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Indonesia urged to implement Preferential Trade Agreement

Karachi, April 08, 2013 (PPI-OT): Karachi Chamber of Commerce and Industry’s President Muhammad Haroon Agar has urged to Ambassador of Indonesia to Pakistan H.E. Burhan Muhammad to expedite enforcement/implementation of Preferential Trade Agreement (PTA) between Pakistan and Indonesia.

Exchanging views during the visit of Indonesian Ambassador to KCCI, he articulated that signing of PTA on the occasion of 62nd anniversary of Pak-Indonesia Friendship in the month of February 2012 was a crucial initiative to open new chapter of economic and commercial cooperation. KCCI believes that the Preferential Trade Agreement (PTA) will bring closer the business communities of both countries and will give a strong boost to the bilateral trade ties.

He hoped that after enforcement/ implementation of PTA, negotiations will start for Free Trade Agreement (FTA). He anticipated that after implementation of PTA, Pak Indonesia bilateral trade could escalate upto US Dollar 2 Billion in coming years from the current figure of around 1.3 billion US Dollars. Indonesia would be able to increase its export of crude palm oil (CPO) to Pakistan whereas Pakistan can export to Indonesia its fruits, value added textiles, carpets, fabrics, leather goods, chemicals, surgical items etc.

He urged for Indonesia-Pakistan joint ventures in crude palm oil and agricultural value added products. Bilateral trade between Indonesia and Pakistan has grown to $ 1.65 Billion in 2012, up 15% from $1 Billion in 2008. Indonesia exported goods worth $1.38 billion to Pakistan while importing goods worth $273 million. Major increase has been seen in export of cotton/cotton fabrics and cereals from Pakistan which grew by $ 20 million and $11.53 million respectively while import of palm oil from Indonesia increased by $ 289.87 million.

He urged the Ambassador to expedite negotiations on signing of “Mutual Recognition Agreement” and take measures to remove non-tariff barriers on imports of fruits, rice, including monthly quotas, complex licensing system, and limited entry points for imports. Indonesia being world’s third largest consumers of rice can import Pakistani basmati rice.

He conveyed gratitude to the Indonesian Ambassador and Consul General for inviting Indonesian exhibitors to participate in the Karachi Chamber’s My-Karachi Oasis of Harmony Exhibition scheduled to be organized in July 2013.

Ambassador of the Republic of Indonesia H.E. Burhan Muhammad stated that being Indonesian Ambassador to Pakistan his priorities were to enhance economic cooperation (G2G) between Indonesia and Pakistan, connect the business communities of two countries for B2B and developing Military to Military linkages between two brother Muslim countries.

He highlighted that the Indonesia-Pakistan Preferential Trade Agreement (PTA) was a landmark development in the bilateral history of two countries which will not only raise bilateral trade volume but also open doors for Pakistani businessmen to penetrate in the emerging ASEAN market. With enforcement of PTA the trade volume between two countries will touch the figure of two billion US dollars in one year.

He apprised that there was some delay in the enforcement and notification was not issued yet; in this connection he will meet Pakistan’s Secretary Commerce shortly and will also visit Jakarta to meet Indonesian Trade Minister. He stated that besides economic and commercial cooperation, Indonesia can also invest in the infrastructural development projects.

Pakistan can get benefit of Indonesian expertise in coal sector for its Thar Coal project. He said that Indonesia and Pakistan have had a remarkable history of fraternal relationship and two countries have enjoyed sound and steady commercial interaction since last several decades. He hoped that this amiable relationship will continue to grow with the implementation of the PTA.

Consul General of Indonesia in Karachi Rossalis R. Adenan, President of Pakistan-Indonesia Business Forum and Ex-President KCCI Abdul Majid Haji Muhammad, Former President KCCI Majyd Aziz, Senior Vice President KCCI Shamim Firpo, Vice President KCCI Nasir Mehmood and Managing Committee Members of KCCI also participated in the meeting.

According to the press release, the Pakistan-Indonesia PTA was signed on February 03, 2012. The PTA negotiation between the two countries went through a great deal of time consuming process, dating back to August, 2002 when the Trade Ministers from the two countries took an early initiative to sign a Joint Statement on Comprehensive Economic Partnership (CEP).

In November 2005, Pakistan and Indonesia signed the Framework on Comprehensive Economic Partnership (FACEP) during President Susilo Bambang Yudhoyono’s visit to Pakistan. Under the provisions of FACEP, both countries agreed to commence with PTA negotiations as the first step towards achieving a Free Trade Agreement (FTA) as the final goal. To implement FACEP, the Trade Ministers agreed to establish a Trade Negotiation Committee (TNC).

It took six years and eight rounds of negotiation meetings for the two countries to come to an agreeable terms, offering benefits for the two to increase their economic and trade partnership. During the TNC-8 meeting in Jakarta, both the sides were able to successfully conclude negotiation on the PTA on September 16, 2011.

Under the PTA, Indonesia has agreed to offer market access to Pakistan on 220 tariff lines on preferential rate. The list includes export products in the interest of Pakistan that are fresh fruits, cotton yarn, fabrics, readymade garments, fans, sports goods, leather goods and other industrial products.

Indonesia has also offered market access to kinnow (Mandarin) and oranges from Pakistan at 0% which will provide a level playing field to this product in the Indonesian market. Pakistan has offered Indonesia a total of 311 tariff lines for market access preferential tariff.

It includes edible palm oil products (crude oil, RBD palm oil) sugar confectionary, cocoa product, consumer goods, chemicals, tableware, kitchenware, rubber products, wood products, glassware products, and electronic products.

Among Pakistan’s concession is the same preferential treatment on edible palm oil products from Indonesia as provided to Malaysia under Pakistan Malaysia Free Trade Agreement. Therefore, Indonesia will export edible palm oil products at 15% margin of preference equivalent to Most Favoured Nation (MFN) tariff.

Pakistan’s economy being the second largest in the South Asia region after India is one of the emerging markets in the world and has strategic value to Indonesia. Vice versa, Indonesia being an important member of ASEAN with the largest economy and a member of the G20 will be a good partner to enhance the two countries economic and trade relations in the Asia Pacific region. The total trade between Indonesia and Pakistan has more than doubled, as it touched the figure of US$ 1.4 in 2011-2012 if compared to US$ 645.3 million in 2004-05.

For more information, contact:
M. Shafiq Baig
Public Relations Officer
Karachi Chamber of Commerce and Industry (KCCI)
Aiwan-e-Tijarat Road,
Shahrah-e-Liaquat, Karachi-74000
Tel: +9221 9921 8001 -09
Fax: +9221 9921 8010
Email: pro@kcci.com.pk, pro2@kcci.com.pk
Website: http://www.kcci.com.pk/

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