07/02/2012 (SteelGuru) - Reuters reported that Indonesia's crude palm oil sales to Pakistan are expected to more than triple this year as a result of a cut in import duties imposed by Islamabad following a trade pact signed.

The preferential trade agreement approved in September but formally signed on Friday will result in Pakistan lowering its duty by 15% on crude palm oil from the world's top producer.

Mr Sanaullah Pakistani ambassador to Indonesia said that "In 2010 Indonesia exported CPO to Pakistan worth USD 77 million. I am hopeful with the PTA it will rise to USD 300 million or even more than that this year."

Mr Sanaullah said that the 2 countries had been discussing the proposed PTA for several years. The signed agreement will be ratified by both governments within a month. Currently, Pakistan applies a duty of PKR 9,500 to PKR 10,800 per tonne on Indonesian palm oil products.

In 2007 to 2008, Indonesia's CPO exports to Pakistan was worth USD 500 million but fell to under USD 100 million in the following years after Pakistan switched to Malaysia after a similar trade agreement on duties four years ago.

Overall output in Indonesia, which overtook Malaysia as No 1 palm oil producer in 2007 is expected to be about 25 million tonnes to 26 million tonnes this year. Sumatra, Kalimantan and Sulawesi are the main producing areas for palm oil which is used in products such as food, cosmetics, tyres and biofuel.