Iran and Armenia are at full throttle to lift their economic ties.
Close to one month after First Vice President Es’haq Jahangiri traveled to Yerevan to give the currently unimpressive bilateral trade a new boost, a 50-strong business delegation, headed by Armenia’s Economy Minister Karen Chshmaritian, surveyed the prospect of joint production among other trade-related issues with their Iranian counterparts.
The two sides conferred at a conference held in Iran Chamber of Commerce, Industries, Mines and Agriculture’s headquarters in Tehran on Monday.
Tehran’s main motivation in considering joint production with Yerevan is Armenia’s membership in the Eurasian Economic Union, which could lead to increased Iranian exports to Eurasian countries through Armenia, besides supplying the Armenia market in the first place, Financial Tribune’s sister daily Donya-e-Eqtesad quoted Nematzadeh as saying at the conference.
The EEU is an economic union of former Soviet republics led by Russia to guarantee free transit of goods, services, capital and workers among member states. Besides Russia, other members include Armenia, Belarus, Kazakhstan and Kyrgyzstan.
The Armenian delegation landed in Tehran on Sunday. In addition to the country’s business leaders, the mission included the country’s first deputy minister of economy, Garegin Melkonyan, deputy minister of transport and communications, Aram Arsenyan, deputy minister of diaspora, Vahagn Melikyan.
Executive director of the Development Foundation of Armenia, Arman Khachatryan, and representatives of the foundation, Armenia’s Small and Medium Entrepreneurship Development National Center and Export Insurance Agency of Armenia ICJSC were also among the visitors, according to Armenia’s economy minister.
Trade value between Iran and Armenia is negligible and needs to grow. This was echoed by all the keynote speakers of the conference, including Chshmaritian, head of Iran Chamber of Commerce, Industries, Mines and Agriculture, Mohsen Jalalpour, and Iran’s Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh.
Joint Manufacturing Plans
Discussions mainly revolved around future plans to boost bilateral trade from the current $300 million to $1 billion.
Besides pushing forward ongoing power transmission projects, which would pave the way for a hike in gas-for-electricity swap between Iran and Armenia, the two sides have been eying joint manufacturing in Armenia to reach the set trade target.
Chshmaritian welcomed the idea of joint production with Iran and expressed optimism about the EEU agreeing to allow Iran-Armenia manufacture in the regional market.
Since there are no tariff barriers to trade between the EEU states, Iran can ship a portion of its semi-finished products to Armenia so that the production chain is completed there, from which point they could be reexported to other Eurasian states.
The move also seeks to take advantage of the manufacturing capacities of Armenia, as it has inherited many factories from the Soviet Union. Although Armenia used to account for only 1% of the Soviet Union population, 3% of the union’s products were manufactured in the country, according to Leon Aharoniyan, the head of Iran-Armenia Chamber of Commerce.
Furthermore, Armenia could act as Iran’s gateway to the European Union and well into the US, as the EU has recently given the green light to imports of 6,400 types of commodities with negligible tariff rates from Armenia, Georgia and Azerbaijan.
Yerevan is also in talks with the United States to establish similar trade arrangements with Washington.
“Today, Armenia has a free economy. Given the agreements it has lately signed with other nations, manufacturing in the country and exports to the EEU and the EU states are exempt from tax and duties,” said Chshmaritian.
He also referred to Armenia’s two economic zones, namely Alliance and Aja, in which investors could enjoy discounts and other incentives, calling on Iranian traders to seize this opportunity to boost bilateral trade.
Transportation Projects
Promoting bilateral trade, however, needs adequate transit infrastructures. Both countries are planning to develop two major transportation projects: Armenia’s North-South Road Corridor and Armenia-Iran Railroad.
“Once the Armenia’s North-South Road Corridor becomes operational, it will play a significant role in expanding Iran-Armenia trade ties,” said Chshmaritian.
The transportation corridor is a major infrastructure project aimed at connecting Armenia’s southern border with its northern point by means of a 556-km-long Meghri-Yerevan-Bavra highway.
The Armenia-Iran Railroad, he added, will not only serve bilateral trade ties, but it will also benefit the entire region.
The ongoing project seeks to connect the two countries through Armenia’s mountainous Syunik Province bordering Iran, thereby creating the shortest transit corridor from the ports of Black Sea to the ports of Persian Gulf.
Trade Deregulation
Issues hindering bilateral trade were also discussed during the conference.
“The absence of direct banking transactions, along with Armenia’s strict tax regulations regarding foreign exchange transfer in particular, are among issues that should be tackled as soon as possible,” said the ICCIMA head, Mohsen Jalalpour.
Iranian private sector businesses, he added, should be treated by Armenian government like other companies doing business in the country.
Nevertheless, tackling those issues, according to Chshmaritian, is already on Yerevan’s agenda.
“Armenia has a plan underway for enhancing trade regulations,” he said, adding that his ministry is pursuing deregulation policies.
