"The agreement is one of several agreements that have been discussed in Indonesia-Malaysia bilateral meeting recently," said the chairman of the Indonesian Palm Oil Board (DMSI) Derom Bangun on Friday.
Indonesia pledged to increase diesel fuel composition of B7.5 that contains 7.5 per cent palm biodiesel to B10 that contains 10 percent pal biodiesel.
Malaysia also expected to increase the use of biodiesel in the country from five percent to 7.5 percent.
"DMSI strongly supports increasing the use of biodiesel agreement in the country," he said.
The 10 percent use of biodiesel which means 3.3 million kiloliters (kl) of diesel consumption reached 33 million kiloliters per year will absorb as much as 3 million tons of CPO.
Biodiesel increasing absorption in Indonesia would affect the supply and demand balance in the international market.
"With reducing the supply, the CPO prices is expected to automatically push up the price of farmer`s fresh fruit bunches (TBS)," he said.
Chairman of North Sumatra`s Indonesian Employers Association (Apindo), Parlindungan Purba said that employers need government policies that support the North Sumatra`s commodity prices export movement.
After the global economic crisis, the commodity`s prices experienced a declining trend.
Export value for palm oil up in July 2013 felt 6.O3 per cent compared to the same period last year or remains 2,280 billion U.S. dollars.