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A worker loads harvested palm fruits in Malaysia. Major exporters Indonesia and Malaysia are pushing new uses for the tropical oil in the face of market headwinds.   © EPA/Jiji
Market Spotlight

Indonesia, Malaysia push biofuel to offset palm oil price downturn

Falling prices hurt companies; risks loom from El Nino and EU deforestation law

ERWIDA MAULIA, ISMI DAMAYANTI and NORMAN GOH, Nikkei staff writers | Southeast Asia

JAKARTA/KUALA LUMPUR -- Weak prices for palm oil, a worsening outlook and a backlash against the commodity over deforestation concerns are pushing Indonesia and Malaysia -- the world's biggest producers -- to boost domestic use through developing jet fuels and expanding biodiesel programs.

Widely used in Indonesia for cooking oil and applications such as personal care and cleaning products, palm oil is an important sector in Southeast Asia's largest economy with the industry employing millions of workers. Indonesia is the world's largest exporter and it is the country's top export commodity, apart from coal. Palm oil is similarly important in neighboring Malaysia, the world's second-largest producer and exporter.

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