Liquid Biofuels Development in Southeast Asian Countries: An Analysis of Market, Policies and Challenges

Bioethanol and biodiesel in the Southeast Asia are supplied to its domestic and regional market as well as exported to other countries in Asia and Europe of about 11 and 38 % of the total production, respectively. Southeast Asian biofuel market must be looked in the regional context since ASEAN Economic Community in 2016 is expected to enhance the market integration. In this context, this paper provides a timely meta-analysis of the region in terms of production-consumption and trade linkages vis-a-vis key policies and concerns of likely impact. This study shows that Thailand plays a key role in feedstock supply, production, domestic consumption and export of bioethanol in the region. Malaysia and Indonesia are major players in biodiesel export market, but high domestic demand in Philippine results in import dependency for bioethanol. Our findings show that Thailand has comprehensive set of policies including ambitious national biofuels targets supported by fixing the price-floor for buying from farmers, mandatory blending, and demand side subsidies, while the policies in other countries are less comprehensive with targeting only certain specific aspects. Our analysis also shows that market linkages within Southeast Asian countries for bioethanol and biodiesel are generally unconstrained by the domestic market protection related trade barriers except for biodiesel in Thailand. However, large scale introduction of biofuel has potential impacts to food security, land use, deforestation and environment.