Economy, Business And Markets

Shifting Focus on Maritime Industry

Shifting Focus on Maritime IndustryShifting Focus on Maritime Industry

The potential for the expansion of seaports, maritime repairs, shipping and transit in Iran is enormous, but economic activity at sea has so far been limited to gas and oil excavation works. With the possibility of a final deal with the West just around the corner, Hadi Haghshenas, deputy at the Ports and Maritime Organization, discusses the potentials in Iran’s wider maritime economy.

Iran enjoys strong maritime presence along the Caspian Sea, as well as on the long coast linking the Indian Ocean to the oil-producing countries surrounding the Persian Gulf. Notably, the Strait of Hormuz is a crucial energy corridor for the global economy, with over 20 percent of all oil passing through it.  

However, with the onset of sanctions against the Islamic Republic, foreign shipping companies have moved their main activities to other ports in the region, such as Dubai, where financial transactions are easier and international insurance is issued. Although Iranian ports have a total capacity of around 200 million tons, only a fraction of this is currently used, according to Haghshenas.  

Haghshenas believes that sanctions have prevented Iran from buying the latest port and shipping equipment. Nevertheless, Iran remains competitive. “Luckily, Iranian firms in the south and north [of the country] have the necessary knowledge and technology on maritime repairs to attract vessels from other countries,” he told Ta’aadol newspaper.

Sanctions have also closed the flow of foreign investment. In response, the state, under the banner of the Resistance Economy aims to develop and expand the maritime economy. The Resistance Economy refers to a set of guidelines proposed by the Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei to counter sanctions, promote domestic growth and reduce reliance on oil revenues.

Haghshenas argues that Resistance Economy is part of the national interest and aims to create conditions that allow the country to continue its economic activities even if sanctions are tightened and conditions worsen.

State supervision and investment does not imply that the private sector is absent. In fact, Haghshenas believes the law of supply and demand will ultimately determine the speed with which infrastructure is developed. “In coordination with our domestic advisors and contractors, we are working to improve ports in the north and south, while at the same time developing breakwaters and ferries,” he added.    

Competitiveness is key to both the Resistance Economy and maritime potential, Haghshenas believes. “Resistance Economy means an economy dependent on domestic resources that can produce competitively with the rest of the world,” he added.

“The first sign of competitiveness in the maritime economy is preferential tariffs and tariffs which can compete with neighboring countries. Our tariffs cannot compete with neighboring countries,” he told Marine Times.

Appropriate tariffs would lead to a rapid expansion of transit, transship and container activity, especially when sanctions are lifted.

Iran has lost a lot of container trade and revenues on transit to neighboring countries in recent years. Haghshenas is optimistic that the country can gain back much of the potential revenues. Nevertheless, concrete decisions also need to be made to attract foreign shipping companies. Most notably, “if sanctions are removed, we should lower the costs and barriers of entry, transit and shipping and increase the potential of our ports based on global standards,” Haghshenas noted.