ISLAMABAD: Indonesia has issued a notification for the correction of Indonesia-Pakistan preferential trade agreement (PTA) by offering immediate market access for 20 new 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 memorandum of understanding (MoU) to amend the agreement was signed between the two countries during the visit of Indonesian president in January 2018.
Following this, a meeting was held between the Indonesian minister for trade and Pakistan’s Commerce Secretary Younus Dagha on the sidelines of Shanghai Expo in 2018.
Dagha highlighted the non-tariff barriers imposed on Pakistan’s agricultural products by Indonesia. “After sustained efforts of the Ministry of Commerce, Indonesia has finally offered unilateral market access for Pakistani products,” said a statement issued by the Ministry of Commerce on Monday.
The Indonesia-Pakistan Preferential Trade Agreement was signed in 2012, but it failed to help increase Pakistan’s exports to the Indonesian market.
Despite the PTA, Pakistan’s exports to Indonesia fell after the agreement came into force. Exports came down to $141 million in 2016-17 from $236 million in 2011-12. However, 2017-18 proved to be a good year for Pakistan’s exports, when shipments jumped to $296 million, the commerce ministry said.
The balance of trade is highly tilted in favour of Indonesia. At the time of signing the PTA, the total volume of bilateral trade was $1.6 billion, which reached $2.8 billion in 2017-18.
The commerce ministry pointed out that the growth was due to increase in Indonesia’s exports to Pakistan, which were at $1.72 billion in 2013-14 and rose to $2.53 billion in 2017-18.
The ministry said it took up the matter with Indonesia’s Ministry of Trade during review meetings for the PTA. Three review meetings were held and Indonesia acknowledged the concern over adverse effect of the PTA on Pakistan’s exports and agreed to unilaterally grant zero-duty status to 20 products of Pakistan’s export interest.
A formal notification for including the additional tariff lines in the PTA has now been issued and it will be effective from March 1, 2019.
In the previous year, Pakistan exported 200,000 tons of white rice and 200,000 tons of wheat to Indonesia. The commerce ministry said it recently managed to get special permission from Indonesia for the export of mangoes as well in the upcoming season.
Traditionally, Indonesia has been one of the leading export destinations for Pakistani kinnow.
Published in The Express Tribune, February 26th, 2019.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.