16/09/2011 (Jakarta Post) - Indonesia resumed talks on a preferential trade agreement with Pakistan on Wednesday with an expectation to conclude the long-negotiated deal within days.

Trade Ministry director general for international trade cooperation Gusmardi Bustami said the government was in talks with Pakistan Vice Trade Minister Zafar Mehmood to find breakthroughs on tariff reductions for a number of commodities, including palm oil and kino oranges. Both governments expressed the “same spirit to show flexibility”, he added, as they sought possibilities to move on.

In June, Indonesia and Pakistan temporarily halted negotiations on the PTA as both countries made no progress in solving the tariff reduction issue. Previous negotiations between the two countries were also deadlocked for two years over concessions on several commodities.

“We are on the last mile to finish the negotiation and this may happen in one or two days,” he told reporters after a meeting between Deputy Trade Minister Mahendra Siregar and Mehmood, who was on a three-day visit to Jakarta.

On the same day, Mehmood attended an Indonesia-Pakistan business forum, which involves exporters and importers of, among others, rice, surgery tools, beauty treatment products, from both countries.

Gusmardi said that in sealing the deal, Indonesia expected its exports to Pakistan to rebound to the 2007 amount of nearly US$1 billion, mainly on the back of palm oil exports.

“With an approximate 170 million population, Pakistan will also be a promising market for us in the future,” he said, adding that the sales of locally made products other than palm oil also had opportunities to increase an edge in the Pakistan market.

Pakistan deputy trade minister said his party was hopeful he could sign the PTA and would try to accommodate Indonesia’s requests.

“This will increase our trade volume many fold, especially palm oil from Indonesia, which has come down to almost zero, which [in the past] controlled a 55 percent share of imported palm oil in Pakistan,” Mehmood said, adding that the PTA would enable Indonesia’s exports to reach around $1.5 billion per year by creating a level playing field between Indonesia and its main competitor in palm oil trade, Malaysia, which had earlier signed a similar deal with Pakistan.

Data at the Agriculture Ministry shows that Pakistan imposed import duties of Rp 9,100 a ton on CPO and its derivatives from Indonesia — the world’s largest CPO producer, but applies 10 percent less duty on palm oil from Malaysia due to the PTA between the countries.

The duty results in a gradual decline of Indonesia’s exports to Pakistan. In 2007, Indonesia’s exports to the country were $929.65 million and dropped by 28 percent to $665.29 million in 2009. Last year, exports stood at $688.19 million, while overall bilateral trade was at $787.42 million.

Indonesia exports commodities such as coal, palm oil, cacao, rubber, tea, yarn and paper to Pakistan, and imports, among others, cotton, copper, finished leather, woven fabrics, kino oranges, and fish products from the country.