Workers handle palm oil fruits at an oil palm plantation in Slim River, Malaysia August 12, 2021.

Malaysia has no plans to raise palm oil's biodiesel blend to 20 per cent from the current 10 per cent, as the required infrastructure development would need funding that both the industry and the government are unwilling to provide, the commodities minister said on Monday.

There are challenges to implement the biodiesel blend to 20 per cent as it will require an investment in infrastructure estimated at about 643 million ringgit ($146.20 million), Plantation and Commodities Minister Johari Abdul Ghani told parliament.

Malaysia currently imposes a 10 per cent biodiesel mandate, although a 20 per cent biodiesel mandate is implemented in Labuan and Langkawi as well as the state of Sarawak except Bintulu, he said.

"Our engagement with industry stakeholders show that they want the government to finance this but we are not ready to fund it," he said.

Top palm oil producer Indonesia has launched the mandatory B40 biodiesel programme, which created supply tightness in the world market and made palm oil more expensive than rival oils.