Petro diplomacy has played its role in last few decades and that makes energy security a major concern worldwide. Rapid climate change and environmental protection is another vital issue to be addressed in recent energy policies. So an alternative carbon neutral transport fuel is a must in new sustainable energy mix. Biodiesel has immense potentiality to be a part of a sustainable energy mix. In this energy scenario, Brazil's success is a role model in utilizing its agro-industry for reducing poverty, greenhouse gas emission and petro-dependency simultaneously. Brazil commercialized bioethanol in mass scale by introducing flexible fuel vehicles in market. This dedicated engine idea moralizes a new concept of dedicated biodiesel engine vehicles for Malaysia and Indonesia. Southeast Asian countries, i.e. Malaysia and Indonesia is the largest producer as well as exporter of palm oil. Growing at highest yield rate among other biodiesel feedstock, palm based biodiesel is a top exported product for this region. This paper will quantify the prospects of a dedicated biodiesel engine vehicle for Malaysia and Indonesia that will initiate palm based biodiesel in fuel supply chain by leapfrogging the barriers of biodiesel utilization by boosting local automobile industry simultaneously. This article will also review on energy scenario of Malaysia and Indonesia and their renewable energy policies and challenges for coming decades.