Iran Industries Ministry Sets Target to Enhance Exports to Neighbors

EghtesadOnline: The Ministry of Industries, Mining and Trade has set a target of raising Iran's annual exports to neighboring countries to $48 billion by the fiscal 2021-22, the deputy industries said.

News ID: ۷۴۹۱۹۶

16 December 2019

According to Hossein Modarres Khiyabani, Iran currently has a 2% share in the neighboring countries' total imports and if the target is realized, the share will rise to 4%, IRNA reported.

“Neighboring states have $1.2 trillion worth of imports [per year] while Iran’s share is only $24 billion,” Financial Tribune quoted him as saying.

“Iran's export commodities are being monitored so that data for exploring more options to boost exports can be collected.”

The official believes Iran’s exports to its 15 neighbors, namely the UAE, Iraq, Turkey, Afghanistan, Pakistan, Russia, Oman, Azerbaijan, Turkmenistan, Kuwait, Qatar, Kazakhstan, Armenia, Bahrain and Saudi Arabia, have the potential to reach $100 billion per year.

According to Khiyabani, the average value of Iran's exported commodities presently stands at $400 per ton while it is $1,200 per ton for imported commodities.

“The gap between the average value of exported and imported commodities indicates that a wrong strategy is in place, such that raw materials are exported while processed products are imported instead of importing raw and intermediate goods and exporting processed products with a high value added,” he said.

“Increasing the average value of exported commodities is possible by processing raw materials, turning them into finished products with high value added and diversifying the range of exported goods.”

Expanding Exports to EEU States

The ministry is also pursuing plans to expand exports to the five member states of Eurasian Economic Union, namely Russia, Kazakhstan, Armenia, Kyrgyzstan and Belarus.

Iran and EEU signed a three-year provisional agreement in Astana, Kazakhstan, on May 17, 2018, for the bloc to welcome Iran into EEU.

The deal became operational on Oct. 27 and now Iran has three years to negotiate an all-out free trade agreement with the Eurasian bloc.

The average tariff set by the union on Iranian goods as part of the agreement stands at 3.1%, while the figure is 12.9% for EEU goods exported to Iran.

Iran and EEU have listed 862 types of commodities in their provisional agreement, based on which Iran will enjoy easier export terms and lower customs duties on 502 items and the same goes for 360 items from EEU member states.

“Of the 862 items mentioned in the agreement, 639 are industrial commodities and the remaining 223 items are agricultural goods,” the deputy head of Iran Chamber of Commerce, Industries, Mines and Agricultures, Mohammad Reza Karbasi, was quoted as saying by ICCIMA’s news portal.

The deputy minister pointed out that all Iranian authorities have focused on the full implementation of the agreement with the aim of promoting trade exchanges with five Eurasian countries.

Last Year's Non-Oil Trade With Neighbors at $35.5b

Iran traded 67.6 million tons of non-oil commodities worth $35.58 billion with 15 neighboring countries during the last Iranian year (ended March 20, 2019) to register a 9.71% and 7.29% decline in tonnage and value respectively compared with last year’s corresponding period.

Data released by the Islamic Republic of Iran Customs Administration show Iran’s exports totaled 59.06 million tons worth $24.06 billion last year, indicating a 0.07% decrease in tonnage and a 0.03% increase in value year-on-year.

Imports stood at 8.54 million tons worth $11.52 billion, down 0.24% and 0.23% in tonnage and value respectively YOY.

A non-oil trade surplus of $12.54 billion was registered in favor of Iran during the period under review.

Iran mainly exported liquefied natural gas, gas condensates, low-density oils and mineral oils to neighboring states.

In exchange, major commodities imported into Iran from the neighboring states included nuclear reactor parts, barley, field corn, semi- and wholly-milled rice, steam turbine parts and cellphones.

In terms of total trade value, the UAE topped the list among neighboring countries with Iran trade standing at 17.57 million tons worth $12.52 billion, down by 30.07% and 25.6% in tonnage and value respectively YOY.

Exports to UAE amounted to 13.75 million tons worth $5.95 billion to register a 24.53% and 12.06% decline in tonnage and value respectively YOY.

The UAE was Iran’s second biggest export destination among the countries under review and third in the whole world.

In return, the UAE exported 3.82 million tons of commodities worth $6.56 billion to Iran, down by 44.68% and 34.71% in tonnage and value respectively YOY.

The UAE was the top exporter of goods to Iran among the states and second in the world after China.

Major Iranian commodities exported to UAE were gas condensates, low-density oils and mineral oils.

For its part, the UAE mainly exported steam turbine parts, cellphones, butter and turbojet parts to Iran.

Iraq was Iran’s second biggest trading partner among neighbors during the period, as two-way commercial exchanges stood at 19.84 million tons worth $9.01 billion to register a 48.25% and 35.75% growth in tonnage and value respectively YOY.

Iran exported 19.76 million tons of goods worth $8.96 billion to Iraq, up by 49.15% and 36.71% in tonnage and value respectively YOY.

Iraq was Iran’s top export destination among neighboring countries and second in the world, after China, during the 12-month period.

Iran’s exports to Iraq included liquefied natural gas, mineral oils, household cleaning detergents, low-density oils and tomatoes.

In return, Iran imported 73,563 tons of commodities worth $58.69 million from Iraq, down 43.14% and 34.61% in tonnage and value respectively YOY, most of which constituted low-density oil, machinery, aluminum alloy and cans.

Iraq was the seventh biggest exporter of goods to Iran among neighbors and 41st exporter to Iran in the world.

Turkey was Iran’s third major trading partner among neighboring states.

Trade between Iran and Turkey amounted to 8.15 million tons worth $4.98 billion, indicating a 49.54% and 30.61% decrease in tonnage and value respectively YOY.

Iran’s exports reached 6.76 million tons worth $2.36 billion, down 52.72% and 40.22% in tonnage and value respectively YOY, while Turkey’s exports to Iran hit 1.39 million tons worth $2.61 billion, down by 24.96% and 18.79% in tonnage and value respectively YOY.

Turkey was Iran’s fourth export destination and the second exporter of goods to Iran among neighbors. The country was Iran’s sixth export destination and third exporter to Iran in the world, after China and the UAE.

Liquefied natural gas, non-alloy zinc, aluminum, urea and bitumen were Iran’s main goods exported to Turkey, while Turkey exported mainly cooking bananas, tobacco and fiber.

Afghanistan was Iran’s third biggest export destination, after Iraq and the UAE, among neighbors and fourth in the world, as Iran exported 5.67 million tons worth $2.92 billion to Afghanistan during the 12-month period, down by 4.18% in tonnage and up by 5.11% in value YOY.

Iran mainly exported low-density oils, iron/steel bars and floorings to Afghanistan.

Russia was the third major exporter of goods to Iran among neighbors, after the UAE and Turkey, during the 12 months as Iran imported 2.17 million tons of commodities worth $1.34 billion from Russia, indicating a 59.39% and 84.52% hike in tonnage and value respectively YOY. Iran mainly imported nuclear reactor parts, sunflower oilseeds, field corn and barley from Russia.

Russia was the eighth exporter of goods to Iran in the world.