JAKARTA - Permata Bank Chief Economist Josua Pardede argues that the mandatory implementation of B50 biodiesel can help the movement of the rupiah exchange rate and the trade balance without burdening the State Budget (APBN).
However, he said, the main requirement for the scheme to materialize is good policy governance.
"If the management is good, B50 can help the rupiah and the trade balance without burdening the state budget excessively," Josua told ANTARA in Jakarta, Sunday.
Josua explained that the macro application of B50 has the potential to provide great benefits because it directly reduces the need for solar imports, especially when the rupiah is still weak and global oil prices are prone to rise.
The potential for foreign exchange savings from this policy is likely to be greater than the direct additional government costs, especially if world oil prices are high, the rupiah is weak, and crude palm oil (CPO) prices do not jump too sharply.
However, Josua said, his calculations would change if CPO prices rose sharply while world oil prices fell.
"In such conditions, the cost of blended biodiesel can be more expensive than imported diesel, so the government or palm oil fund management agency must bear a larger difference," he said.
Another risk is that the increase in palm oil demand for energy can suppress the supply of cooking oil or palm-based food if the supply management is not strong.
Josua said the implementation of B50 would be beneficial if it was carried out with discipline in terms of supply, price, and funding; but it could be expensive if it only pursued a mixed target without ensuring that the economic costs were under control.
On the fiscal side, the implications for the state budget are mixed. On the one hand, B50 can help reduce the pressure on energy and mineral imports, hold back foreign exchange needs, and support the rupiah.
"This is important because Indonesia's trade balance in May 2026 turned into a deficit of 1.16 billion US dollars after more than six years of surplus, mainly due to high import growth and increased energy imports due to global energy prices. Thus, B50 can be a cushion for the external balance and reduce indirect pressure on energy subsidies," he explained.
On the other hand, B50 also carries fiscal risks. If the selling price of fuel is not increased in accordance with production costs, then the cost difference must be borne by the business entity, the palm oil fund, or ultimately the government through compensation and subsidies, which has the potential to narrow the state budget.
Therefore, Josua argues that B50 is worth continuing as an energy security and import reduction strategy, but do not judge it only from the figures of foreign exchange savings.
The more appropriate size is the net benefit, namely regarding the amount of imported diesel that has decreased, foreign exchange savings, additional costs for the difference in the price of biodiesel that must be borne, and its impact on food prices.
"The recommendation is that the government needs to make an open calculation between foreign exchange savings, the cost of biodiesel incentives, the impact on the price of cooking oil, and the potential burden of subsidies," he said.
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