Indonesia has abolished import duties of up to 30 percent on 20 Pakistani products in a trade deal to secure more than one billion dollars of palm oil exports to the south Asian economy that is shifting to a new supplier on long-awaited tariff concessions.
“The renegotiated trade deal is a step towards securing future of Indonesian palm oil exports to Pakistan,” Ehsan Malik, chief executive officer of a pan-industry advocacy group Pakistan Business Council (PBC) told The News. Malik said Pakistani government is to announce the breakthrough in day or two.
The Indonesian government has long been mulling import duty concessions for 20 tariff lines, including rice, mangoes and value-added textiles, under the revised preferential trade agreement (PTA) originally signed with Pakistan in February 2012.
Indonesia is the dominant palm oil exporter to Pakistan, exporting $1.5 billion worth each year.
“(But) Indonesia is losing market share to the world’s No. 2 producer, Malaysia,” Abdul Rasheed Jan Mohammed, chairman of the Pakistan Edible Oil Refiners Association stated.
In January, Indonesia and Pakistan finalised the review process for the PTA and the former agreed to grant tariff concessions on major exports from the latter, including zero percent tariffs on citrus (kinnow) and mangoes. Indonesia’s global imports under these tariff lines are around $600 million.
In 2017, Pakistan imported goods, mainly vegetable oil, worth $2.4 billion from Indonesia. The country’s exports, however, stood at $241 million, leaving a trade deficit of $2.2 billion.