Indonesia and Malaysia, the world's two leading palm producers, plan to set aside up to 40 percent of their output for biodiesel, with Jakarta estimating 600,000 tonnes of crude palm oil will be used by the biodiesel industry next year. Indonesia's calendar year 2007 palm oil production is forecast to rise to 17.60 million tonnes from an estimated 15.90 million in 2006, overtaking Malaysia as the world's largest producer, industry sources said.

Indonesia has said the bulk of its biofuel production will come from palm oil-based biodiesel produced by the private sector.  Some Indonesian plantation companies have announced plans to build biodiesel plants, such as PT Bakrie Sumatra Plantations Tbk, PT Astra Agro Lestari Tbk and privately-owned PT Asian Agri with a combined annual capacity of around 450,000 tonnes.

Several foreign companies also plan to enter the Indonesian biofuel industry, like Malaysia's Golden Hope Plantations, Genting Bhd, Sime Darby Bhd and Singapore's Wilmar Holding Pte. Ltd.  As part of the government's plans, two state-owned companies, PT Rajawali Nusantara Indonesia and PT Perkebunan Nusantara III (PTPN III), plan to build biofuel plants using palm oil and sugarcane.

Earlier this year, the government allowed retailers to blend 10 percent of biofuels into fuel products. State oil and gas company Pertamina is retailing biodiesel, made up of 5 percent crude palm oil blended with 95 percent diesel oil.

The United States, the world's largest economy, is looking at efforts to rely more on biofuel and cut reliance on imported oil while Indonesia, the world's fourth most populous country and its second largest palm oil producer, recently increased its efforts to produce more biofuel, including from palm oil.

Source:  Planet Ark "Bush Supports Indonesia Biofuel Initiatives"  11-21-06