Iran Exports to Qatar Up 117%

Iran exported $139 million worth of non-oil goods to Qatar during the seven months to October 22, registering a remarkable %117.5 increase compared with the same period last year, according to the latest data released by the Islamic Republic of Iran Customs Administration.

Financial Tribune’s inquiries show that bitumen, food and agricultural products accounted for the largest portion of the exports. Bitumen exports amounted to $28 million, significantly higher than the export value of other commodities shipped from Iran to Qatar during the period.

Other than bitumen, tomato ($6.61 million), milk and cream ($4.1 million), cucumber ($3.9 million) and watermelon ($3.8 million) have been among Iran's top exports to Qatar after a number of Arab states—led by Saudi Arabia—abruptly severed diplomatic relations with Doha early June and imposed a blockade on the Persian Gulf country, accusing it of supporting terrorist groups. The Qatari government has denied the accusation, blasting the blockade as unjustified and a violation of international law.

Iran’s main exports to Qatar in the last fiscal year (March 2016-17) including cement, pistachio and saffron, have registered slight growth this year though their share from total exports is not considerable anymore.

IRICA data indicates steady growth in the value of Iran's non-oil exports to Qatar during the first four months after the Arab rift. Notably, the exports saw a significant growth during the month ending in October 22. Iran exported about $50 million of non-oil products to Qatar during the one-month period, which shows a five-fold upsurge year over year.

The growth in the latest month suggests that Iranian exporters and policymakers have managed to address some of the problems that were hindering exports to Qatar early after the blockade.

Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said back in September that the Saudi-led economic blockade on Qatar is pushing it closer to Iran economically.

"They (Saudi Arabia and its allies) said Qatar was now closer to Iran. By their measures they are pushing Qatar to Iran," he was quoted as saying in Paris.

Boost in Transportation

The role of cargo movement through sea route has increased in the country after the siege was imposed on Qatar.

Adnan Musapur, a member of the export committee at Iran Chamber of Commerce, Industries and Mining, confirmed that exporters now have no problem regarding transportation and visa.

“Most of the [Iranian] shipping lines have now switched their transport services to Qatar, instead of the UAE and Oman,” Eximnews.ir quoted him as saying.

Torang Darya Shipping Line, the biggest private shipping company in Iran, intends to expand its business in Qatar. The company expects trade between Qatar and Iran to increase in coming days, which will lead to an increase in its frequency from Qatar. 

“Before the siege (imposed on Qatar), we did not have any desire (to expand) because Qatar was importing most of its requirement from some of its neighboring countries. But right now, we have the desire and the plan for import and export from Qatar. We want to extend our business in Qatar,” Amir Khani from TDS Line, who was in Qatar to participate in an industry exhibition, was quoted as saying by Qatar's daily newspaper The Peninsula. 

Valfajr Shipping Company (affiliated with Islamic Republic of Iran Shipping Lines), Rah Abrisham Marine Shipping Agency, and Pasargad Shipping Lines are among firms that have started services to Qatar.

Masoud Khayatzadeh, head of Abadan Chamber of Commerce, says the chamber has been holding talks with major Qatari companies to establish an exclusive wharf in Qatar for Iranian goods, in an attempt to ease transportation to the neighboring state.

According to Iranian Minister of Roads and Urban Development Abbas Akhoundi, the two countries formed a joint committee to boost cooperation in air and marine transportation, during Qatari Minister of Transport Jassim Saif Al Sulaiti’s visit to Tehran in late October.

The two countries are also working on forming a special corridor to ease transportation of goods from Iran to Qatar.

Meanwhile, Turkey and Azerbaijan have been using Iran as a land route to export to Qatar, filling the gap in the market in the absence of Saudi Arabia and its allies after the crisis broke out. According to Mohammed bin Mahdi Al Ahbabi, a board member of Qatar Chamber of Commerce and Industry, the land route between Turkey and Qatar via Iran reduces the cost of transport of goods by about 80% compared to air cargo.

The Qatari government has facilitated business trips for Iranians by issuing six-month visas. The move has resulted in higher demand for business trips to Qatar in recent weeks. Qatar Airways and Iran Air have recently increased the capacity of their flights to Doha especially from the southern Iranian province of Fars, where a large number of merchants reside.

.@IranAir_IRI assigns its Airbus A321 to Tehran-Lar-Doha route to meet the high demand for traveling from the southern city of Lar to #Qatar pic.twitter.com/pj4pbbxiih

— Financial Tribune (@Fintribune) September 5, 2017

Iran Aseman Airlines and other private airliners are also working to launch cargo and passenger flights from Shiraz to Doha.

Improvement in Banking Relations

There have also been improvements regarding corresponding relations between banks of the two countries, though ties have yet to be fully established.

Bank Saderat Iran is reportedly working to enhance operations of its branch in Doha to help remove transactional problems facing Iranian exporters in Qatar.

“I can tell the [Iranian] exporters that we have reached agreements and effective steps have been taken to resolve their banking problems,” Siavash Zera’ati, the CEO of Bank Saderat has been quoted as saying.

At present, Bank Saderat Iran is the only Iranian lender with two branches in Doha.

Bank Melli Iran is also holding talks with one of the largest banks in Qatar for establishment of corresponding ties, Mohammad Reza Hosseinzadeh, the bank’s CEO, told the Financial Tribune earlier this month, without mentioning the name of the Qatari lender.

Long-Term Ties

As the primary issues in the way of trade between the two countries are being addressed, Iranian exporters and policymakers have more space to focus on the establishment of a long presence in the Qatari market.

Musapour believes that the governments of the two countries must work to come up with a preferential trade agreement, which would help establish lasting trade ties.

“Iranians have had made good headway in the Qatari market… but we need to prepare ourselves for outperforming competitors there,” he noted.

Qatar has managed to withstand the Arab crisis, he said, adding that larger international companies are expected to enter the market in the coming months.

Musapour called for major Iranian companies to start investing in Qatar and establish joint venture companies if they seek long-term presence in the country. “The government also needs to take necessary measures to ease doing business.”

Shirin Asal Food Industrial Group, Iran’s biggest confectionery company, which is also one of the biggest in the Middle East, has recently announced plan to enter Qatar’s retail market.

“We have already done a market study in Qatar and fortunately there is demand for Iranian products. People in Qatar are willing to buy products which are produced in Iran,” Hossein Mahfouzi, Middle East export executive of Shirin Asal, told Qatar’s daily newspaper The Peninsula.

“The products which will be distributed will be mainly cake-lines and confectionery items. In November, we hope to have our products in chains in Lulu and Al Meera,” he said. “Our future plan is to have a small factory for Qatar market as soon as we get the right feedback (about which product has more demand) from the market,” he said.

With a turnover of about $5 billion per annum, Shirin Asal, is exporting its products to 75 countries and is the only fully integrated Iranian confectionery group.