Iran's Trade With Oman Burgeoning

EghtesadOnline: A total of $110 million worth of commodities were exported to Oman during the first four months of the current Iranian year (March 20-July 21), according to the secretary of Oman Affairs Bureau with the Trade Promotion Organization of Iran.

News ID: ۷۵۰۸۱۰

26 August 2020

“Our main exported products were construction materials and equipment, wooden and plastic artifacts, fruit and vegetables, red meat and chicken, food products, machinery parts, lead and copper,” Soheila Rasoulinejad was also quoted as saying by ILNA.

Oman is a southern neighbor of Iran located on the southern side of the Sea of Oman.

Referring to shipping routes between Iranian ports of Jask, Shahid Bahonar, Shahid Rajaee and Khorramshahr and the Omani ports of Al Suwaiq, Shinas, Sohar and Sultan Qaboos Port, Chairman of Iran-Oman Chamber of Commerce Mohsen Zarrabi recently said, “Almost all countries closed their borders with Iran following the spread of the new coronavirus. However, Oman increased its shipping lines with Iranian ports to reduce the transportation costs of its imports.”

“Before the outbreak, there were nine direct airways from Iranian cities of Tehran, Isfahan, Shiraz, Chabahar, Qeshm, Kish, Mashhad, Lar and Lamerd to Oman’s Muscat. Presently, Oman has closed all its air routes to control the spread of the virus,” he said.

Fivefold Rise in Trade

Noting that Iran’s exports accounted for $149 million of the two countries’ $221 million trade in the fiscal 2013-14, Zarrabi said Oman has cemented its close economic and political ties with Iran in recent years, in spite of US sanctions.

“Trade with the neighboring country increased fivefold over five years to March 2019. Iran’s share from Oman’s total imports has improved from 0.7% in the year ending March 2014 to 3.6% in the year ending March 2019,” he said.

“Despite their close, friendly political relations, trade volume between Iran and Oman was hardly significant from March 2006 to March 2013. This is while Oman relies heavily on imports to meet its demand for consumer goods. The neighboring country should have been an important export market for Iran, but due to the lack of proper infrastructures, our share of Oman’s import was meager over those years.”

Joint Chamber of Commerce's Role

The formation of Iran-Oman Chamber of Commerce in the year ending March 2014 brought about remarkable developments in the economic relations of the two countries, including improved non-oil trade through the creation of new shipping lines and the launch of more regular flights.

“It is now much easier and cheaper for Iranian citizens to obtain visa from Oman,” ILNA quoted Zarrabi as saying.

“Iran’s imports from Oman increased from $70 million in the year ending March 2017 to $413 million in the year ending March 2019. Omani ports are now transshipping goods to Iran much more than before.”

Oman can play a pivotal role for improving Iran’s exports and reexports.

Zarrabi said that through Oman, Iran can also find access to export markets like Yemen and African countries, and create new export destinations.

With a population of 28 million, Yemen is a favorable market for Iranian products. Currently, the country meets its import requirements from Oman’s Salalah Port. African countries usually make long-term purchases. Iranians will be able to use letters of credit to export to these countries under the franchise of Omani companies. Oman also has free trade agreements with 16 Arab, African and four European countries as well as the US and Singapore.

Zarrabi said Iran will be able to export its products via Oman to these countries and enjoy their zero import duty.

The official urged Iranian investors to focus more on Omani’s free trade zones than its industrial towns, given the more generous tax benefits they offer.

“Tax exemption in Oman’s free trade zones is between 15 and 30 years whereas in its industrial towns, investors are granted only a five-year tax break. Oman requires foreign investors to employ 35% of their labor force from natives in industrial towns compared with 10-20% in FTZs,” he said.

"Iran and Oman can improve their cooperation in mining, tourism, transportation and industries. Iranian exporters of technical and engineering services have been present in Oman since 2002 and they have put in great, praiseworthy performance there. However, due to the decline in oil prices and our budget deficit, we cannot act as contractors; most Iranian projects in Oman have been transformed into build-operate-transfer, build-own-operate and engineering, procurement, construction and financing, which need investment," he said.

MoU to Facilitate Commercial Dispute Settlements

Iran-Oman Chamber of Commerce and the Arbitration Center of Iran Chamber of Commerce, Industries, Mines and Agriculture recently signed a memorandum of understanding on Thursday with the aim of facilitating a more efficient and prompt dispute settlement between the businesspeople of the two countries.

“Iran-Oman Chamber of Commerce is willing to resolve potential disputes between economic players from both sides outside the court and in arbitration centers instead. Therefore, we decided to sign an MoU with ICCIMA Arbitration Center and use their expertise and assistance in this regard,” Zarrabi, who doubles as director general of ICCIMA Arbitration Center, was quoted as saying by the news portal of Iran Chamber of Commerce.

Cooperation in Mining Sector

Recently, Iran-Oman Chamber of Commerce signed a memorandum of understanding with Iran Mine House to enhance the presence of Iran’s mining companies in the neighboring country, improve exports of minerals through Oman, facilitate joint investments and form specialized mining committees, Otaghiranonline.ir reported.

Referring to Oman’s 9th Five-Year Development Plan (2016-2020) that focuses on the development of non-oil sectors such as transportation and logistics, tourism, fisheries and mining, Zarrabi said the Omani government aims to implement significant upstream and downstream projects related to mining.

With the new MoU, Iran-Oman Chamber of Commerce intends to improve dissemination of information regarding Oman’s projects, tenders and exploration activities to Iran Mine House and vice versa, send commercial delegations to exhibitions and enhance negotiations between the economic players of Iran Mine House with Oman, offer consultations, hold courses on Oman’s rules and regulations, and how to enter the neighboring country’s market, among other services.

For his part, Mohammad Reza Bahraman, the head of Iran Mine House, said the MoU would pave the way for better cooperation between IMH and other joint commerce chambers.

“With representatives in 31 provinces, IMH has also established an international law institute … Iran-Oman Chamber of Commerce and Iran Mine House will complement the economic activities of each other in Oman,” he said.