Economy, Business And Markets

A Strategy to Increase Share in Global Trade

A Strategy to Increase Share in Global Trade A Strategy to Increase Share in Global Trade

R epresentatives from 57 Omani businesses  visited Iran on Saturday. Oman has been a traditional partner of Iran since 1866, but the sultanate’s market, like several others, seems to have also been affected by the sanctions weighing on the Iranian economy.

With a population of 3.6 million, the Arab nation has a small consumer market, but Omani authorities are eyeing Iran as a major non-oil exporter in the Persian Gulf that could help them reach an ambitious plan to turn the tiny sultanate to a re-export hub in the Middle East, maybe a rival to the United Arab Emirates’ Jebel Ali port , the biggest free trade zone in the region.

Business to business meetings, held during the Omani delegation’s short trip, were a major part of the event hosted by Iran-Oman chamber of commerce at the five-star Azadi Hotel in north Tehran.

Top officials from both sides agreed to form a joint investment company specialized on funding giant development projects and to launch a shipping line as of May 5 between the two Muslim nations. This latter agreement is expected to boost non-oil exports from Iranian ports to the sultanate’s fast-growing ports. But Omanis seem to have greater expectations; they seek a larger share in global trade through closer ties with Iran.

The visiting Omani business owners were mainly “on a promotional trip”, as put by Jamal T. Aziz, the CEO of Sohar Freezone.”We’d like to promote trade between Iran and Oman and are looking for Iranian investors interested in our market,” he told the Financial Tribune.  

Aziz also declared that the nuclear-related sanctions against Iran have “affected” their bilateral trade but said that there must be ways around to further expand ties despite the external pressure.

“We are seeking how to maneuver through the sanctions,” he said, adding that he is optimistic about lifting of sanctions as the ongoing talks between Iran and six world powers will “hopefully” reach a final long-term agreement by the self-imposed June 30 deadline.

The Omani businessman emphasized that even under sanctions Bank Muscat offers transaction services to Iranians, a claim an Iranian trader firmly rejected when asked to comment by the Financial Tribune. “Our efforts to use the bank’s services failed… just because we were Iranian,” he said vehemently.

However, Aziz insisted that those Iranian companies not listed by the European Union or the United Nations as sanctioned entities are free to use Oman’s banking services.

Iranian banks are barred, over Tehran’s nuclear dispute with the West, from having access to SWIFT, a system that facilitates international bank transfer.

“Omani authorities try to offer financial solutions through the Omani banks,” Aziz said, admitting that the Iranian companies “have to comply with certain regulations.”

Financial and economic sanctions have increased costs for Iran’s trade partners as the Omanis have to import Iranian goods through Dubai, another Omani trader said . “That increases our costs. If we imported directly from Iran the costs would be reduced by 20-25 percent,” said Jamil Ali Sultan, the managing director of W.J. Towel Group of Companies.

Sultan’s company has been importing food, fruit, vegetables and dairy products from Iran “for long years”. He confirmed that his company has not had “any banking transactions” with the Iranian partners in the past couple of years.

Banking restrictions, he said, “have forced us to use a Dubai-based company as a mediating party when trading with Iran.”

Oman has been expanding the infrastructure on its strategic ports of Sohar, Duqm and Salaleh and easing the investment and trade regulations on the ports, a string of attempts aimed at maximizing its competitive position against the UAE, which is already Iran’s biggest non-oil trading partner.

“Why this business had to go to the UAE,” asked Ahmed Ali Akaak, the deputy CEO of the Port of Salaleh, in a question-and-answer session before B2B meetings began. “We should not allow this to happen because we have better ports which are well-connected to the rest of the world. We can bridge Iran to different markets,” he said.

The UAE is also Iran’s biggest source of imported goods worth Dh93.51 billion ($25.45 billion) in 2013, while it ranks eighth among Iran’s export markets, according to The National website.

Trade between Tehran and Muscat, however, is not that big, ranging between $600 million and $1 billion in recent years, according to Iran-Oman chamber of commerce.