Economy, Domestic Economy

Oman Could Replace UAE for Iran

Oman Could Replace UAE for Iran
Oman Could Replace UAE for Iran

Omani ports have the potential of replacing those of other Persian Gulf countries, through which Iran has long been conducting trade, said the head of Iran-Oman Chamber of Commerce.

“Influenced by political tensions, countries whose ports are currently used by local traders have at times caused trouble for Iran,” IRNA quoted Mohsen Zarrabi as saying in the Iran-Oman Business Meeting held in Tehran earlier this week.

The meeting, held on the premises of Iran Chamber of Commerce, Industries, Mines and Agriculture, was also attended by Jamal Aziz, CEO of Oman’s Sohar Free Zone and deputy CEO of Sohar Industrial Port Company, and a number of Iranian traders who discussed ways of promoting trade via Omani ports of Sohar and Salalah.

In recent years, ports of the UAE, notably Dubai’s Jebel Ali Port, played an active role in Iran’s foreign trade. Iranians have deep-rooted trade ties with Emirati cities, especially Dubai, which account for 90% of the Arab country’s trade with Iran. Nonetheless, the ongoing Iran-Saudi Arabia strife has affected relations between Tehran and the UAE.

The Saudi execution of top Shia cleric Sheikh Nimr al-Nimr in January sparked a flurry of retaliatory developments between Tehran and Riyadh. A group of protesters broke into the Saudi Embassy in Tehran and its consulate in Mashhad. Iranian authorities condemned the attack and called for the prosecution of perpetrators. Nonetheless, Riyadh halted diplomatic and trade ties as well as air traffic with Tehran.

Soon after, a group of Saudi allies, including Bahrain, Sudan, Djibouti and Somalia, followed suit and broke off diplomatic ties with Iran, while Kuwait and Qatar recalled their envoys and the UAE downgraded its relations to chargé d’affaires.

This is while “Oman has remained a friend through tough times. It maintained cordial relations with Iran during the sanctions era and also played a positive role in nuclear talks,” Zarrabi said.

He added that Iran’s policy is to capitalize on Oman’s trade potential to boost Tehran-Muscat economic ties beyond just bilateral trade.

“Oman has signed good trade deals with western, Latin American, Asian and African countries. The country offers low tariffs as a result of those agreements, which make it a good medium for Iran to expand trade activities,” he said.

Zarrabi also referred to the adequate rail, shipping and customs infrastructures of the Omani ports of Sohar and Salalah, and said given their proximity to Iranian ports such as Bandar Abbas in the southern Hormozgan Province, Iran can easily shift its trade toward Oman.

Iran also recently launched a direct shipping route to Oman to help diversify access to international export markets for the Islamic Republic. The new route is expected to turn Oman into a hub for the reexport of Iranian goods in the region, possibly overtaking trade between Iran and the UAE. Iran and Oman also plan to use the new shipping route to promote trade across the region.

“Iranian exporters can set up businesses in Omani ports and after having their products processed there, they can reexport the commodities to other countries, using Oman’s trade incentives,” Zarrabi said.

He also touched on the meager bilateral trade figure of less than $1 billion per year, adding that both countries are planning for a fivefold rise in transactions.

Jamal Aziz said due to its proximity to Bandar Abbas, Sohar Port could turn into a hub for trading food products between Iran and Brazil, as the Latin American country is the top food supplier for Iran.

“Brazil exported 5 million tons of food to Iran, which were shipped via UAE’s Jebel Ali Port,” he said.

“We are trying to prepare a business model to propose to Iran so that it can import all of its Brazilian food products through the port of Sohar.”

The Omani official noted that investments in Sohar Port and free zone are excluded from customs duties and investors enjoy tax exemption for 25 years.

Aziz also referred to low inflation rate and absence of bureaucracy in Oman as other benefits of the Persian Gulf country for Iranian investors.