News Analysis |
Indonesia’s commerce minister on 26th January announced the lifting of the quota embargo on kinnow imports from Pakistan, allowing shipment of an unlimited quantity of the citrus fruit to the Southeast Asian country. The announcement came during the Indonesia-Pakistan Business Forum in Islamabad, which was attended by commerce ministers of the two countries.
Pakistan exported 36,000 tons of kinnow to Indonesia worth $19.8 million last year. “After the removal of quota curbs, it is expected that Pakistan’s kinnow exports will increase to 60,000 tons,” said All Pakistan Fruits & Vegetable Exporters, Importers & Merchants Association (PFVA) former chairman Waheed Ahmed.
In 2014, Pakistan had taken an initiative by placing a ‘self-imposed’ temporary embargo on export of kinnow to Europe and the UK and thus averted a likely ban on imports by these countries.
Indonesia Minister of Trade Enggartiasto Lukita said the Comprehensive Economic Partnership Agreement (CEPA) was signed between the two countries in 2005 and the preferential trade agreement (PTA) in 2012, which became operational the following year.
He said a review of the PTA was still under way and three meetings had been held since 2016. Under the review, Indonesia has included 20 more tariff lines from Pakistan in the duty-free list including mangoes and rice. The Indonesian minister also invited Pakistani businessmen to explore investment opportunities in his country.
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Addressing the forum, Commerce Minister Pervaiz Malik said that the imbalance in bilateral trade following the PTA raised questions about the viability of the agreement and threatened the transformation of the original plan into a free-trade agreement (FTA).
“Trade growth [since the PTA] has been one-sided. Whereas Indonesia’s exports to Pakistan increased from $1.2 billion in 2012 to $2.2 billion in 2016-17, Pakistan’s exports to Indonesia unfortunately declined from $196 million to $137 million,” said Malik.
Pakistan was able to export 375,000 tons of kinnow in 2014-15. For the last six years, kinnow has not been exported to Iran, a big market for Pakistan, due to the reluctance in the issuance of import permits by the Iranian government.
To address the imbalance, Indonesia has agreed to remove impediments to Pakistan’s current exports and has unilaterally granted zero-rated market access for 20 priority items of Pakistan’s export interest.
The minister said Pakistan’s economy had been on the path of recovery since 2013, registering a growth of 5.3% in 2016-17, which was the highest in the past 10 years. “Government’s efforts to restore peace and stability and meet energy requirements have helped Pakistan make strides towards economic prosperity.” The minister was of the view that CPEC-related projects would boost foreign direct investment.
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Last month, keeping in view various issues related to the export of kinnow (orange) to Russian and Iranian markets, next year’s export target had been revised downwards by All Pakistan Fruit & Vegetable Exporters, Importers & Merchants Association (PFVA).
During the current season, which started from December 1st, the association has set an export target of 250,000 tons compared with last year’s exports of 280,000 tons. This means the country would be able to export just 12.5% of its annual kinnow production. This year’s total anticipated production is 2,000,000 tons.
“Trade growth [since the PTA] has been one-sided. Whereas Indonesia’s exports to Pakistan increased from $1.2 billion in 2012 to $2.2 billion in 2016-17, Pakistan’s exports to Indonesia unfortunately declined from $196 million to $137 million,” said Malik.
“The decline in exports can be attributed to the lack of interest on part of the government of Punjab, high cost of production, stiff competition and various trade barriers imposed by Iran, European countries and Russia,” a press release quoted PFVA former chairman Waheed Ahmed as saying.
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Ahmed emphasised the need for immediate action to improve quality of kinnow otherwise the country will eventually lose part of its $200-million annual kinnow exports. The kinnow industry has been experiencing numerous issues, which has led to consistent decline in its export since 2014-15. Pakistan was able to export 375,000 tons of kinnow in 2014-15. For the last six years, kinnow has not been exported to Iran, a big market for Pakistan, due to the reluctance in the issuance of import permits by the Iranian government.
The demand of the Pakistani kinnow in the international markets is on a decline as well due to its poor appearance, too many seeds and infections due to Canker. In 2014, Pakistan had taken an initiative by placing a ‘self-imposed’ temporary embargo on export of kinnow to Europe and the UK and thus averted a likely ban on imports by these countries.