The program will also help shore up crude palm oil (CPO) market, which has declined lately, Hamdhani of the Commission VI of the House of Representative, said here on Wednesday.
B20 is a mixture of CPO and diesel oil with CPO making up 20 percent. The B20 program is expected to significantly reduce import of oil fuel. Large import of oil products have caused deficit in the country`s international trade.
B20 would be a substitute for automotive and industrial diesel oils and the regulation, which has already been effective since September 1 this year is expected to contribute to redressing the country`s trade balance.
"The program has to be properly and seriously implemented to help improve the market of palm oil. CPO price is shrinking lately," Hamdhani said.
He said there are 2 million oil palm farmers suffering as a result of the weak demand for palm oil and the program would give them hope for a better days.
He said the Energy and Mineral Resource Minister has also asked state-owned electricity company PLN to use B20 as there are still many power plant with a total capacity of 2,000 megawatts still using industrial diesel oil.
The Indonesian Government hopes to save more foreign exchange in the import of oil fuel by ruling more types of motor vehicle to use bio-diesel B20 for fuel substituting automotive diesel oil.
"This regulation is part of the policy to boost exports and cut imports," Coordinating Minister for Economy Darmin Nasution said here recently.
Darmin said the policy was expected to reduce trade balance and current account deficits and to create a healthier balance of payments.
The government has been concerned with the shrinking value of rupiah against the US dollar mainly on widening trade and current account deficits lately.
Under the new regulation on the use of B20, the country hopes to save up to US$2.3 billion in imports of oil fuel until the end of this year.
Earlier, Bank Indonesia said the use of B20 would save up to US$6 billion in imports of oil fuel per year that would significantly reduce the current account deficit.
Indonesia was the world`s largest producer of palm oil hope to widen the market of the commodity when the market demand is weak at present.
Reporting by Muhammad Razi Rahman
Editing by A Saragih, Eliswan