Domestic companies need to become export-oriented to help develop the economy, the head of Iran Electricity Industry Syndicate said on Wednesday.
“The quality of locally-manufactured products will not improve unless they enter international markets, but sanctions and political issues have put the brakes on exports,” Alireza Kolahi was also quoted as saying by ILNA.
Referring to Iran’s automobile industry that has no presence in international markets, he noted that major automakers, Iran Khodro and SAIPA, have never entered global markets so they do not feel obliged to produce quality products and end users have to pay the price for this senseless policy.
The economy of countries like Turkey that have export-oriented industries has developed fast.
“In our economy, which is property-oriented, investments have been concentrated in unproductive sectors. One of the signs of this condition is the current housing bubble,” he added.
The official described Iraq as a “strategic market” and estimated the country’s cable market at $900 million.
“Although we have the Iraqi Oil Ministry’s special certificates to export power cables to this country, due to the presence of multinational firms in Iraq that are not willing to cooperate with Iranian corporations, we cannot have a say in their projects,” he added.
The oil era is coming to an end; the world is changing with breathtaking speed. Today is not the time to sell oil to supply essential goods to people. Oil-oriented economies should be replaced with productive, diverse and creative economies
As Iran is on FATF’s black list, Iraqi contractors cannot settle their debts via banking system.
Iranian manufacturers of electrical wire and cable products have the potential of selling at least $600 million worth of goods to neighboring countries annually, yet the value of current exports is less than $100 million.
“Sanctions and related issues have forced Iranian producers to send their products to Turkey and export them to destinations under Turkish brands, and this is detrimental to our economic system,” Kolahi said.
According to the official, domestic firms have gained the technology to produce 63-400 kilovolt power cables and they are ready to export electrical goods, services and knowhow to international markets, provided that impediments like political challenges, banking restrictions and tariff barriers are removed.
Key Equipment
Iran previously imported high-voltage cables mainly from Japan and South Korea, but domestic production of this key electrical equipment is estimated to reduce its imports by 20%.
“Central Asian countries such as Turkmenistan are the main destinations of power equipment export,” he said, adding that the export of power equipment and technology comprises nearly 60% of the country’s total technical and engineering exports.
Not being a member of World Trade Organization and unhealthy rivalry among Iranian traders also pose obstacles to the development of strong trade ties between Iran and neighboring countries.
In addition to non-economic, political barriers, Iran’s tariff system has inflated the end-price of local products and sapped the country’s competitiveness and export ability, he added.
Exporters have experienced systematic slowdown in their revenue, profit, investment, capital, employment and wage growth. The sectoral distribution of the impact shows that the electronic equipment sectors have suffered more in comparison to the other sectors.
To remove these barriers, he recommends forging free trade agreements with other nations.
Trademark registration in countries like Turkey, promotion and sales of products by having a local representative there and taking part in exhibitions will also help Iranian companies gain a toehold in global market.
Kolahi added that lack of venture capital in Iran has led to investment in and profit-making from speculative practices and trading in foreign currency, gold coin and real-estate markets.
The oil era is coming to an end; the world is changing with breathtaking speed. Today is not the time to sell oil to supply essential goods to people. Oil-oriented economies should be replaced with productive, diverse and creative economies.
One of the drivers of diverse, creative economies is the growth of venture capital. Failure to expand such an economy would increase brain drain from the country, as the domestic economy does not provide leeway for the financial growth of elites and skilled and educated human resources.
