ISLAMABAD: The Federal Board of Revenue (FBR) has reduced customs duties on the import of 313 items from Indonesia under the preferential trade agreement (PTA).
In absolute terms, Pakistan exempted the whole of customs duties on the import of 82 tradable items from Indonesia as part of the treaty.
The reduction will be applied retrospectively from Sept 1, 2013.
Both countries held the first round of meeting in Islamabad on PTA in August 2003, but failed to conclude it over differences on reduction in duties on palm oil and kinno (oranges) over the last 10 years.
It took them eight rounds of talks to conclude the treaty especially after Pakistan’s implementation of the free trade agreement with Malaysia, which made Indonesian palm oil at a disadvantaged position.
Pakistan and Indonesia had signed the PTA in February 2012, but its implementation was delayed because of disagreement on the non-tariff barriers especially on export of kinno to the Indonesian market.
A notification SRO741 of 2013 was issued by FBR to implement the reduction.
As per the order, Pakistan reduced customs duties on import of 53 items to five percent under the PTA. Similarly, on 24 items customs duties were reduced to nine percent.
Indonesia offered market access to Pakistani kinno at zero per cent. Pakistan agreed to provide the same treatment for Indonesian palm oil products as given to Malaysia under the Pakistan-Malaysia free trade agreement.
Under the treaty, Pakistan lowered the specific duties on import of crude oil import from Indonesia to Rs6,800 per tonne; palm stearin Rs7,692.5 per tonne, RBD palm oil Rs9,180 per tonne, palm olein Rs7,692.5 per tonne, crude oil of palm kernel Rs7,692.5 per tonne and others Rs9,180 per tonne.
Moreover, Pakistan reduced custom duties to 16 percent on import of 47 items under PTA from Indonesia. Similarly, the custom duties lowered to 20 percent on import of 55 percent while the remaining items were placed under the 24 percent duties at import stage.
Recently, Pakistan and Indonesia also signed the Mutual Recognition Agreement (MRA) on Plant Quarantine and SPS Measures, which was the last hurdle in actualising the PTA between the two countries.
Indonesia has signed MRA with only the US, Australia, New Zealand, Thailand and Canada. From South Asia, Africa, Europe and Middle East, Pakistan has become the first and the only country to export its fruit to Indonesia without subjecting it to Indonesian Quarantine Rules and Regulations.
Pakistani kinno and other agricultural products would be allowed to enter the Indonesian market through Tanjung Priok Port, Jakarta under the MRA.
Both sides expect that bilateral trade would reach $5.5bn by 2014 end.
As per the MRA, Pakistani kinno would reach Jakarta without undergoing SPS standards and inspections. Pakistan would have a longer shelf life for its agricultural products and cheaper costs by avoiding entry through Surabaya.
The export of kinno, which ranges between $4m-5m, is likely to get a boost with the Country Recognition and MRA. Other agricultural products which can benefit from this agreement include pears, apples, apricots and dry nuts.