Pakistan and Indonesia are in the process of negotiating a Free Trade Agreement (FTA) to enhance market access and strengthen economic collaboration between the two countries. In 2012, the two nations signed a Preferential Trade Agreement (PTA), which came into effect in 2013, improving market access and providing tariff concessions on a wide range of products.
Indonesia, the largest economy in Southeast Asia, ranks among Pakistan’s key trading partners. Pakistan exports items such as processed foods, pharmaceuticals, IT services, halal meat, textiles, seafood, and sports goods to Indonesia. In exchange, Indonesia supplies Pakistan with palm oil, consumer electronics, auto parts, coal, rubber, tea, spices, and nickel-based products, with palm oil being the primary import.
The current FTA negotiations are anticipated to strengthen trade ties by expanding market access and fostering collaboration in areas like electric vehicle battery manufacturing, capitalizing on Indonesia’s abundant nickel resources.
Pakistan’s investment in Indonesia has grown significantly, especially in the services, construction, and trade sectors. The President of the Pakistan Federation of Chamber of Commerce and Industry (FPCCI) highlighted that Indonesia could serve as a gateway for Pakistan to access the ASEAN market and support its trade diversification efforts.
Beyond trade, Pakistan and Indonesia are working to expand the collaboration across multiple sectors such as education, healthcare, information technology, tourism, energy, and defense. Indonesia is viewed as a strategic bridge for Pakistan to the ASEAN region, offering substantial opportunities for Pakistan to deepen its economic footprint in Southeast Asia.
Pakistan and Indonesia’s bilateral trade rose to $4.7 billion in the 2024–25 fiscal year, a notable increase from $3.36 billion in 2023, highlighting the strengthening economic partnership between the two nations.
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