Monday, 23 March 2009

Pakistan and Indonesia to sign PTA soon: Envoy

Personal note: The people of Indonesia need Pakistani oranges and mangoes like the Eskimos need refrigerators, so I wonder what the real reason is for this deal.


Veeramalla Anjaiah , The Jakarta Post , Jakarta | Mon, 03/23/2009

Indonesians will soon be able to taste Pakistan's delicious Kino oranges and mouth-watering mangoes, while palm oil producers will also be able to export more of their commodity to Pakistan, the country's ambassador to Indonesia said on Saturday.

"All these things will happen when we sign the much-awaited preferential trade agreement *PTA*," Ambassador Maj. Gen. (ret) Ali Baz told The Jakarta Post in an interview Saturday ahead of Pakistan's National Day, which falls on Monday.

Pakistan's National Day is observed to mark the Lahore Resolution (also known as the Pakistan Resolution), which was passed unanimously at the All-India Muslim League's annual convention in Lahore on March 23, 1940.

The resolution called for a separate homeland for the Muslims of British India. Eventually, Pakistan became an independent state on Aug. 14, 1947.

Both Indonesia, Southeast Asia's biggest economy, and Pakistan have successfully negotiated the PTA.

"We will sign the PTA very soon, We have already finished negotiations and are now looking for an appropriate date to sign it," Ambassador Baz, who speaks fluent Indonesian, said.

When asked about the salient features of the agreement, Baz said the import duties on several goods from both countries would be lowered significantly to boost trade between the countries.

"For example, both countries have agreed to lower tariffs on Kino oranges and palm oil under a tradeoff arrangement," Baz said.

Currently, Pakistan imposes a 10 percent import duty on Indonesian palm oil products, while Indonesia imposes a 25 percent tariff on Kino oranges.

Both countries have lost significant revenue and market share due to these high import duties.

Pakistan imposes a 5 percent import duty on palm oil from Malaysia. This has led to a reduction in Indonesia's market share, which declined to just 28 percent in 2008 from 50 percent in 2007, in Pakistan.

But Pakistan complains that Indonesia's higher tariff has led to the stoppage of exports of oranges to Indonesia.

"Insyah Allah (God willing), we will soon export our oranges and mangoes, which are much cheaper than even local fruits," Baz said.

The tradeoff on the lowering of tariffs will mostly benefit Indonesia, which has enjoyed a huge trade surplus with Pakistan.

In the first 11 months of 2008, Indonesian exports, mainly palm oil, coal and tea, to Pakistan reached US$887.91 million, while its imports from Pakistan stood at $60.22 million.

The PTA comes at a difficult time and as a boon to declining Indonesian exports, which contribute a third of the GDP, due to the current global financial crisis.

Indonesia is currently looking for more non-traditional markets as it seeks to ride out the crisis.

"If Indonesia is looking for new markets, Pakistan is the perfect place. We are the second biggest market in South Asia, with 176 million people. We consume a lot of palm oil and coal. We are also like a gateway to the rapidly emerging Central Asian markets," Baz said.

"You can see this from our growing trade."

Even without the PTA and higher import duties, Baz said, bilateral trade has been growing at a tremendous pace.

"In 2008, our two-way trade with Indonesia reached $1.2 billion. With this PTA, it will easily reach $3 billion within two to three years," he said.

Pakistan is also trying to deepen defense ties with Indonesia.

"We will soon sign a defense agreement with Indonesia to enhance our close relations with Indonesia," Baz said.

Commenting on the latest situation in Pakistan, Baz said democracy had returned to the country.

"We have a democratically elected government in Pakistan. Our President Asif Ali Zardari has decided to reappoint Iftikhar Chaudhry as our chief justice to strengthen our democracy. This was appreciated by everyone in Pakistan, including the opposition," Baz said.

Chaudhry was sacked by then president Pervez Musharraf in 2007 when the latter imposed emergency rule in the country.

Zardari's government has come under intense pressure, both from within the country and overseas on the issue of tackling terrorism.

"We are the biggest victim of terrorism. That's why we are at the front line of the global war on terror. We have a different approach to dealing with terrorism, which is based on the three 3 D - dialogue, development and deterrence," Baz said.

He added there was a need for a new strategy to deal with terrorism in South Asia.

"US President Barack Obama is now designing a new strategy to deal with the situation in Afghanistan because the previous strategy failed to curb terrorism," Baz said.

After the relative success in Iraq, the US under Obama is finalizing a new strategy combining its military might, diplomacy, civilian aid and pragmatism.

"We will welcome any initia-tive that will help curb terrorism," said Baz.