The quest for renewable energy has intensified since the escalating price of crude petroleum in the recent years. Renewable energy such as biodiesel has the potential to replace petroleum-derived transportation fuel in the future. Biodiesel is defined as the mono-alkyl esters of long-chain fatty acids derived from vegetable oils such palm oil, rapeseed and soybean. Currently, more than 80% of the world biodiesel productions are from rapeseed oil. However, the cost of palm oil which is at least US$ 200 per tonne cheaper than rapeseed oil indicates that palm oil could be a more suitable and attractive candidate as the source of biodiesel compared to other vegetable oils. Although palm oil is known to be a multi-purpose vegetable oil with products ranging from food to biodiesel, there are a lot of issues surrounding palm oil production. Nevertheless, some of these issues reported in the literature were found to be misleading and are thus confusing the public perception on palm oil. Thus, the aim of this paper is to highlight and clarify the negative issues reported in the literature surrounding palm oil production. Apart from that, various policies or/and strategies that will lead to a more sustainable production and development of palm oil industries will also be proposed. Hence, palm oil will be able to become the leading vegetable oil in terms of food and non-food production, especially as the main source of renewable energy, biodiesel.