). Hence, this intervention should be interpreted as forcing local diesel consumers to use Indonesian palm oil instead of foreign diesel without a bio-component (which would be in line with the government's goal of reducing oil fuel imports).

The regulation came into force on 1 September 2018.

AFFECTED SECTORS

 
N/A

AFFECTED PRODUCTS

 
N/A