According to Indonesian Consul General in Karachi Dempo Awang Yuddie, Bilateral trade between Indonesia and Pakistan is expected to reach $2.5 billion this year. He also said that the two countries had tried to improve both political and economic ties since 2015.
The volume of bilateral trade grew from $700 million in 2010 to $2.3 billion in 2016, an increase of 229%.
Pakistan’s major exports to Indonesia include textiles and clothing, vegetables and fruits (mainly oranges) while its major import item from Indonesia is palm oil.
With over $2 billion worth of imports, the balance of trade is in favour of Indonesia while the two countries are trying to strike a balance so that it can become a win-win situation for both the trading partners.
Indonesia imports over $650 million worth of fruits and $550 million worth of vegetables annually. Now that Pakistan is regaining its share in Indonesia’s fruit imports, its exporters want to export more vegetables as well.
To improve trade relations, the two countries signed the Preferential Trade Agreement (PTA) on February 3, 2012, which came into effect in September 2013 after many rounds of negotiations.
Under the PTA, Indonesia offers market access for 232 tariff lines, of which 103 are zero-rated. Items in the preferential trade list include fresh fruits, cotton yarn, cotton fabrics, readymade garments, fans, sports goods, leather goods and other industrial products.
Zero-rated market access is offered to kinnow (mandarin) and oranges from Pakistan, providing a level playing field to this product in the Indonesian market.
Pakistan’s offer to Indonesia under the PTA covers 313 tariff lines that include items such as edible palm oil products, sugar confectionery, cocoa products, chemicals, kitchenware, rubber, wood, glassware and electronic products.
On 20th August the Indonesian government has removed Pakistan from its Calling Visa Country List after 13 years in view of growing bilateral trade relations and interest of Pakistani travellers to Indonesian tourist destinations.
Indonesia also has agreed to lift the ban on import of Pakistani Mango as well as the export of Kinnow for the full season.
The 3rd Pakistan and Indonesia Dialogue was held in Jakarta recently in which the officials of both countries reviewed the Preferential Trade Agreement (PTA) and discussed steps for making more effective measures for future.
Pakistan produces nearly a million metric tons of mangoes on yearly basis. The country exports 6 to 7 per cent of mango in its total production and its share in the global market is around 3.8 per cent. The country’s mango exports during the last three years have gradually declined from the peak of 103,487 MT in 2012-13 to 64,111 MT in 2015-16.
Sources said that Indonesian authorities have further agreed in principle to unilaterally include 20 products of Pakistan’s prime interest in PTA for which they have sought 2 months’ time to consult with stakeholders. The Insider says that Pakistan’s export to Indonesia will double from approximately 170 million dollars to 375 to 400 million dollars this year with the addition of 20 tariff lines in PTA. On the other hand, Indonesian exports grew 46.1 per cent to1.9 billion dollars from 1.3 billion dollars during the years 2012-15.