Indonesia will see its crude palm oil (CPO) exports to Pakistan freed from import duty starting on Sunday, as the two countries have signed a preferential treatment agreement (PTA) on bilateral trade. In exchange, Indonesia will open its main port, Tanjung Priok in North Jakarta, for Pakistan’s Kinnow oranges.
The Mutual Recognition Agreement (MRA) was signed on Friday by Pakistani Ambassador to Indonesia Sanaullah and Banun Sri Harpini, head of the quarantine agency with Indonesia’s Agriculture Ministry. Tanjung Priok Port bars the entry of horticultural commodities, including Kinnow oranges, of which Pakistan is one of the world’s largest producers. The restriction was put in place due to lack of capacity at the country’s busiest port. “The accord also grants the recognition of pest-free areas for horticultural imports from the country, which is necessary for Pakistan’s oranges to enter the port. The recognition will be renewed annually to prevent possible pest and fungal outbreaks as a safety measure,” Banun said after the signing ceremony. In return, Pakistan will exempt Indonesia, the world’s largest CPO producer, from paying 10 percent in import duty on the commodity.
The MRA is a follow up to a PTA inked by the two countries last year, which removed 25 percent import duty on Kinnow oranges and allowed Indonesia’s CPO to penetrate Pakistan’s market. The agreement should have taken effect this year, but has been delayed for months mainly because of the ban on Kinnow oranges entering Indonesia via Tanjung Priok.
“Although the PTA was signed last year, Pakistan has yet to remove its import duty on our CPO exports. With the various requirements Pakistan has to meet to get through our quarantine procedure and to have our CPO facilitated to enter their market, the MRA was needed,” Banun explained. With a series of regulations issued by the agriculture and trade ministries, the government has tightened horticultural imports by reducing entry gateways for imports via only four ports – excluding overloaded Tanjung Priok – and introducing importer licenses and rules on cold storage facilities for fruit and vegetables.
