Trade minister Gita Wirjawan said, after signing the agreement, that reductions in import duties covered by the agreement would make the country`s palm oil exports to Pakistan more competitive.
"We are optimistic that the signing of the PTA would increase CPO exports," he said.
The director general of international cooperation of the ministry of trade, Gusmardi Bustami, meanwhile said he believed Indonesia`s palm oil exports would, in stages, again reach 550 million US dollars per year, as in the past.
"After our markets were taken over by Malaysia three years ago, we still believed we would get them back again," he said.
Gusmardi said when the agreement is implemented, Pakistan will provide a 15 percent reduction in tariffs for Indonesian CPO. He noted that the cut would place the country`s palm oil sales on an equal footing with Malaysia, which received a reduction in tariffs from Pakistan after the two countries signed a free trade agreement in 2008.
He said the Pakistani government had earlier given a tax cut on CPO from Malaysia, and because of the difference in tariffs, exports of Indonesia`s CPO to Pakistan dropped severely.
Indonesia`s CPO exports to Pakistan in 2007 reached US$552 million, while dropping to US$91.2 million in 2010.
"Now, Indonesia`s CPO has been placed on a level playing field with that from Malaysia. We earlier gave a cut to Malaysia because we had a trade agreement with it," Pakistani ambassador to Indonesia Sanaullah said.