This paper addresses B5 biodiesel programs in Malaysia, global challenges on the production of palm oil. Protective measures for future efficiency as well as continued viability of this renewable energy sector are also discussed. Crude palm oil (CPO) prices are currently suppressed because of high palm oil inventory. Malaysian government has taken a pro-active step in implementing the B5 biodiesel for transportation and industrial sectors through the introduction of B5 biodiesel. The B5 Biodiesel Program which was initially targeted at selected government agencies has been fully implemented for subsidized sectors in the Central Region. The promotion of B5 development is highly attractive due to its potential local feedstock from palm oil industry and the availability of production technologies that offer opportunities for the sustainable development in energy entrepreneurships. Nationally, produced B5 will improve the access to alternative energy services and is expected to help in improving productivity and sustainability. Despite successful local B5 implementation, Malaysia is recently facing global challenges on the biodiesel production which currently remains stagnant due to weak domestic demand and uncompetitive export tax structure. (C) 2013 Elsevier Ltd. All rights reserved.