Indonesia, Pakistan Ink Free Trade Agreement After 10 Years


By Tito Summa Siahaan on 1:33 am August 31, 2013.
Category Business, News
Tags: Indonesia trade, Pakistan



Trade between Indonesia and Pakistan is set to accelerate after the governments of both countries finally signed a long-awaited free trade agreement, according to a senior Indonesian official.

“Today, a free trade agreement between Indonesia and Pakistan has been signed,” Deputy Trade Minister Bayu Khrisnamurthi said on Friday, adding the agreement will be fully implemented soon. “By Sept. 1, trade between Indonesia and Pakistan will be opened up,” he said.

Bayu said the impact of the free trade agreement will be seen by the fourth quarter this year. “The immediate potential [trade] from the agreement in 2013 is around $100 million to $200 million,” he said.

That increase in trade will come from the palm oil, garments, paper products, footwear and coal sectors.

Next year the impact will be greater, Bayu said. “The agreement could generate an additional $1.5 billion to $2 billion [in trade between the countries] next year.”

He said Indonesia booked a surplus of $1.1 billion in non-oil and gas trade with Pakistan and another $2 million surplus in oil and gas trade for the first six months of this year.

The agreement will also provide Indonesia with greater access to markets beyond Pakistan’s borders, said Bayu. “It’s not only about Indonesia and Pakistan. The idea is to go up, to Central Asia,” he said.

Talks to establish a free trade agreement between the countries started in 2002.

Under the agreement, Pakistan will grant preferential treatment to 287 imports from Indonesia, including cocoa, chemicals, tableware, kitchenware, rubber and wood products.

For Pakistan, Indonesia will provide preferential import duties on 216 products, including fresh fruit, garments, and leather goods. Indonesia has also offered to scrap duties on Pakistan-grown mandarins and oranges.

The Jakarta Globe