Indonesia hopes to save foreign exchange with B20 policy

the country hopes to save up to US$2.3 billion in imports of oil fuel until year end.

REPUBLIKA.CO.ID, JAKARTA -- The Indonesian Government hopes to save more foreign exchange in the import of oil fuel by ruling more types of motor vehicle to use bio-diesel B20 for fuel substituting automotive diesel oil. The regulation, which has already been effective since September 1 this year, is expected to contribute to slashing dependence on import for oil fuel, Coordinating Minister for Economy Darmin Nasution said here recently.

"This regulation is part of the policy to boost exports and cut imports," he said.

Nasution said the policy was expected to reduce trade balance and current account deficits and to create a healthier balance of payments. The government has been concerned with the shrinking value of rupiah against the US dollar mainly on widening trade and current account deficits lately.

Also read: B20 mandatory use must be in line with industry development

B20, a mixture of palm oil with a ratio of 20 percent with diesel oil 80 percent, was already ruled as substitute for automotive diesel oil in 2016 but with limited application. Under the new regulation on the use of B20, the country hopes to save up to US$2.3 billion in imports of oil fuel until the end of this year.

Earlier, Bank Indonesia said the use of B20 would save up to US$6 billion in imports of oil fuel per year that would significantly reduce the current account deficit. Governor of the Central Bank Perry Warjiyo said Indonesia was the world largest supplier of palm oil so that the supply of palm oil for B20 production would be easily available.

Production of B20 is expected to increase in 2019 and export opportunity would be wider, Perry said.

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