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REVISED PTA WILL BOOST RICE EXPORTS TO INDONESIA
1/20/2018

DAILY DAWN (20/01/2018)

REVISED PTA WILL BOOST RICE EXPORTS TO INDONESIA

ISLAMABAD: Pakistan will export 65,000 tonnes of non-Basmati rice to Indonesia as part of the revised preferential trade agreement (PTA).

Indonesia floated a tender in the current week for the procurement of 500,000 tonnes of rice. As much as 84,000 tonnes are to be sourced from South Asia.

Two Pakistani companies, facilitated by the Ministry of Commerce and the Pakistan mission in Jakarta, were able to participate in the bidding process. The bids were finalised on Jan 19.

As a result, these two companies secured an order for 65,000 tonnes of white rice out of a total regional quota of 84,000 tonnes. The rest was given to an Indian company. “The Ministry of Commerce is hopeful that the breakthrough made today would prove to be a milestone in tapping the huge Indonesian white rice market,” said Commerce Secretary Younus Dagha.

Pakistan signed the PTA with Indonesia in 2012, which became operational in the subsequent year. As a result, bilateral trade witnessed a substantial increase, although it remains in favour of Indonesia. A review of the PTA was initiated wherein, besides revising the agreement to make it mutually beneficial, the issue of market access on rice was also taken up. Consequently, the two countries signed a memorandum of understanding, which envisaged sourcing of rice from Pakistan.

Mr Dagha said the Indonesian side has agreed to immediately reduce the tariff to zero on 20 tariff lines of Pakistan’s prime interest.

Major items are mangoes, broken rice, tobacco, yarn, fabric, denim, garments, towels and bed. Indonesia’s global imports under these tariff lines are around $600 million. This is sizeable market access considering Indonesia’s very high tariffs on a number of these lines.

Indonesia has also relaxed its import restrictions on kinno, allowing its import for four months as opposed to the earlier two months to accommodate Pakistan’s concern. Besides this, mango has also been granted market access at zero per cent duty for the entire season. This is the first time Indonesia has opened the import of mango for any country.

In terms of the volume of trade, tariff lines offered to Pakistan for preferential market access covered only 27pc in dollar terms in 2012. This percentage increased to 48pc and then slipped to 33pc in 2016-17. This demonstrates that Pakistan’s request list to Indonesia didn’t contain tariff lines of its prime export interest. For example, there are 24 tariff lines in which Pakistan’s exports to Indonesia over the last five years have been above $1m. Out of these 24 tariff lines, only four are covered under the PTA.

Under the PTA, Pakistan offered preferential tariff to Indonesia on 313 tariff lines, whereas Jakarta reduced tariff on 232 lines for Islamabad. In spite of the PTA, Pakistan’s exports to Indonesia did not increase. Only 32 out of 232 tariff lines included in Indonesia’s offer list could be utilised. The rest of the tariff lines in the offer list remained unutilised by our exporters. As a result, bilateral trade with Indonesia increased from $1.23 billion in 2011-12 to $2.26bn in 2015-16.

The growth in bilateral trade was due to an increase in Indonesia’s exports to Pakistan. Exports from Islamabad to Jakarta showed a negative growth after the implementation of the PTA. Exports to Indonesia declined from $196m in 2012-13 to $138m in 2016-17.

In order to implement market access granted on the 20 tariff lines, the two sides will be signing a protocol during the upcoming visit of the Indonesian president as some of the articles of the agreements require amendments. The Indonesian president, who will arrive on Jan 25, will also address a joint session of parliament.

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