Jakarta. Indonesia and Sri Lanka on Thursday launched the negotiations for a preferential trade agreement (PTA) after waiting since 2017. 

Deputy Trade Minister Jerry Sambuaga and Sri Lankan Foreign Affairs Minister Tharaka Balasuriya launched the negotiations virtually from their respective countries.  

A PTA typically reduces or eliminates tariffs on selected goods, making it the first step in economic integration. During the launch, both countries found the PTA to become a key building block towards a free trade agreement (FTA) -- a more comprehensive deal that usually aims to lift the tariffs across all goods.

“Sri Lanka is an important partner to Indonesia in the Southeast Asian region. … The PTA negotiations that we launched today are expected to enhance market access, boost economic growth, and become the first step towards an FTA,” Jerry told Balasuriya.

Likewise, Balasuriya said Sri Lanka wanted to see both economies use the PTA as a “foundation to commence the negotiations on the more ambitious FTA.” 

Indonesia wants the first round of negotiations to take place in the first semester of 2024. 

“With this PTA, Indonesia has the potential to boost exports to Sri Lanka for its leading products such as palm oil, paper, and fatty acid,” Djatmiko Bris Witjaksono, the director general for international trade agreements, was quoted as saying in a press statement on Friday.

In 2017, President Joko “Jokowi” Widodo hosted his then Sri Lankan counterpart Maithripala Sirisena for bilateral talks at the Merdeka Palace in Jakarta, where they decided to explore the possibility of a trade agreement. 

Last year, Sri Lankan President Ranil Wickremesinghe and Jokowi agreed to begin the trade pact negotiations soon during their meeting in China.

The Indonesian government data shows that the bilateral trade with Sri Lanka was valued at $369.7 million in 2023, up by 17.61 percent from $314.4 million recorded in the previous year. Indonesia has managed to maintain its surplus with the island country in the past five years. Last year, Indonesia’s surplus amounted to $283.5 million.