Pakistan Trade

Relations With

Indonesia & Malaysia

History

• Muhammad Ali Jinnah who was at that time

President of the All-India Muslim League - India and

Pakistan were still not Independent nations

encouraged Muslim soldiers serving in British Indian

army to join hands with Indonesians their fight

against the Dutch Imperial colonisation of Indonesia.

• Pakistan played a vital role in support of

Indonesian Muslims by sending troops to Indonesia

and also by blocking the Dutch airline in Pakistan

which was a mean to supply arms to Dutch armies

in Indonesia.

• A large number of Pakistani Muslim soldiers died in

the war with Netherlands in Indonesia

• Indonesia got independent on 27 December 1949 and

Mr. Sukarno who also led the independence

movement of Indonesia became its first President.

• In 1960 President Ayub Khan and President Sukarno

also signed an agreement to send Indonesian students

into Pakistani universities for education.

• In 1967 when President Suharto took over, the

Indonesia-Pakistan relations took a new turn,

Indonesia started showing its slight inclination

towards India.

• when Pakistan faced the 1971 war with India,

Indonesia preferred to take a non-partisan position

into it and showed no support to Pakistan.

• While in the 1965 war of Pakistan, Indonesia provided

full support to Pakistan.

• In the 1967-1968 agreements were signed to promote

co-operation between radio and television

corporations and news agencies.

• Both the countries also agreed to establish direct

shipping services and identified items for export

and import from each other.

• In 1972 Prime Minister Zulfiqar Ali Bhutto

visited Indonesia which helped to build

confidence between the two countries again.

• The President Musharaf’s era is considered to be

one of those periods in which the bonds were

strengthened and the business relations between

the countries were developed but it could not

help Pakistan get ASEAN membership which

Pakistan always tried to secure through

Indonesian channel for its bearing an influential

position amongst ASEAN countries.

Agreement

• Pakistan-Indonesia PTA was signed on February 3,

2012 after conclusion of prolonged negotiations,

which were initiated in August 2002

• the Preferential Trade Agreement became operational

in September 2013 after many rounds of negotiations.

• Under the agreement, Indonesia agreed to offer

market access to Pakistan for 220 tariff lines on

preferential rates.

• The list included fresh fruits, cotton yarn, fabrics,

readymade garments, fans, sports goods, leather

goods and other industrial products.

• After PTA’s implementation, Indonesia will be

able to increase exports of crude palm oil to

Pakistan

• whereas Pakistan can export fruits, value-added

textiles, carpets, fabrics, leather goods,

chemicals, surgical equipment and other items.

• Pakistan offered Indonesia a total of 311 tariff

lines on preferential rates. It included edible palm

oil products, sugar confectionary, cocoa products,

consumer goods, chemicals, tableware,

kitchenware, rubber products, wood products,

glassware products and electronic products.

• Pakistan has offered the same preferential

treatment on edible palm oil products from

Indonesia as provided to Malaysia under Pakistan

Malaysia Free Trade Agreement.

Imports & Exports

• Bilateral trade between Indonesia and Pakistan

had grown to $1.65 billion in 2012 from $1

billion in 2008. Indonesia’s exports to Pakistan

were $1.38 billion and imports from Pakistan

were $273 million.

• In Pakistan’s exports, major growth was recorded

in cotton/cotton fabrics and cereals, which grew

by $20 million and $11.53 million respectively,

while import of palm oil increased by $289.87

million.

• Indonesia is the largest exporter of palm oil

products to Pakistan.

SUGGESTION

• Pakistani government should also endeavor and

take suitable measures to strengthen the ties with

Indonesia and use its position to seek access to

the ASEAN countries which can bring a drastic

change in the trade activity of Pakistan resulting

into the economic betterment of the country.

Pakistan Trade

Relations With Malaysia

1st Malaysian Politician

Background

• On 31 August 1957 the Federation of Malaysia became

an independent nation and joined the Commonwealth.

• On 5 October 1965, Pakistan severed their diplomatic ties

with Malaysia when a Malaysian representative at

the UN Security Council (to which Malaysia had been

elected in 1965) had taken sides in the Indo-Pakistan

war over Kashmir.

• Malaysia’s trade policy is to work towards

creating a more liberalised and fair global trading

environment. While Malaysia continues to accord

high priority to the rule-based multilateral trading

system under the World Trade Organisation

(WTO), Malaysia is also pursuing regional and

bilateral trading arrangements to complement the

multilateral approach to trade liberalisation.

Pak-Malaysia Closer

Economic Partnership

Agreement (MPCEPA)

• The Comprehensive Free Trade Agreement

(FTA) for Closer Economic Partnership between

Pakistan and Malaysia was approved by the

Cabinet on 6th November, 2007. It was signed on

08-11-2007 at Kuala Lumpur Malaysia.

• The Agreement is a timely initiative by the

Government of Pakistan to secure market for its

export products in Malaysia and deepen the

economic and trade relationship with an

important member of the region.

• The MPCEPA encompasses liberalisation in trade in

goods and services, investment, as well as bilateral

technical cooperation and capacity building in areas such

as sanitary and phytosanitary measures, intellectual

property protection, construction, tourism, healthcare

and telecommunications.

Areas covered under

MPCEPA include:

• General Provisions

• Trade in Goods

• Rules of Origin

• Customs Procedures andCooperation

• Trade Remedies

• Sanitary andPhytosanitary Measures

• Technical Barriers toTrade

• Trade in Services

• Investment

• Intellectual Property

• Economic Cooperation

• Dispute SettlementMechanism

• General Exceptions

• Final Provisions

Exports and Imports

• Exports to Malaysia from Pakistan comprise ofCotton Yarn, Fabric, Rice, Fruits, Vegetables, SportsGoods, Carpets, Fish and Fish preparations, Leatherand Leather Products and Chemical etc.

• Imports by Pakistan from Malaysia include Palm Oiland its Products, Electronic Items, Timber,Chemicals, Machinery, Animal and Vegetable Fatsand Oil, Crude Rubber, Cork and Wood, Non-Ferrous Metals, Synthetic Yarn etc.

• Pakistan is continuously facing trade deficit even after

FTA. Pakistan's Balance of Trade with Malaysia

historically is in favour of Malaysia. In order to

overcome the trading imbalance, there is need for

diversifying trading products, besides Palm Oil.

• Malaysia is a potential market for Pakistani Fruits and

Vegetable like Mangoes, Onions and Potatoes.

• Pakistan is rich in human resources and there isgreat potential for Pakistan to export its skilledtechnical and labour force besides educatedhuman resources to Malaysia.

• Pakistan is an open economy with no restrictionswhere Malaysian firms and contractors canbenefit from entering into Joint Ventures forestablishing businesses.

• Pakistan and Malaysia have to find new areas of mutual

co-operation and try to further boost bilateral trade and

economic ties for getting full advantage of Pak-Malaysia

Free Trade Agreement (FTA), which is still far from its

existing potential.

Malaysia’s trade with Pakistan expanded by 6.2% to RM5.01 billion

(US$1.29 billion) from RM4.72 billion (US$1.44 billion)

Total exports increased by 3.6% to RM4.12 billion (US$1.06 billion)

from RM3.97 billion (US$1.21 billion)

Total imports increased by 19.9% to RM891.3 million (US$230.0

million) as compared to RM743.6 million (US$226.4 million)

• In 2015 Pakistan was Malaysia’s:

• 31st largest trading partner

• 19th largest export destination

• 45th largest source of imports

• SERVICES-

The MPCEPA is a comprehensive agreement and it covers

liberalization of Trade in Services as well. Pakistan offered

maximum foreign equity participation of 60% in all sectors

and there are no limitations on the number of Malaysian

employed per organization.

Thank You !