KUALA LUMPUR (April 14): The Malaysian government has agreed to increase the current 10% biodiesel — B10 — mandate for the transportation sector to B15, beginning with B12, as it seeks alternative source of fuel to support its energy security efforts amid the ongoing Middle East conflict.
This as "recovery from the crisis is expected to take up to 18 months", according to Economy Minister Akmal Nasrullah Mohd Nasir, underscoring the need to accelerate the country’s biodiesel programme to build long-term resilience and reduce dependence on its conventional counterpart.
The expansion of the biofuel mandate will be done without incurring additional costs and using existing blending infrastructure, Akmal said during a broadcast briefing on Tuesday.
“The government believes that biodiesel usage will extend the availability of national diesel supply, supported by biofuel mitigation plans, phased upgrades of B20 and B30 depots under RMK13, and preparation towards a B30 mandate for commercial and public transport sectors,” he said.
Biodiesel blend mandates set the specific proportion of renewable fuel, typically palm oil-based methyl ester, to be mixed with fossil diesel.
Today, Malaysia’s biodiesel production capacity stands at 2.36 million tonnes per annum (Mtpa), more than double the actual production of 975,207 tonnes last year.
“This indicates that the industrial base, supply chain and blending capacity are already in place and only need to be strengthened in an organised manner to deliver greater national benefits,” Akmal said.
The government believes biodiesel usage will extend the availability of national diesel supply, he noted.
Malaysia’s existing fuel supplies are sufficient until end-May, Akmal reiterated. “Hence, the government must plan ahead for June and the months ahead,” he added.
Rising costs projected
Malaysia, like other countries globally, has been under pressure from higher energy prices following the flare-up of the conflict in the Middle East.
The Iran-US war, which has seen attacks on oil and gas facilities and, more importantly, a blockade of a major shipping bottleneck, the Strait of Hormuz, has sent Brent above US$100 per barrel.
Aside from energy price concerns, the Strait of Hormuz is also a critical chokepoint for global agriculture, with one-third of the world's traded fertiliser passing through it.
Malaysia imports 63% of its fertiliser requirement. Akmal said the government projects animal feed prices to rise about 8% and fertilisers by 15% to 20%.
“This signals that cost pressures could be passed to consumer prices if not addressed early,” Akmal said.
However, food prices have remained stable, with a surplus seen for selected items including rice, poultry, fruits and vegetables, the minister said.
Impact on labour market expected in 2Q
Meanwhile, “more pronounced impacts” on the labour market are expected to emerge in the second quarter, according to Akmal.
Though job losses have actually declined year-on-year for the January to the first week of April period, he noted the impact of the crisis will be lagged.
“Today we see cost pressures and weeks or months later we see pressure on employment and income. Therefore, the government, through the National Economic Action Council (MTEN), is examining appropriate mitigation measures to reduce public concern on this issue,” Akmal said.
The aviation and tourism sectors also showed signs of pressure, Akmal noted. 55 flights have been cancelled between March 23 and 28 while tourist arrivals have also declined.
Earlier, the Ministry of Finance increased the amount of cash aid under its diesel assistance programmes for paddy farmers.
Cash aid under Budi Agro-Komoditi and Budi Diesel Individu will be increased to RM400 from RM300 previously. The Ploughing Incentive for Paddy Farmers for the 2026 planting season was also increased to RM300 per hectare compared to RM160 previously.
In Iran, a ceasefire last week had temporarily tempered tensions. However, the US began a blockade of the Strait of Hormuz on Tuesday, following failed peace talks over the weekend.