Economy, Domestic Economy

Doing Business With Iraq: Opportunities & Challenges

Doing Business With Iraq: Opportunities & Challenges
Doing Business With Iraq: Opportunities & Challenges

Improving economic ties with neighboring countries and promoting export of non-oil commodities have been at the core of Iranian government’s agendas ever since revenues generated from oil exports shrunk significantly due to slump in global prices.

An immediate neighbor of Iran, Iraq is regarded as an important trading partner for Iranians. Iraq is the most significant export market for Iran’s non-oil trade. These exports include light industrial products, food, consumer goods, construction materials and electricity.

At a recent conference, aimed at acquainting Iranian businesses with the opportunities and challenges of trade in Iraq, Iran’s deputy vice president, Rostam Ghasemi underlined the enormous trade opportunities for Iranian businesses in Iraq, the Persian economic daily Donyaye-Eghtesad wrote.

Speaking at the Iran-Iraq Special Economic and Trade Opportunities conference in Tehran in mid January, Qasemi mentioned “quality, speed and price” as three important parameters that could “give a competitive edge to Iranian products in the Iraqi market and, in the long run, help Iran secure a firm foothold in the Iraqi market.”

 Need to Study Iraqi Market

Qasemi described economic development as a prerequisite for playing an effective role in the global arena and urged the Iranian private sector to carefully study the Iraqi market before embarking on any joint business ventures.

He further highlighted the “vast untapped potential” for trade between Iran and Iraq and called for both countries’ businessmen to “seize the opportunities.”

“While the political and cultural ties between the two countries are growing, the volume of trade is still not satisfactory,” he said, adding: “Annual trade between the two countries can increase up to $20-25 billion if both countries’ governments and private sectors join hands to tap the vast potential.”

 Banking Problems

Head of Tehran’s chamber of commerce, mines, industries and agriculture, Yahya Al-Es’haq, addressing the conference, noted that “lack of bank guarantees” impedes Iranian  business in Iraq, calling for both countries’ officials to address the issue.

Asserting that Iran is looking for “long-term business relations” with Iraq, he said trade between the two countries must be pursued in such a way as to benefit both parties.

He further observed that trade exchange between the two countries which had exceeded $12 billion in the previous year (March 21, 2013 - March 21, 2014) dropped by 3% in the current year (ending March 20) and reiterated that Iran “aims to increase this figure to $25 billion.”

 Plummeting Oil Prices

Speaking at the event, Naser Kan’ani, the head of Iraq department at the ministry of foreign affairs, referred to banking problems, rigorous visa formalities and strict customs regulations as major obstacles in the way of free trade between the two countries.

He said Iranian authorities are prepared to “lift visa requirements for Iraqi citizens” and called on the Iraqi authorities to take necessary measures towards visa waiver agreements with Iran.

The head of Federation of Iraqi Chambers of Commerce, Jafar Al-Hamdani, addressing the conference, said: “Both Iran and Iraq should take necessary measures to engage in long-term investments. Unfortunately, Iranian investors are rather hesitant when it comes to investing in the Iraqi market.”

He expressed dissatisfaction with the current level of monetary exchange, which is carried out through only four banks, and called for boosting the level of trade exchange.

 Exports to KRG

On a separate note, Iran’s Minister of Agricultural Jihad, Mahmoud Hojjati on Saturday met with Iraqi Kurdistan Regional Government’s minister of agriculture and water resources, Abdul-Sattar Majid Qader to discuss the expansion of “cultural, economic, political and agricultural ties.”

Following the meeting, which took place at the agricultural ministry in Tehran, Hojjati said the two sides have arrived at new agreements to expand technical cooperation in the field of animal health, animal husbandry and breeding techniques, IRNA reported.

The minister also noted that Iran is currently a major exporter of red meat, eggs and poultry to the KRG, and also exports saffron, pistachio, raisin, apple, pomegranate and almonds to that region.