Indonesia has agreed to provide a level playing field to Pakistan on 22 tariff lines, so Pakistan can compete with Indonesia''s Free Trade Agreement (FTA) partners for those tariff lines. This was announced by Indonesian Minister of Trade, Enggartiasto Lukita, Friday while addressing the Indonesia-Pakistan Business Forum which met here for fostering trade, investment and economic partnership between the two countries. The Indonesian government has also agreed to relax quota restriction on Kinnow import from Pakistan.
Indonesia and Pakistan had signed the framework agreement on comprehensive economic partnership in 2005. This agreement served as a basis for the two countries to establish the trade negotiating committee for Indonesia-Pakistan Preferential Trade Agreement (IP-PTA).
The minister said that Indonesia is mindful of the concerns that the PTA is somehow asymmetric in delivering its benefits. This is the reason for two governments to get back on the table in 2016 to find ways to address the implementation issues of the PTA and discuss possible ways to deepen if not expand the commitments therein.
He further said, "We also need to deepen and expand PTA, address implementation issues in a more targeted way and sign a memorandum of understanding on trade promotion." The trade minister said Indonesia and Pakistan should work together even closer to build confidence in palm oil trade and investment, and collaborate on the development of palm-oil based industries.
"Indonesia and Pakistan need to upgrade commercial relations. In this regard, I come with Indonesia''s business representatives and associations. We need to connect with each other, explore opportunities, and collaborate to get the better of not only Indonesian and Pakistani markets, but also the markets of third countries in our respective regions and beyond," he added.
To promote Indonesia-Pakistan two-way trade, the Director General of National Export Development and the Secretary of Trade Development Authority of Pakistan will sign a memorandum of understanding on trade promotion, he added. The Indonesian trade minister said Pakistan is one of the important trading partners for Indonesia, especially for palm oil, and Indonesia is Pakistan''s third largest importer country. In 2016, the total trade volume of both countries was recorded at $2.17 billion and in the period from January to November 2017, it reached $2.38 billion. Indonesia''s exports to Pakistan are dominated by palm oil products, while Indonesia''s main imports from Pakistan include citrus fruits, cotton, paper and paper products, rice and sardines.
While exploring the Pakistan''s market, the Indonesian delegation is also keen to establish investment cooperation with Pakistan companies. A number of partnership agendas include the joint venture between Apical with Mujahid Group and MM Group on refinery, crushing, tank terminal and commercial sales in ex-tanks business; the development of Indonesia-Pakistan Friendship Center between Wijaya Karya Group, Grand Cokro and Zamin Group; the establishment of Original Equipment Manufacturer between SAS Solo and Grand Engineering Lahore; and the cooperation between Pertamina Indonesia and Punjab Energy Holding Company Limited in energy exploration. Pakistan''s investment in Indonesia from 2013 to 2017 was recorded at $18.9 million.
The minister said Indonesia keeps facilitating and promoting a two-way business, and one way of doing it is by inviting more Pakistani business to attend "Indonesia''s Trade Expo." In the past five 5 years, Pakistan businesses participated actively in trade expo. Next year, Indonesia plans to expand the Indonesian Trade Expo and turn it into Southeast Asian Trade Expo to include business from Southeast Asian countries.
Federal Minister for Commerce and Textile Mohammad Pervaiz Malik said Pakistan and Indonesia enjoy close relations based on religious affinity, mutual trust and cooperation. The minister said under the umbrella of Comprehensive Economic Partnership Agreement (CEPA), both sides entered into a Preferential Trade Agreement in 2012 which has been operational since 2013. Since then bilateral trade has been on an upward trajectory, rising from $1.392 billion in 2012 to $2.375 billion in 2016-17.
However, the trade growth has been one-sided. Whereas Indonesia''s exports to Pakistan increased from $1.196 billion in 2012 to $2.238 billion in 2016-17, Pakistan''s exports to Indonesia unfortunately declined from $196 million to $137 million during the same period. This not only raised serious questions over the viability of this PTA but also threatened the original plan to graduate to a comprehensive FTA between the two countries.
Convinced of the great potential the Indonesian market holds for Pakistan, Ministry of Commerce embarked on an endeavor to make the PTA mutually beneficial. Malik said they went into a review of PTA and sought cooperation of Indonesian brothers in making this agreement a win-win proposition. "I am extremely grateful to you, and your government for not only removing the impediments to Pakistan''s current exports but also, unilaterally, granting zero-rated market access on 20 priority items of Pakistan''s export interest. I am hopeful that this visionary gesture would not only bring some semblance of balance in bilateral trade but would also pave the way for future cooperation," Malik added.
He further said that Pakistan''s economy has been on a path of recovery since 2013. During the last fiscal year the GDP registered a growth of 5.3 %, the highest in last ten years. The government''s effort to restore peace and stability and meeting energy requirements has helped Pakistan take strides towards economic prosperity. The large scale manufacturing in Pakistan recorded growth of 5.6% in fiscal year 2017, and the momentum continues in the current fiscal year. The overall business sentiment in Pakistan has significantly improved which has encouraged a number of firms to pursue expansion plans. The FDI in Pakistan has seen an upward surge and is expected to rise further with impetus provided by China-Pakistan Economic Corridor related projects.
The minister said according to economic forecasts by international financial institutions, Pakistan''s economy can now look forward to steady growth in the coming years. PricewaterhouseCoopers has recently forecasted that Pakistan could become world''s 16th largest economy by 2050, overtaking countries like Italy and Canada. Morgan Stanley, Forbes, Bloomberg, Economist and Washington Post all have been expressing similar optimism about Pakistan''s future economic growth.
The minister said backed by a rising economy, vast natural resources, and a young population, Pakistan is a dynamic nation that is brimming with potential. The government is working to restore confidence of the investors/businessmen, both local and foreign, through its pro-business and transparent policies. He said Pakistan offers liberal investment opportunities. There is a keen interest by investors of several major international companies towards investing in Pakistan. Major sectors where opportunities exist include energy, infrastructure, housing, agriculture and others.
To communicate this exciting reality to the world, the government has devised a new brand ''Emerging Pakistan.'' The minister urged the business community to capitalize upon the available opportunities. The business community of the two countries must have more frequent interactions, harness the existing linkages and develop enduring partnerships to enhance bilateral trade and investment relations. The events like this Business Forum are a step in the right direction. Meanwhile, representatives of Indonesian Chamber of Commerce and Industry and Federation of Pakistan Chamber of Commerce and Industry signing an MoU for promotion of bilateral trade.
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