CIS Trade Hurdles in the Spotlight

EghtesadOnline: Top private sector and state officials convened in Tehran late Tuesday as part of the 72nd Government-Private Sector Dialogue Council and their main order of business was to discuss trade obstacles to the Commonwealth of Independent States, namely problems related to banking, finance, transport and visas.

News ID: ۷۸۱۱۲۳

14 January 2018

Gholamhossein Shafei, the head of Iran Chamber of Commerce, Industries, Mines and Agriculture, kicked off the event by criticizing the meager share of bank loans for supporting exports.

“The share of exports from bank loans has reached 0.5% last year from 2.5% a decade ago,” Shafei was quoted as saying by the official news portal of ICCIMA.

According to the prominent private sector figure, the adverse competition among CIS not witnessed among developed economies, combined with unprofessional Iranian merchants based in these countries, has worked to tip the scales against Iran in a high-risk business landscape, Financial Tribune reported.

The official was also less than satisfied with the low number of preferential trade agreements reached between Iran and neighboring countries and called for their numbers to increase.

As the top state representative at the meeting, Minister of Economic Affairs and Finance Masoud Karbasian criticized Iranian traders who have so far refrained from using the Iran-Russia “Green Corridor” piloted in January after it was proposed by Russian Agriculture Minister Alexander Nikolayevich Tkachyov during his visit to Iran in January.

“Russia was determined in creating a trade connection through this corridor but Iranian traders have not used it, even as Russia is giving 25% rebates in export tariffs to exporters,” he said.

According to the minister, “the Russian market is now out of Iran’s hands” as Turkey has moved to establish an active presence there after the European Union leveled sanctions against Moscow.

He called for a speedier implementation of the Iran-Russia bank card integration plan promised by the Central Bank of Iran Governor Valiollah Seif after several delays and who also supported the use of national currencies in dealing with the country.

Karbasian pointed to Iran’s plans to connect its railroads to that of Central Asia and Russia, adding that if the Rasht-Astara Railroad project is completed, “transit of goods from the Persian Gulf to Scandinavian countries can be realized”.

Representing the parliament, Mohammad Reza Pour-Ebrahimi, the head of Majlis Economic Commission, pitched the idea of establishing exports management companies to resolve a lack of solidarity and dynamism between Iranian traders abroad.

He called for more bilateral and multilateral monetary agreements emphasized in the Sixth Five-Year Development Plan (2017-22) and criticized shortcomings in this regard by the central bank chief.

The official also pointed that the rate of financing Iranian exporters is much higher than that of neighboring countries.

Asadollah Asgarolladi, the head of the Iran-Russia Chamber of Commerce and a senior businessman, said a lack of trust between the traders of both countries is evident and proposed using the capacities of the Iran-Russia Economic Commission chaired by Karbasian to resolve the issue.

Banking troubles, problems with visa issuance, financial volatility pertaining to the use of national currencies, CBI’s promise of unifying the dual foreign exchange rate that has yet to materialize and lack of sufficient air transit were alluded to by the official as major Iran-Russia trade hurdles.

Iran-Ukraine Banking Ties

Representing the central bank in the joint meeting was Mehdi Kasraei-Pour, director general of the regulator’s Department of Foreign Exchange Affairs who anticipated better banking affairs.

He first pointed out that Iran faces no problems in making and receiving payments with and from Russia and also boasts four bases of operations in CIS.

“Tejarat Bank has a branch in Belarus, Bank Melli Iran has one in Baku and Bank Mellat has another in Yerevan, but we have not been content with that and are striving to employ the services offered by Russian banks in CIS jurisdictions,” he said.

Kasraei-Pour announced that a banking committee has been formed to promote banking ties with Ukraine, while Ahmad Araqchi, CBI’s deputy for foreign exchange affairs, will soon travel to the East European country to reestablish links.

Mohammad Lahouti, the head of Iran Export Confederation, also spoke of banking ties and referred to them as the “most important challenge facing Iranian exporters” in tandem with troubles pertaining to transit, tariffs and costs of doing business.

“Beginning joint efforts with countries that have not been a market for us is most challenging, because we do not possess the necessary infrastructure in those countries,” he said.