Domestic Economy

Adding Value to Exports

Adding Value to Exports Adding Value to Exports

Restricting imports of inessential items and boosting production and export of high value-added products are the two major objectives on the government's agenda to increase revenues from exports, as part of a broader objective to move away from reliance on oil.

After proposing four major import control policies over the past months, the Ministry of Industries, Mining and Trade has also set as a top priority to move away from export of low value added raw materials, Persian newspaper Donya-e Eghtesad reported.

As a first step to restrict unnecessary imports, the ministry proposed allocation of foreign currency at subsidized government rate only to import products required by the processing and downstream industries. Controlling imports through grant or refusal of preferential tariff rates, offering technical counseling to Islamic Republic of Iran Customs Administration for defining the tariff rate categories and reconsidering the exemption on import charges granted to sailors and residents of border regions are among the other strategies pursued by the ministry to curb imports.

> Raw Mineral Exports Down

Head of Trade Promotion Organization of Iran, Valiollah Afkhamirad said on Sunday that the export of raw minerals decreased by 23% in terms of value and 25% in terms of weight over the past Iranian year (ended March 20) compared to the preceding year.

Iron ore comprised the majority of raw mineral exports last year, said Afkhamirad, adding that 18.8 billion tons of iron ore valued at $1.1 billion were exported, down from the previous year's export of 26.5 million tons of iron ore, worth $1.6 billion."

He said the main reason behind the decline in iron ore exports, is the global slump in iron ore prices from $110 per ton to below $60 per ton last year.

Earlier in May, the industries ministry had proposed higher export tariffs on 24 commodities and sent the list to the Economy Council for approval. According to Afkhamirad, 13 of the 24 listed items were categorized as raw and intermediate products for which the ministry proposed 10-80% export tariffs.  

"While the industries ministry's proposal has not yet been approved, the volume of raw mineral exports was influenced by future uncertainties and lack of stability in the market," said Afkhamirad.

He also noted that some major intermediate products including steel products (ingot, slab, billet, bloom, I-beam, rebar and plate), aluminum ingot and copper cathode were subjected to export restrictions over the past year as part of the government's policy to protect downstream industries, which in turn led to lower exports.

According to data by Islamic Republic of Iran Customs Administration, intermediate products whose exports were restricted generated $2.4 billion from 20.1 million tons of exports last Iranian year, down 4% in value and 26% in weight compared to the previous year when 27.1 million tons valued at $2.5 billion were exported.

According to Afkhamirad, lower export of raw minerals and higher export of finished products during the past Iranian year indicates a shift in the government's policy toward export of higher value added products. "This policy is evident in the restrictions imposed on the export of low value added products and unavailability of export incentives for such products," he said.

He, however, noted that to achieve this objective, the government must also focus on creating the necessary infrastructure and business environment to boost the manufacturing of high value added products.