Jakarta. The government will push ahead and ratify a trade deal with Pakistan to protect $1.5 billion in annual palm oil exports to the South Asian nation, Coordinating Economic Affairs Minister Darmin Nasution said.
Indonesia is the world's biggest palm oil producer and although it is the dominant exporter to Pakistan, it has been losing market share to the world's No. 2 producer, Malaysia, according to Abdul Rasheed JanMohammed, chairman of the Pakistan Edible Oil Refiners Association.
Darmin said in a statement late on Wednesday that President Joko "Jokowi" Widodo would ratify the preferential trade agreement with Pakistan, without approval by the House of Representatives.
If Indonesia does not ratify the deal soon, "Pakistan will terminate the PTA, making Indonesia lose its crude palm oil market worth $1.46 billion," the minister said in the statement. Malaysia could then grab that market share, he added.
Pakistan is expected to buy 70 percent of its crude palm oil from Indonesia this year, down from 80 percent in the past two years, JanMohammed said at an industry conference in Indonesia last week. Malaysia has picked up market share in Pakistan, he added.
Indonesia booked a $2.15 billion overall trade surplus with Pakistan last year, with total two-way trade of $2.63 billion.
The government is also set to ratify six other deals that have been stalled in the House for several years without explanation, according to the statement.
Indonesia will sign a comprehensive economic partnership agreement with Australia before the end of this year after leaders of the two countries concluded talks on ways to boost trade and investment in areas ranging from cars to cattle.
Additional reporting by Bernadette Christina Munthe