Nothing Ahead | PEXELS

Apr 22, 2022

Ethanol Has Untapped Potential in Southeast Asia

USGC explores potential markets that can expand global ethanol use

Ethanol is increasingly capturing the interest of buyers and policymakers across Southeast Asia and Oceania (SEA) amid growing environmental awareness.

The U.S. Grains Council (USGC) sees Indonesia, Vietnam, the Philippines and Malaysia as high-opportunity markets where focused development programs can help unlock value for expanding global ethanol use.

USGC’s SEA office has compiled a market research document that reviews ethanol’s market potential, market development efforts to date, the current market situation and what the future may hold in the region.

A preview of that information can be found below. The full document, "Southeast Asia: A Glimpse Into The Region’s Vibrant Ethanol
Programs," can be found here.

Indonesia

Indonesia is an archipelagic country of 275 million people and Southeast Asia’s largest economy. The country consumes close to 10 billion gallons of gasoline per year and could be primed to surpass 11 billion gallons annually by 2025 on the back of the global economic recovery.

USGC’s current priority in Indonesia is to see an increase in the country’s blend rate to nearly 10% in addition to advocating for a pilot program in the East Java region.

Vietnam

Vietnam is another case of immense potential for expanded ethanol use. Southeast Asia’s fastest growing economy consumes close to three billion gallons of gasoline annually, with demand expected to grow 16% over the next five years.

Vietnam’s gasoline consumption will grow and will carry with it a need to reduce fuel costs for its growing middle class and meet commitments to emissions reduction. USGC has worked in recent years to demonstrate the value of reducing tariffs on fuel ethanol in the market.

Moreover, USGC strengthened its relationship with key regulators after signing a memorandum of understanding (MOU) with Vietnam’s Ministry of Industry and Trade (MOIT) to establish a close partnership in the field of ethanol policy through technical assistance.

“Vietnam has proven itself as a willing and able trade partner. We maintain a high level of cooperation on multiple levels to achieve mutually beneficial trade and environmental goals,” said Kent Yeo, USGC regional ethanol consultant in Southeast Asia.

The Philippines

The Philippines, Southeast Asia’s second-largest country by population, consumes over 1.5 billion gallons of gasoline per year and blends at 10%.

USGC’s work there is a demonstration of how the Philippines can meet its higher blend goals by highlighting the environmental policy and demonstrating value to the local industry.

Malaysia

Malaysia’s gasoline consumption before the pandemic was growing at 3% per year, and total consumption is forecast to surpass five billion gallons per year by 2024.

Despite being a mature gasoline market in Southeast Asia, use and knowledge of fuel ethanol is limited, providing USGC an opportunity to offer information on and assistance with the commercial and environmental benefits of transitioning to using ethanol.

With travel restrictions loosening across Southeast Asia for the first time since the start of the COVID-19 pandemic, USGC’s regional team is preparing to visit key ethanol markets in the coming months to further implement and execute market development activities.

“We have assembled a strong team in Southeast Asia to develop the market for ethanol in the region. With new faces alongside familiar Council teammates, we are positioned to accelerate our policy efforts in key markets,” said Caleb Wurth, USGC Southeast Asia and Oceania regional director.

“We are changing our targets to match opportunities in front of us. With our regional strategy, we hope to deliver long lasting, sustainable partnerships between USGC members and Southeast Asia and Oceania.”

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