The Indonesian market could be a testing ground for Palestinian exports’ competitiveness following the introduction of a zero tariff policy.
An agreement with Indonesia on import tariff waivers for Palestinian products came into effect in mid-February after 2.5 years since the idea was floated in Oct 2016.
The initial waiver will apply to fresh and dried dates, and virgin olive oil. Palestine has asked for about 20 export products to be included in the policy.
Tariffs previously were set at 5 percent.
Djatmiko Bris Witjaksono, director of foreign trade analysis and trade center at the Ministry of Trade, said the agreement offers preferential treatment for Palestinian imports, but it will be up to the business community to show its willingness to buy the products.
“Palestine may have to compete with similar products imported from other countries. If the supply and product continuity is reliable, importers will eventually buy from them,” he said.
“The tariff exemption is significant and should be reflected in the products’ pricing in the market. Eventually it will boost the competitiveness of Palestinian products in Indonesia.” Witjaksono said.
Shinta Widjaja Kamdani, vice chairwoman of international relations at the Indonesian Chamber of Commerce and Industry, said the zero tariff policy will boost trade between the two countries.
“Now we have to look at the market opportunity to identify the goods from Indonesia we can export and vice versa. It looks like there is a market there for our food and beverage products,” she said.
Trade Minister Enggartiasto Lukita said the elimination of Indonesian tariffs on Palestinian dates and olive oil began on Feb. 21, when Indonesia’s Foreign Ministry sent a diplomatic note to Palestine.
Zuhair Al-Shun, Palestine’s ambassador to Indonesia, was also told about the tariff move in a meeting with Indonesian Vice President Jusuf Kalla on Feb. 28.
“We hope we will be able to enjoy Palestinian dates in the upcoming Ramadan,” Lukita said in a joint press conference with Palestinian Ambassador to Indonesia Zuhair Al-Shun after meeting the vice president on Feb. 28.
Both countries are considering expanding the policy to create a preferential trading agreement, the trade minister said.
Al-Shun said Palestine has provided a list of products to be considered for preferential treatment by Indonesia.
“The list is being reviewed by the Indonesian government. We also welcome Indonesian products that will be exported to Palestine,” Al-Shun said.
Lukita said the trade agreement is part of Indonesia’s unwavering support for Palestine.
Trade between Indonesia and Palestine was worth $3.5 million in 2018. Indonesian exports to Palestine include coffee, tea, bread and other foodstuffs, while dates and olive oil make up the bulk of its imports.
According to data from Statistics Indonesia, trade between Indonesia and Palestine reached US$3.5 million in 2018. The zero tariff policy is expected to boost date imports by 11.62 percent within a year.
Vice Minister for Foreign Affairs, AM Fachir said the idea to provide preferential treatment for Palestinian products was first floated by members of Palestinian trade delegation attending an international trade expo in Jakarta in Oct 2016.
Lukita and his Palestinian counterpart formalized the idea in a memorandum of understanding (MoU) they signed on the sidelines of the 11th World Trade Organization (WTO) ministerial conference in Buenos Aires, Argentina in Dec 2017, during which Indonesia also endorsed Palestine to be a WTO member.
The MoU was then ratified in Indonesia into a presidential regulation in April 2018, followed by Lukita and Al Shun signing the formal agreement in Jakarta in Aug 2018.
Ministry of Finance then issued two ministerial regulations — on import tariff waivers for Palestinian products and on the technical direction for customs offices to execute the policy.
Issuing the two regulations was the last phase along Indonesia’s legislation process to allow the full implementation of the agreement since they will be circulated to all ports of entry so that customs officers can identify products from Palestine and exempt them from any import duties.
Read the original story here in Arab News