Exports of Techno-Engineering Services Reach $1.8b in Q1-3

EghtesadOnline: Iran’s exports of technical and engineering services stood at $1.8 billion during the current fiscal year’s first nine months (March 21-Dec. 21, 2021), $1.1 billion more than in last year’s corresponding period, according to the head of the Trade Promotion Organization of Iran.

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13 February 2022

“We have held talks with some countries in Southeast Asia, Africa and North Africa regarding infrastructure, road and power plant construction projects there. If resources are allocated to such projects, from the National Development Fund for example, we can, over a short period of time, increase our exports of technical and engineering services to $20 billion per year,” Alireza Peymanpak was also quoted as saying by Mehr News Agency.

Secretary of Iranian Syndicate of Construction Companies Iraj Golabetounchi says the neighboring Iraq is Iran’s main export destination for technical and engineering services.

“Some 40 Iranian companies have been contracted to implement 57 major infrastructural projects in Iraq. Using the current capabilities and capacities of these companies, we can increase our exports to this western neighbor to more than $5 billion per annum,” he added.

According to the official, Iraq’s annual construction market is worth $100 billion.

“Iran undertook about 900 construction projects worth $32 billion in 21 countries from the fiscal 1994-95 to 2020-21. The figure reached its peak in the fiscal 2011-12 when we exported around $4.2 billion worth of technical and engineering services,” he added.

There are 56,500 firms providing technical and engineering services in Iran, from which 53,000 are contractors and the remaining 3,500 provide consulting services, according to the official, who noted that the figure increases by 10% every year.

“Yet, these businesses are working at only around 70% of their full capacity. If the government prepares the ground for these businesses to employ the workforce, they should offer facilities for them to purchase the required machinery, as they can triple their operating capacity,” he added.

Service exports are an important trend in global trade. Many traditional manufactured product exports increasingly contain technology that requires installation, troubleshooting, maintenance and repairs.

According to Trade Ready, a service export is any service provided by a resident of one country to people or companies from another.

Examples include franchise support and knowhow supplied to a foreign franchisee, architects and engineers designing a project abroad or a team of consultants traveling to a foreign destination to assist with the installation or trouble-shooting of equipment.

Some of the challenges associated with service exports include export compliance, VAT and income tax, work visas and immigration, tariffs and duties, and data privacy considerations.

According to the United Nations Conference on Trade and Development, in Q3 2021, global services trade continued to recover, registering a strong 25% increase compared to Q3 2020. Nevertheless, over the first nine months of 2021, global services trade remained somewhat below 2019 levels.

In seasonally adjusted terms, world services exports grew 3.9% in Q3 compared to Q2 2021, thus maintaining positive growth quarter-on-quarter.

From a regional perspective, in Q3 2021, services exports’ growth was positive everywhere, YOY, with the highest relative rise recorded for Latin America and the Caribbean 64% for exports and 42% for imports.

A stronger recovery was often preceded by a bigger downturn from the year before. Exports’ growth from Q2 to Q3, seasonally adjusted, was positive for all regions, except for Northern America, where exports measured for Q3 were slightly below the Q2 level.