Indonesia offers immediate market access to 20 Pakistan's products

JAKARTA - Indonesia has issued formal notification for correction of Indonesia-Pakistan Preferential Trade Agreement (PTA) by offering immediate market access for 20 products of Pakistan’s prime interest.

The priority products include mangoes, broken rice, ethanol, tobacco, yarn and fabric, home textile, terry towel, apparel and knitwear, a statement issued by Ministry of Commerce here on Friday said.

A Memorandum of Understanding (MoU) to amend the PTA between the two countries was signed during the visit of President of Indonesia in January 2018.

Following this, a meeting was held between the Indonesian Minister for Trade and Secretary Commerce Younas Dagha on the sidelines of Shanghai Expo in 2018 wherein he underlined the need for such correction and requested for early resolution of this issue. He also took up the issue of non-tariff barriers imposed on Pakistani agriculture products by Indonesia. Long and sustained efforts of the Ministry of Commerce bore fruition and Indonesia has finally offered unilateral market access for Pakistani products.

Indonesia – Pakistan Preferential Trade Agreement (IP-PTA) was signed in 2012; however, it failed to help Pakistan’s exports grow in the Indonesian market.

Despite the Preferential Trade Agreement, Pakistan’s exports to Indonesia showed negative growth during post PTA period; The figures had come down to $ 141 million (2016-17) from $ 236 million (2011-12). However, 2017-18 proved a good year for Pakistan’s exports which jumped to $ 296 million.

The balance of trade is highly tilted in favour of Indonesia. At the time of the signing of the PTA, total volume of bilateral trade was $ 1.6 billion, which reached to $ 2.8 billion in 2017-18. All the growth in bilateral trade was due to increase in Indonesia’s exports to Pakistan, which were at $ 1,720 million in 2013-14 and have increased to $ 2,530 million in 2017-18.

Ministry of Commerce took up this matter with the Ministry of Trade Indonesia during review meetings of IP-PTA.

Subsequently, three review meetings were held and Indonesia acknowledged concerns expressed by Ministry of Commerce regarding adverse effects of IP-PTA on Pakistan’s exports and finally agreed to unilaterally grant zero duty on 20 products of Pakistan export interest.

Formal notification of inclusion of additional tariff lines in the IP-PTA has now been issued after the approval of the President and effective from 1st March 2019.
During the previous year, Pakistan exported 200,000 MT of white rice and 200,000 MT of wheat to Indonesia.

Recently Ministry of Commerce has managed to get special permission from Indonesia to export Mango for the upcoming season as well. Traditionally, Indonesia has been one of the leading export destinations for Pakistani Kinnow.

In the wake of these new tariff concessions, exporters of denim fabric, ethanol, towel, leather and home textile products are very excited and eager to exploit the potential of the Indonesian market.

The Prime Minister’s Adviser on Commerce, Textile, Industries and Production and Investment Abdul Razak Dawood thanked the Indonesian government for understanding the negative impact of the PTA on Pakistan’s trade and addressing it.

The adviser has stated that Pakistan will also review other FTAs/PTAs to make them more beneficial for Pakistan.