Several Singaporean companies are moving quickly to gain a foothold in Iran after international sanctions on the Islamic Republic were lifted in January.
According to an article in Singaporean newspaper Today, the potential for growth and profits are high, as the country reintegrates into the global economy.
Barely three months after the removal of the sanctions, Esmaeil Molazadeh, the owner of Gabbeh Carpet that imports handmade Iranian carpets, is already seeing an economic boost to his business, with multiple enquiries from customers in both countries.
Other than the carpets, Molazadeh also exports electronic products bought from Singapore to Iran.
“It has already started. I believe the trade can increase by 20 to 50% within one year and can be doubled in less than three years,” he said.
“Singapore’s position as a trading hub also allows him to create an effective marketplace to resell his imports to tourists and overseas buyers.”
Another company eying opportunities in Iran is Excel Marco, a provider of process safety and automation solutions for the onshore and offshore oil and gas, marine and logistics industries.
“Iran is certainly an area we want to invest in,” said Excel Marco’s Managing Director David Ong.
“Now that it has opened up, we see possibilities. They (Iran) have been shut off from the rest of the world. Iran is one of the world’s largest producers of oil. They will increase their production, therefore they may need to ramp up their production systems and improve their capabilities and may need the equipment (that we have). Through this, if we can grow our topline by 10% within two years, it will be a success.”
The company will be going to Iran next month to explore business opportunities.
According to the World Bank, Iran is the second-largest economy in the Middle East and North Africa region. It has a population of over 80 million with an estimated nominal gross domestic product of $397 billion in 2015.
Top exports are petroleum and petrochemical products, fruits and nuts, carpets, cement and ore. Top imports include industrial supplies, capital goods, foodstuffs and technical services.
Before US sanctions in 2012, Singapore’s bilateral trade with Iran amounted to $4.9 billion in 2011, data from the Ministry of Trade and Industry showed. After the sanctions were imposed, Singapore’s bilateral trade with Iran fell to $1.9 billion in 2012. Last year, bilateral trade with Iran amounted to $126.8 million.
In late February, Singapore signed a Bilateral Investment Treaty with Tehran to promote and protect investments, as companies explore new opportunities in the untapped market.
The signing coincided with a 57-strong business mission led by the Singapore Business Federation to Iran, with representatives from 48 companies in industries spanning oil and gas, petrochemicals, maritime, logistics, real estate, info-communications technology and professional services.
“Iran continues to be an important market in SBF’s global portfolio and a market that we have consistently engaged over the last decade until the enhanced sanctions kicked in,” said SBF CEO Ho Meng Kit.
“There is vast market potential in Iran ... With the sanctions lifted, there will be great demand for foreign products, services and technologies.”
SBF has identified certain key sectors for focus, including hotel construction and development, oil and gas, transport and logistics, water solutions, general trade and fast moving consumer goods.
“These are areas of strength for Singapore companies and where complementary needs can be met,” added Ho.
United Overseas Bank’s economist Francis Tan says trade is likely to bump up gradually to similar volumes before the sanctions were imposed.
Tan noted that key areas that are likely to benefit from the removal of sanctions would be consumer products, with the best gainers expected to be the wholesale and trade segments.
