Pakistan and Indonesia have signed a Preferential Trade Agreement (PTA) that should boost trade and investment flows between the two countries and could ultimately lead to the creation of a Free Trade Area.

The agreement inked on Friday was one of the provisions outlined in a Comprehensive Economic Partnership Agreement (CEPA) signed in 2005.

Under the PTA, Indonesia will provide preferential duty treatment to 216 Pakistani products, including silk fabrics, cotton yarn, cotton fabrics, ready-made garments, synthetic filament yarn, knitted shirts, cotton shawls, cotton tracksuits, leather garments and gloves.

Indonesian items of export interest to Pakistan under the Agreement comprise 287 tariff lines including textile and leather products.

Pakistan's exports to Indonesia rose by more than 90% to US$139m during the fiscal year to June 2011. Major export products were raw cotton, cotton cloth, raw leather, cotton yarn, synthetic fabrics, and ready-made garments.

Pakistan has already signed FTAs with Malaysia, Sri Lanka, and China, and a PTA with Iran. Talks are underway for FTAs with Bangladesh, UAE, the EU and the US.

The country has been striving to achieve its textile and clothing export target of US$25b by the year 2015.