Financial Updates

The blog "FINANCIAL UPDATES" consists on exclusive economic and commerce news about across the world particularly Pakistan economy

Thursday, November 3, 2011

Pak to gain $0.3bn by PTA with Indonesia on Palm Oil

The Pakistani Authorities said on Thursday that the country is going to provide the same treatment on Palm Oil products to Indonesia as provided to Malaysia under Pak-Malaysia FTA. The county's economy will aslo get benefit $300 million of foreign exchange through Pak-Indonesia Preferential Trade Agreement.

The Commerce Ministry said in a statement issued form Islamabad that the Federal Cabinet approved the Preferential Trade Agreement with Indonesia and it will be signed by the Commerce Ministers of both countries at a date and venue to be agreed through diplomatic channels. The Agreement shall enter into force 30 days after the date on which the Parties exchange written notifications for completion of their respective legal procedures.

Under the Agreement, Indonesia agreed to offer market access to Pakistan on 221 tariff lines of on preferential rate. The Indonesian offer list include the products of export interest of Pakistan including fresh fruits, cotton yarn, cotton fabrics, readymade garments, fans (ceiling, table, pedestal) sports goods (badminton and lawn tennis rackets), leather goods and other industrial products. Indonesia also offered market access to Kino from Pakistan at 0% which will provide a level playing field to this product in the Indonesian market, said in the statement.

Pakistan’s offer list to Indonesia under the Agreement includes a total of 288 tariff lines for market access at preferential tariff.

Pakistan also agreed to offer to provide the same treatment on Palm Oil products from Indonesia as provided to Malaysia under Pak-Malaysia FTA. It means Pakistan will import palm oil from Indonesia @15% Margin of Preference (MoP) rate.

Pakistan has been importing palm oil and its products from Malaysia and Indonesia. The preferential market access provided by Pakistan to Indonesian palm products will have a positive impact on the overall economy of the country. It is expected that this will result in saving approximately $300 million of foreign exchange of Pakistan. It will also help in decreasing the prices of vegetable ghee, cooking oil etc in the country which are going beyond the reach of common man and will create competition in the market which will discourage monopolistic trends, the ministry said.

It is important to mention here that Pakistan and Indonesia signed the Comprehensive Economic Partnership Agreement (CEPA) in November 2005 on the occasion of the visit of the President of Indonesia to Pakistan. Under the provisions of CEPA, in 2006, both countries commenced negotiations to conclude a Preferential Trade Agreement. The Agreement would ultimately create a Free Trade Area between the two countries. Both countries successfully concluded the negotiations process during the 8th round of negotiations held on 16th September, 2011 in Jakarta, Indonesia.

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