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November 7, 2018

Indonesia vows tariff concessions by November-end

Business

November 7, 2018

ISLAMABAD: Pakistan’s annual exports to Indonesia is likely to go up an estimated $200 million as the south east Asian economy decided to green-signal duty concessions to the former’s 20 exportable products by end of the current month – a decision that was delayed since January.

Indonesia Trade Minister Enggartiasto Lukita said a notification to approve duty concessions will be issued by November-end.

“Inclusion of these tariff lines in IP-PTA (Indonesia-Pakistan preferential trade agreement) would help Pakistan’s exports to Indonesia to grow further,” Lukita said at a meeting with Secretary Commerce Younus Dagha on the sidelines of China International Import Expo, which is scheduled for November 5 to 10 in Shanghai.

Both sides agreed to further strengthen the trade relations between two countries, an official statement said.

Dagha raised the issue of delay in notification of inclusion of 20 additional tariff lines in IP-PTA.

In January, Indonesia and Pakistan finalised the review process for the PTA, signed between the two countries in February 2012 and the south east Asian country agreed to grant tariff concessions on major exports from the latter, including zero percent tariff on tobacco, textile fabric, rice, ethanol, citrus (kinnow), woven fabric, t-shirts, apparel and mangoes.

Indonesia’s global imports under these tariff lines are around $600 million.

A commerce ministry official told APP that the PTA renegotiation is likely to lift bilateral trade up by $200 million to $370 million.

“Concession on 20 tariff lines is a major success of Pakistan and now Pakistani citrus and mangoes exports to Indonesia will increase country’s trade,” the official said.

Currently, Indonesia grants only two months a year for export of Pakistan’s citrus and mangoes, “but after renegotiation Pakistan could export the fruits to Indonesia throughout the year,” the official added. Indonesia has already issued notification to allow import of mangoes from Pakistan for the upcoming season, rekindling hopes of exports boost for the country that fetches $90 to $100 million a year from mango exports.

Dagha and Lukita also agreed to initiate a study to establish the feasibility of further expansion of IP-PTA.

Previously, both the sides decided to start dialogue to extend the PTA’s scope to free trade agreement, especially after a conflict of interest led to non-tariff measures by Indonesian government on Pakistani exports.

Currently, Pakistan provides preferential tariffs to 313 imports from Indonesia that allows 232 imports from Pakistan under reduced duty structure.

Trade analysts said Pakistani exporters could not benefit from reduced concessions as they have confined their exports to a few products.

They said at least 200 tariff lines granted by Indonesia remained untouched, which evidently reflected in the decline in exports from Pakistan despite PTA. The exports fell to $138 million in 2016/17 from $196 million in 2012/13, while exports from Indonesia rose, bringing up bilateral trade to $2.26 billion in 2015/16 from $1.23 billion in 2011/12.

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