ISLAMABAD: Pakistan and Indonesia on Tuesday agreed to review their Indonesia-Pakistan Preferential Trade Agreement (IP-PTA), worth around USD4 billion, in a bid to boost bilateral trade and address the current trade imbalance.
The IP-PTA, which has been in place since 2012, aims to provide preferential tariff concessions on a range of goods traded between the two countries, thus fostering closer economic ties. Under this agreement, certain products, particularly in the textile, agriculture, and machinery sectors, benefit from reduced tariffs, making them more competitive in each other’s markets.
The review is expected to expand the scope of the agreement and adjust tariff rates to reflect the changing trade dynamics and interests of both nations.
The agreement was reached during a meeting between Prime Minister Shehbaz Sharif and Indonesian President Joko Widodo at the Prime Minister’s Office.
Both leaders discussed the importance of strengthening economic ties, with a focus on expanding trade under the IP-PTA to support sustainable growth.
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The IP-PTA has already led to an increase in trade volume between the two countries, but both sides acknowledged the need to address the existing trade imbalance, which currently favours Indonesia.
In addition to trade, the two leaders emphasised deepening investment relations. President Widodo expressed Indonesia’s commitment to enhancing collaboration through Indonesia’s Sovereign Wealth Fund (Danantara) and Special Investment Facilitation Council (SIFC), exploring new opportunities in sectors such as health, education, and vocational training. Both sides also discussed expanding cooperation in Halal industries, agriculture, and information technology – sectors where both countries see significant potential for growth.
The IP-PTA could play a key role in facilitating trade in Halal-certified products, such as food, pharmaceuticals, and cosmetics, as both Indonesia and Pakistan are leading producers of such goods.
During the meeting, the two leaders highlighted regional security concerns, particularly the ongoing crises in Kashmir and Gaza.
Both reaffirmed their commitment to peaceful solutions in line with United Nations Security Council resolutions, with Prime Minister Sharif praising Indonesia’s active role in facilitating ceasefire initiatives and providing humanitarian aid in Gaza. The visit, marking 75 years of diplomatic relations between the two countries, underscores a growing partnership, with a focus on mutual economic and geopolitical interests.
In addition to trade and investment, the talks covered defence, security, education, and healthcare cooperation.
Copyright Business Recorder, 2025
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