Expanding ties: Indonesia and Pakistan enter trade agreement

Partners to enjoy preferential access to other’s markets

ISLAMABAD: Pakistan and Indonesia have ratified a Preferential Trade Agreement (PTA) to boost trade and investment relations between the two countries, according to an official note received from Jakarta. The Indonesian Minister of Trade Gita Wirjawan and Pakistani Ambassador Sanaullah signed the agreement.

Ambassador Sanaullah stated that “both sides have agreed to provide market access by granting tariff concessions and removing non-tariff barriers and to help both countries develop economic and trade relations to their true potential.”

Expressing his satisfaction with the arrangement, Wirjawan stated that, “Going beyond bilateral gains, we believe that stronger relations between Indonesia and Pakistan also allow both countries to benefit from overall market optimism of the Asian region.”

Under the PTA, Indonesia has agreed to offer market access to Pakistan on 216 tariff lines on preferential rates, while Pakistan has reiterated with 287 tariff lines. The Indonesian offer list of products of export interest to Pakistan includes fresh fruit, cotton yarn, cotton fabrics, readymade garments, fans, sports goods and leather goods. Indonesia has also offered market access to kinnow and oranges from Pakistan at zero per cent tariff.

Pakistan’s offer list to Indonesia includes edible palm oil products, sugar confectionary, cocoa products, HS 33, HS 34, consumer goods, chemicals, tableware, kitchenware and rubber, wood, glassware and electronic products. Indonesia will be able to export edible palm oil products at a 15 per cent margin of preference, similar to the Most Favoured Nation (MFN) tariffs granted to Malaysia by Pakistan.

The accord follows the Framework on Comprehensive Economic Partnership signed between the two countries in November 2005 which envisages an eventual Free Trade Agreement between the two countries. The PTA is a precursor to such an open trade agreement.

Pakistan is an emerging market and the second largest economy in South Asia after India, while Indonesia is an important member of Asean and offers Pakistan the opportunity to deepen its economic and trade relations in the Asia Pacific region.

The Agreement shall enter into force 30 days after the date on which the Parties exchange written notifications of completion of legal procedures in their respective countries.

Published in The Express Tribune, February 4^th, 2012.