While demand for biofuels is likely to soar, vegetable oils are not about to replace petrol as Indonesia's -- or the world's -- major fuel source, warns David Chang, a researcher from UOBKay Hian Securities.
Palm oil production from Malaysia and Indonesia, which together supply 90 percent of global palm oil, provides the equivalent of only about 3 percent of the current demand for fossil fuels.
And Indonesia, which currently supplies 50 percent of global crude palm oil, will struggle to supply even the food industry over the coming years, he said.
As palm oil plantations take four years to reach maturity, it will take several years before Indonesia can significantly expand its production.
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