Domestic Economy

Industry Minister Calls on Japan for Direct Invesment

Industry Minister Calls on Japan for Direct Invesment
Industry Minister Calls on Japan for Direct Invesment

Iran’s Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh called for direct investment of Japanese firms in Iran within the framework of new cooperation policies in the industrial and trading sector.

In a meeting with Japan’s Foreign Minister Fumio Kishida in Tehran on Tuesday, Nematzadeh said, “There are vast areas of cooperation between Tokyo and Tehran, and Iran supports all long-term economic and investment activities by Japanese companies in Iran.”

“One of the policies pursued by the Industries Ministry is to expand mutual long-term activities. Therefore, we are willing to jumpstart relations in engineering, technology and production fields. Further cooperation will open up a vast market for Japanese companies but Iranian products should be introduced to the Japanese market as well,” IRNA quoted Nematzadeh as saying.

“In the new era [following the July 14 nuclear deal], Iran places great importance on large-scale investment. Limited assembling will not help Iranian firm gain a foothold in today’s competitive global market.”

The minister noted that Iranian firms are weighing areas of cooperation with Philips (Dutch diversified technology company) and Siemens (German multinational conglomerate company).

“Japanese companies can follow suit and seize the opportunity to enter Iranian and regional markets,” he said.

Kishida said Japan’s government will lend support to Japanese firms willing to venture into Iranian market, adding that the presence of Japanese giants in Iran would help strengthen cooperation between the two sides on various industrial fronts.

On ties with world automotive giants, Nematzadeh said negotiations with former French partners and Germany’s VW as well as Italy’s Fiat are underway.

“Iran is also eager to establish effective, long-term cooperation with the Japanese side. Japanese cooperation with Iran used to be in the form of auto part sales, which runs counter to our new policies. A couple of Japanese firms can form partnership to manufacture auto parts within Iran,” he said.

The industry chief added that Iran has set its economic priorities within a 10-year plan that can be handed to the Japanese firms.

As foreign competition for access to the Iranian market is expected to intensify, Japan hopes to help Iran’s infrastructure development, which has been affected due to years of western sanctions. Resource-poor Japan also seeks to secure stable supplies of crude oil and natural gas from Iran.

“Up until now, energy was at the core of the two countries’ economic ties and it will continue to take center-stage in the upcoming discussions. But I do not view Iran as a mere oil supplier,” Kishida said in an interview prior to his Monday meeting with Bijan Namdar Zanganeh, Iran’s oil minister.

The Japanese top diplomat also called for cooperation in different oil sectors and said the visiting Japanese firms are heavyweights keen to forge ties with Iranians in this sector.

Kishida is accompanied by representatives of more than 20 Japanese companies, including those from trading, automobile, medical equipment, oil and gas sectors in his two-day visit to Iran. The visit is primarily aimed at concluding a mutual investment pact on development of infrastructure, oilfields and trade.

Negotiations on concluding the economic deal between Japan and Iran began in early September. Later that month, Japan’s Prime Minister Shinzo Abe and Iranian President Hassan Rouhani met on the sidelines of UN meetings in New York and agreed to work toward an early conclusion to the negotiations.

“First, the Joint Comprehensive Plan of Action needs to take force and then tenders will be held. However, direct investments do not require the tendering process. Fields of petrochemical, refining, distribution and liquefied natural gas have the potential for Iran and Japan cooperation,” Zanganeh said after the meeting in response to a question on the time of reaching oil deals with the Japanese.

Earlier on Sunday, Mitsubishi Chemical Holdings Corporation’s CEO and President Hitoshi Ochi expressed interest in making investment in Iran’s petrochemical industry in a meeting with Deputy Oil Minister Abbas Sheri-Moqaddam.

Recalling his company’s multimillion-dollar purchase of Iranian petrochemical products over the past five years, Ochi said the Islamic Republic can be a good investment target for Japan, as it holds the world’s largest oil and gas reserves.

Sheri-Moqaddam took stock of Japan’s earlier partnership in the construction of Bandar Imam Petrochemical Complex and the country’s direct investment in Borzouyeh and Isfahan petrochemical companies.

“Thanks to collaborations with international companies, Iran has managed to create the capacity for producing over 60 million tons of petrochemicals,” he was quoted by Moj News Agency as saying.

The deputy minister noted that 99% of Iran’s petrochemical industry have been relinquished to the private sector as per the amendment to Article 44 of Iran’s Constitution, which calls for speeding up the move toward economic privatization.

Currently, the National Iranian Petrochemical Company is the only state organization in the field, catering to private firms on the path of industrial development.

“The Iranian petrochemical industry needs and welcomes foreign direct investments, particularly in the downstream sector,” Sheri-Moqaddam said, envisioning a fruitful cooperation between the two Asian states given Iran’s hefty share of oil and gas reserves.

He also announced that Japan’s Mitsubishi and Mitsui enjoy state-of-the-art technology in the petrochemical industry and given their good record, they can return to Iran’s industry in the post-sanctions era.

With sanctions on Tehran expected to be lifted as early as the spring, the United States and European countries have been stepping up efforts to improve trade relations with Iran, and Tokyo wants to keep pace with such moves.

Japanese officials said for Tokyo, the investment pact is aimed at encouraging Japanese firms to tap into the commercial potential of the Iranian market. Tokyo and Tehran agreed to accelerate procedures to have the pact become effective at an early date.

“We discussed what we can do to add a new page in the history of our countries by taking advantage of the deal on Iran’s nuclear program with six world powers,” Kishida said after the meeting with Iranian Foreign Minister Mohammad Javad Zarif on Monday.

Kishida and Zarif also agreed on an investment deal that would grant Japanese firms proper legal protection and treatment on par with Iranian businesses. They said they will start procedures to enact the deal as early as possible.