Indonesia Requires Boeing, Airbus Purchases with Biodiesel Export

Foreign Minister Retno Marsudi dan Trade Minister Enggartiasto Lukita give a statement on President Joko Widodo and U.S's Secretary of State Mike Pompeo at Merdeka Palace on Sunday (05/08) - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Followed Indonesian Trade Ministry visited to the United States (US) and Europe, the country has proposed to swap the purchase of Airbus and Boeing aircraft with bioadiesel export for bioavtur plant, said one senior official on Monday (20/08).

Indonesia now in the stages to reducing imported costs by increasing the export values to lowered the current account deficit. Previously in the meeting with the Vice President of International Government Relations Boeing, Mark Lippert last July, Trade Minister Enggartiasto Lukita has expressed the government desires.

The minister visited the US to secure Indonesia’ market access to the Uncle Sam country as well as to improve partnerships and balance trade relations between the two countries in various sectors.

“We invite Boeing not only to make Indonesia a market but also to remain together as part of a mutually beneficial future strategy,” Lukita said in a written statement received by TheInsiderStories on July 25.

He conveyed the considerable cooperation potential between Boeing and Indonesia, such as the development of palm-based bioavtur aircraft, aircraft parts, as well as maintenance, repair, and overhaul services (MRO).

In addition, Indonesia has the potential to become an aircraft service hub of MRO aircraft in Southeast Asia and beyond. With regard to the offer of bioavtur cooperation, the Indonesian government has facilitated a meeting between Boeing and the Indonesian Biofuels Producers Association, which has developed biofuels and exports globally.

Recently, he Indonesian Palm Oil Producers Association and the budget airlines Lion Air Group sign memorandum of understanding on reducing the using of fossil fuel in the aviation industry.

“We hope this agreement will optimize the using of palm oil for eco-friendly fuel because it reduces the carbon emission,” said Counsel of the Indonesian Palm Oil Producers Association Franky Widjaja in a press statement received by TheInsiderStories on April 1o, by adding, the agreement will bring positive multiplier effect on the palm oil downstream industry.

Indonesia’s government targets to start using 0.01 per cent blended bioavtur by 2018. By 2020, the target to improve the mixed biofuel on the aviation fuel by 3 per cent and gradually increased by 5 per cent by 2025.

Indonesia total export of biodiesel.

However, a small number of national courier currently already use the biovtur. But it mostly imported with a value of Rp1.48 trillion (US$108.02 million) per year. This import is an irony since Indonesia is the biggest palm oil exporter in the world.

Last year, the country exported a total of 28 million tonnes (Mt) of crude palm oil (CPO), valued $23 billion. CPO contributed to 12 per cent of the total’s export. While Malaysia in the same year produced around 19.5 Mt of CPO with an export value of $25 billion.

Indonesia import the bioavtur since there is no large-scale bioavtur plant in Indonesia. State-owned energy producer PT Pertamina actually has planned to construct a bioavtur plant in 2017 located near an international airport in Java or Sumatra. The company planned to invest around $450 million with a production capacity of 260 million liters per year.

However, this project has not seemed to be running as expected. Probably because the cost production of bioavtur is very high, around five times more expensive than the regular aviation fuel cost.

Not only for bioavtur, the government previously implemented the biofuels mandatory policy of 20 percent of B-20 for the small and medium enterprises, fishing industry, agriculture, transportation, and other industries.

Based on government data, in 2017, Indonesia recorded use biodiesel of 3.1 million kiloliters. This year, the Indonesian Biofuel Producers Association estimated the using of biodiesel will increase by 3.5 million kiloliters.

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