Pakistan, Indonesia: With PTA implementation, trade can swell 150%

Envoys of both sides to meet in Sept to resolve all issues.

KARACHI:

The implementation of the preferential trade agreement (PTA) between Indonesia and Pakistan is likely to increase the volume of bilateral trade by 150% in a few years, says Indonesia’s Consul General Rossalis R Adenan.

Speaking to journalists on the sidelines of a flag-hoisting ceremony at the Consulate General in connection with Indonesia’s Independence Day on Saturday, Adenan said the implementation of the PTA signed by the two countries last year will lead to reduction in import tariffs, thus increasing bilateral trade to around $4 billion in a few years.

In 2012, the trade volume between Pakistan and Indonesia was $1.6 billion only.

“Bilateral trade is far below its real potential. I hope the agreement is implemented in the near future,” Adenan said while referring to the PTA that hit snags soon after its ratification last year.



Bilateral trade between the two countries increased at an annualised rate of 12.6% from 2008 to 2012.

Indonesia’s main exports to Pakistan are palm oil, coal, nuts, staple fibre of viscose, yarn, rubber, chemical, wood pulp and papers. Pakistan’s major exports to Indonesia are cotton, rice, wheat, frozen sardines, orange, copper, cotton and leather.

Speaking to The Express Tribune, Pakistan-Indonesia Business Forum President Abdul Majid Haji Muhammad said growth in bilateral trade had been unimpressive mainly because Pakistan already had an effective free trade accord with Malaysia. It means Malaysian imports into Pakistan enjoy 15% duty concession, thus leaving Indonesian imports expensive.

Similarly, Pakistan’s exports to Indonesia were also suffering because the latter had struck a trade agreement with China, which was Pakistan’s competitor as far as the Indonesian export market was concerned, Muhammad added.



“The implementation of the PTA is still pending because the bureaucracy has thwarted it for no apparent reason,” he said.

However, expressing hope about early implementation of the PTA, he said an ambassador-level meeting was scheduled to be held in Jakarta on September 20, which would likely resolve all outstanding issues. “I expect that the upcoming meeting will be crucial to the future of the Pakistan-Indonesia PTA,” he said.

Pakistan was the 23rd export destination for Indonesian products in 2012, up from the 25th position it held in 2008. Indonesia was the 21st export destination for Pakistan in 2012, up from the 43rd position in 2008.

“Keeping in view the combined population of Pakistan and Indonesia, which is 420 million, bilateral trade of $1.6 billion a year is a joke,” he said.

Published in The Express Tribune, August 18^th, 2013.

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