When Steve Ciobo heads to Iran on Tuesday, it will mark the first time an Australian trade minister has been there in almost 15 years on official business.
When United Nations trade sanctions took their hold over Iran’s nuclear program, Iran’s economy was crippled and Australian exports were also hit hard, Australian Associated Press reported.
What was once an almost $1 billion export route tumbled to a few hundred million in the space of a decade.
Now with the easing of those sanctions, Canberra is keen to get back on that mission, essentially saying, “Where were we?”
Leading a delegation of more than 20 representatives from Australian companies, including WorleyParsons and Qantas, the minister will open the government’s new Austrade office in Tehran and meet Iranian government counterparts.
“I’m leading this delegation to open doors and to explore the Iranian commercial terrain-that’s about creating a pathway for Australia businesses to engage,” Ciobo said.
It’s obvious why Australia is so keen to get back on track.
Hitting the Jackpot
For companies selling mining equipment and expertise, Iran is the jackpot: 7% of the world’s mineral resources are located there and with operations in arid and isolated regions not dissimilar to Australia.
Iran also holds some of the world’s biggest oil and gas reserves and wants to boost those exports.
And with its population of over 80 million, education, food, healthcare and water sustainability are lucrative areas for Aussie firms.
Ciobo describes it as an exploratory mission.
“Now that the relationship is moving toward being on the right track, there is of course significant potential there,” he said.
Australia isn’t the only one to find a business bonanza.
The minister believes competition will be strong among other countries keen to make inroads into the once-economically isolated nation, including the US and UK.
But it’s thanks to a historically strong trade relationship that Canberra has maintained, including keeping an embassy open amid decades of political tension, that he’s confident Aussie firms will be well positioned.
Austrade Office Shows Australia Means Business
For exporters, the Austrade office is important because it shows Australia is serious about doing business in Iran.
It also helps companies feel more comfortable in an economically sensitive environment, as Iran gradually opens for business.
Since some US sanctions are still in place, Australian firms face considerable risks and restrictions from the use of credit cards to other financial issues.
Ciobo said while the government is keen to set up and help make inroads for the private sector, it’s up to businesses to weigh up the risks.
“Fundamentally it’s their choice to decide whether to come to Iran or not ... whether or not Iran will present the kind of opportunity they’re looking for,” he added.
“There is potential but there is still challenge. For Australian businesses, it will be an opportunity to identify where the rewards lie and where the risks lay.”
And of course, there is also the sticky subject of asylum seekers, some 8,000 of which Iran won’t accept unless they go back willingly.
Ciobo expects the topic to come up during his formal talks.
Recent Upsurge in Bilateral Trade
According to the Islamic Republic of Iran Customs Administration, Iran exported $30.3 million worth of goods to Australia in the last Iranian fiscal year (March 2015-16), registering a 16% increase compared to the year before. Imports stood at over $39.8 million, down 74%.
IRICA’s latest stats on bilateral trade pertain to the first four months of the current Iranian year (started March 20), during which period Iran exported more than 12,000 tons of non-oil goods worth $20 million to Australia, registering a 184% upsurge in value; and imported 4,100 tons worth $9.7 million to record a 111% jump year-on-year.
Copper, paraffin wax, stone, carpet, dates, pistachio, raisin and saffron were among the main exports. Imports mainly included pharmaceuticals, medical equipment, ceramics, wood, machinery and paper.
