His Excellency Mr Hadi Santoso, Consul General of the Republic of Indonesia in Karachi addressing at a press conference on Economy Update 1st Semester 2016

Karachi, July 21, 2016 (PPI-OT):It’s indeed a great pleasure and honour for me to deliver a remarks on this wonderful occasion, and I would like to thank PIBF Southern Zone, Mr Shamoon Zaki for his assisting us organizing this outstanding gathering which I believe will serve as a platform where we could share our views and information in our common effort to further strengthen the excellent and longstanding relations between our two brotherly Muslim countries, Pakistan and Indonesia.

Strengthening bilateral relations between Indonesia and Pakistan in trade, economic and tourism

Right after assuming the charge as Indonesian Consul General in Karachi in 5th November 2014, it has been my earnest desire to further accelerate and expand the rapidly growing diplomatic and economic ties between Indonesia and Pakistan, particularly in Sindh Province with the support and cooperation of all stakeholders and business associations. Indonesia and Pakistan are gifted with tremendous resources and there is a great potential for cooperation in trade sector and what we need is to utilize that potential to the maximum.

The strong historical bonds and national characteristics similarities between Indonesia and Pakistan could serve as a foundation to further strengthen the bilateral relations for mutually rewarding partnership in the years ahead, particularly in trade and economic relations. There is a need for more exchange of trade delegation, individual visits of businessmen and undertaking joint ventures between business communities of the two countries.

Indonesian Consulate General in Karachi has been organizing Familiarization Trips (Fam Trips) since 2009 in collaboration with some travel agents and senior journalists in Karachi that aims to introduce many potential tourism destinations in Indonesia to Pakistani people. It is held on regular basis every year to cover and explore the most important hubs for tourism in Indonesian archipelago.

The trips have been aired/published periodically in Pakistani TV channel and news papers to attract more Pakistani travellers to visit Indonesia. The number of Pakistani travellers from Sindh Province alone, including Karachi has increased in the last two years. There were 1,678 Pakistani travellers from Sindh Province to Indonesia in 2014 compared to 1,311 in 2013.

Furthermore, Indonesian Consulate General in Karachi will take every possible opportunities to promote Indonesian tourism potentials and convey the message of cultural diversity and hospitality of the Indonesian people through the Indonesian art performances on various occasions, including exhibitions held in Karachi, Hyderabad, Sukkur and Larkana which is expected to increase the number of Pakistani travellers to Indonesia.

Current trade volume between Indonesia and Pakistan

Indonesia and Pakistan are enjoying strong bilateral relations as trade volume continued to show positive trend from US$ 1,6 billion in 2013 to US$ 2,2 billion in 2014 and last year reach US$ 2,1 billion. In period of January to March 2016 the trade trend increase 19,24% year-on-year basis.

The trade volume between the two countries was showing good signal but was still far below the existing potential that could only be tapped through enhanced interaction between the business communities of the two countries. Serious efforts must be made to enhance volume of two-way trade between both countries.

The economic relations mainly performed through dynamic approach involves trade agreement (PTA), B to B contact, participating in Trade, Exhibition, Joint Ventures or Investments, and finally I do hope that everything we do together in economic matters will lead us to the formation of Free Trade Agreement of the two brotherly countries.

PTA: A Practical Advantage for Business Communities

Indonesia and Pakistan have entered into a new era of economic cooperation by the signing of the Preferential Trade Agreement (PTA) which reflects the firm commitment of both countries for sustainable development to achieve the goal of economic prosperity. The PTA which has been implemented in 1st September 2013 has given a strong boost to the bilateral trade relations between Indonesia and Pakistan, surpassing US$ 2 billion for the first time in our bilateral history as well as pave the way to a greater economic cooperation between the two brotherly countries. Currently, Indonesia and Pakistan are on the right track in discussing the possibility of implementing Free Trade Agreement (FTA).

Under the PTA, Indonesia has agreed to offer market access to Pakistan on 232 tariff lines on preferential rate. The list includes export products in the interest of Pakistan that are fresh fruits, cotton yarn, cotton fabrics, readymade garments, fans (ceiling, table, pedestal), sports goods (badminton and lawn tennis rackets), leather goods and other industrial products. Indonesia has also offered market access to Pakistani Kinnow (mandarin) at 0%, which will provide a level playing field to this product in the Indonesian market.

Pakistan has offered Indonesia a total of 311 tariff lines for market access at preferential tariff. It includes edible palm oil products (crude oil, palm stearin, RBD palm oil, Palm Olein, crude oil of palm kernel), sugar confectionary, cocoa product, consumer goods (toothpaste, soap, deodorant), chemicals (polyacetals polycarbonates, sorbitol), tableware, kitchenware, rubber products, wood products, glassware products, and electronic products.

Pakistan’s economy being the second largest in the South Asia region after India is one of the emerging markets in the world and has strategic value to Indonesia. Vice versa, Indonesia being an important member of ASEAN with the largest economy and a member of the G20 will be a good partner to enhance the two countries economic and trade relations in the Asia Pacific region.

The implementation of the Indonesia – Pakistan: “Preferential Trade Agreement”, combined with the economic growth in the two countries offers new opportunities for enhanced economic engagement for their mutual benefit and both countries are committed to their primary goal of ensuring broad-based and people-centred economic development designed to improve the quality of life of their respective people. There are vast opportunities for investments in both countries and the private sector is being encouraged to come forward to explore the untapped opportunities and initiate diversified joint plans to elevate further bilateral trade from current levels.

Pakistan is indeed a potential market for export diversification and enhancement of Indonesian non oil and gas products. Especially in commodities such as CPO, tea, paper, coal, spare parts, machinery, steel and chemical products which are the main imported commodities of Pakistan. Moreover, once the security situation in Afghanistan is improved, Pakistan could serve as a corridor for Indonesian trade and economic cooperation with Afghanistan and Central Asia region.

Meanwhile, Indonesia has also emerged as Pakistan’s 4th largest buyer in the ASEAN region around US$ 138 million (comprising Cotton, Cereals, Raw hides and skins (other than furskins) and leather, Edible fruit, nuts, peel of citrus fruit, melons, Fish, crustaceans, molluscs, aquatic invertebrates nes, Tobacco and manufactured tobacco substitutes, Salt, sulphur, earth, stone, plaster, lime and cement, Copper and articles thereof, Meat, fish and seafood food preparations nes, Oil seed, oleagic fruits, grain, seed, fruit, etc, nes). Indonesia is an attractive destination for trade and investment as it is the fourth most populous country in the world with the population of more than 257.6 million and with a GDP per capita of US$ 888.5 billion (data: World Bank 2014).

B to B contact goes hand in hand with the Exhibition where Indonesian businessmen can meet directly with their Pakistani counterpart through an exhibition. I see an exhibition being held in Karachi as a potential ways to introduce the trade opportunities of the two brotherly countries. As you may know, Indonesian government through the Consulate is the only foreign governments that always participate in My Karachi Expo continuously since 2004.

The opportunities of investment in Indonesia are wide open for Pakistani businessmen. Huge project plan has been announced by the President of Indonesia comprising industrial estates, highway, railway, seaports, sea toll, fishing area, airport, and power plant across Indonesia that involves hydro, geothermal, gas and coal steam. All of which will be supported by friendly business licensing.

The progresses of trade in the first semester of 2016, in particular under the observance of Indonesian Consulate General in Karachi, are promising especially as follows:

The new interest and deals being reached in coal commodities which value more than US$ 100 million;

1. The betel nut export has been extended this year as result of Indonesian exporters visit on the previous year which value around US$ 950 thousands;

2. Business deal regarding noodle soup as important ingredient of soup making process has been reached which value US$ 900 thousands per year for 5 year contract;

3. The involvement of Indonesian company in gas development project in Gambat region (Khairpur district) where technology transfer will be done to establish 3, 5 km gas pipe not in the distance time. The project valued around US$ 8 million;

4. The realization of corporate event in Bali where 210 members of Crown Group, lead by the CEO, Mr Farhan Hanif has held conference and leisure in Bali from 21 to 26 April 2016.

All positive gestures are result of support from business communities of the two brotherly countries. I can say all of that as achievement of businessmen but I must not say that my duty is over.

Despite the positive result, there are still huge tasks ahead to add more benefits which can only be done if we working together. I am still dreaming that Indonesian airliner can start operating to Karachi, Indonesia and Pakistan lead the halal industry of Muslim world, and both business society exchange their investment activities. With the grace of Allah and the help of business communities, Insha Allah all of that can be reached in the near future.

For more information, contact:
Consulate General of the Republic of Indonesia
Karachi, Pakistan
E/1-5 Shahrah-e-Iran, Clifton,
Karachi (Pakistan)
Tell: +92-21-35874623
Fax: +92-21-35874483