Indonesia Pakistan Free Trade Agreement: A Step towards A Brighter Economic Future

Indonesia and Pakistan have recently signed a free trade agreement (FTA) that aims to foster bilateral trade and deepen economic ties between the two nations. The FTA is expected to have a significant impact on both countries` economies, as it will eliminate the barriers and tariffs that hindered trade between them. This article will explore the details of the agreement and its potential economic impact.

The agreement, which was signed in Jakarta on February 9, 2021, covers a wide range of products, including textiles, automotive, chemicals, palm oil, and seafood. Under the FTA, both countries will gradually reduce tariffs on these products over the next decade. Indonesia has agreed to immediately eliminate tariffs for 20% of the products imported from Pakistan, while Pakistan will eliminate tariffs on 40% of the products imported from Indonesia. Furthermore, both countries have agreed to protect intellectual property rights, encourage technology transfer, and promote cooperation in the fields of agriculture, tourism, and education.

The FTA is expected to benefit both Indonesia and Pakistan in various ways. For Indonesia, the agreement will increase its exports to Pakistan, which is the world`s fifth most populous country. Indonesia`s major exports to Pakistan include palm oil, textiles, and automotive products. The FTA could boost Indonesia`s palm oil exports, which are currently facing challenges due to the European Union`s ban on palm oil-based biofuels. The agreement is also expected to promote Indonesia`s tourism and education sectors, as it will make it easier for Indonesians to travel and study in Pakistan.

For Pakistan, the FTA will provide a significant opportunity to diversify its exports and reduce its dependence on traditional markets like the United States and the European Union. Pakistan`s major exports to Indonesia include textiles, chemicals, and leather products. The agreement could also increase Pakistan`s share in the global halal food industry, as Indonesia is the world`s largest Muslim-majority country and has a significant demand for halal-certified products.

The FTA is also expected to improve both countries` geopolitical relations, as it will strengthen economic ties and promote regional integration. Indonesia and Pakistan are both members of the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation (SAARC), respectively. The FTA will create a potential opportunity for ASEAN and SAARC to cooperate and create a larger economic bloc.

In conclusion, the Indonesia Pakistan Free Trade Agreement is a significant step towards a brighter economic future for both countries. The agreement will promote bilateral trade, diversify exports, and strengthen economic ties. However, its success will depend on proper implementation and effective communication between the two nations. Nevertheless, the FTA marks the beginning of a new era of economic cooperation between Indonesia and Pakistan.