The First Joint Conference on Korea-Iran Business Opportunities was held at the Iran Chamber of Commerce, Industries, Mines and Agriculture in Tehran on Tuesday.
South Korea's Ambassador to Iran Ryu Jeong-Hyun, President of Iran-South Korea Chamber of Commerce Hossein Tanhaei and Vice Chairman of ICCIMA Pedram Soltani, as well as officials from different Iranian organizations and businesspeople from the two countries attended the event.
“The Korean government has always had a positive approach toward Iran to increase bilateral economic relations beyond the defined frameworks,” Ryu Jeong-Hyun was quoted as saying by the news portal of ICCIMA.
“With an 82 million population, an area 8.5 times as big as Korea and a favorable geographic location, Iran is considered one of the most important destination countries in the Middle East for Korea. Iran-Korea trade has mostly centered around oil, household appliances and automotives, but we are planning to expand our ties in the fields of science, research and cultural engagements,” he added.
The envoy noted that the South Korean Embassy in Tehran has held more than 60 conferences since 2016, the year Iran's nuclear deal (formally known as the Joint Comprehensive Plan of Action) with world powers was implemented, to introduce the capacities and cooperation opportunities between Iranian and Korean economic enterprises, with a focus on small and medium-sized enterprises.
Ryu hoped that these events will help maintain bilateral interactions.
JCPOA's implementation led to the abolition of international sanctions. This is while the United States, a signatory to the deal, has recently pulled out of the multilateral accord unilaterally and reimposed its own set of sanctions against Tehran.
According to the president of Iran-South Korea Chamber of Commerce, Iran exported $8 billion worth of goods to South Korea in 2017 and imported some $4 billion worth of commodities in return.
“The figures have dropped to $3.7 billion and $2 billion respectively so far in 2018. At present, the US sanctions against Iran has caused a decline in Tehran-Seoul trade ties. The main impediments are related to transportation and money transfer issues. Yet, it seems that these obstacles will be eliminated to some extent with the help of the European Union. We hope this will have a positive effect on Iran-Korea economic transactions,” Tanhaei added.
EU is working on a transaction mechanism known as Special Purpose Vehicle to keep trade flowing with Iran in defiance of US sanctions. SPV would serve as a barter exchange neither connected to the US dollar-denominated international financial system nor requiring monetary transfers between EU countries and Iran.
An Iranian firm selling into Europe would accumulate credits that could be then used to buy a product from a different European firm.
France and Germany will likely host the SPV, the Wall Street Journal reported on Monday. Non-European countries, including South Korea and China may also be able to join the EU initiative once it is finalized.
According to Tanhaei, most of Iran's imports from South Korea are consumer goods. Yet, the bulk of Iran’s exports to South Korea are intermediary goods like oil, petrochemicals and mineral products.
In his address to the conference, Director General of Trade Promotion Organization of Iran's Asia-Pacific Affairs Bureau Mojtaba Mousavian Rizi, said Iran-South Korea trade has been hampered by the reimposition of US sanctions against Tehran.
“Iran’s exports to South Korea shrank by 66% during the first seven months of the current Iranian year (March 21-Oct. 22), to stand at $1.6 billion. Oil and gas condensates account for around 93% of our exports to Korea," he said.
"South Korea’s exports have experienced a 21% decline during the same period to reach $847 million. south Korea is no longer among our top five trading partners.”
Rizi noted that the two countries have the opportunity to make up for this decline in 2019, as South Korea has been exempted by the US from sanctions on Iran oil purchases.
Vice Chairman of ICCIMA Pedram Soltani said SPV will not only facilitate economic interactions with Iran, but would also help counter the threats posed by the United States in the international arena in the future.
"Other countries have sensed this threat and that’s why they have expressed willingness to join this initiative," he said.
“We would like to request South Korea to join this mechanism. Large Korean businesses are very much willing to work with their Iranian partners but US sanctions have impaired this cooperation. SMEs from the two sides can, however, continue and expand collaborations under the SPV," Soltani concluded.
