The Business Year

Abbas Memarnejad

IRAN - Economy

An Expanding Range

Deputy Minister of Economic Affairs & Finance (& President of IRICA), Islamic Republic of Iran

Bio

Abbas Memarnejad graduated with a PhD in Economics. Prior to taking the position of Deputy Minister of Economic Affairs and Finance and President of the Islamic Republic of Iran Customs Administration (IRICA), he worked as Secretary of the Customs Reform Working Group on the Economical Reform Plan. He is also a member of the Board of Managers of the Textile and Clothing Export Industry Union, the Board of Managers of Rahbar Informatics Services Company, and the e-commerce working group of the Supreme Council of ICT of Iran.

Since 1Q2012, Iran has been exporting 31% more non-oil commodities in year-on-year terms. What is driving this growth? One significant trend that our government and customs officials are following is […]

Since 1Q2012, Iran has been exporting 31% more non-oil commodities in year-on-year terms. What is driving this growth?

One significant trend that our government and customs officials are following is the expansion of export activity. In our economy, our focus is on international trade. In previous years, foreign investment in Iran depended on producing a commodity that could be re-exported. The result of that investment in Iran is that our range of exports has expanded. In 2011, we exported commodities to more than 150 countries and offered more than 3,000 tariff commodities. This shows that we can offer a variety of goods to many countries—especially in Asia—and participate in a number of activities regarding exports.

In which sector do non-oil exports have the most untapped potential?

Our country depends on oil and petroleum. Commodities coming from this sector rely on energy products. However, two or three years ago our industrial sector also achieved higher levels of activity. We have observed good trends in car manufacturing, chocolate products, biscuits, other edible goods, and cement. Within two or three years, these industries evolved dramatically, especially in manufacturing and machinery.

Are there countries that Iranian exporters are more interested in?

We export goods to 150 countries, and not only in Asia. Countries in Asia have been our export partners since the beginning. Our strategic partners and the most popular destinations for Iranian goods include Iraq, China, and Turkey, which are all vital. Every year China and Turkey are first, and our activity with Iraq and Afghanistan is increasing.

How can a company or an exporter be eligible for a tax exemption?

We give a tax discount for commodities that are produced in Iran and exported. ExIm Bank, which is an export and import bank, is called Toseh Saderat in Iran, and it is the only bank designed to serve this segment. Other banks also offer facilities, but Toseh Saderat is specialized in export and import work. The interest rates of this bank are lower than those of other banking institutions, so in that way it also encourages potential investors and Iranian exporters.

In 1Q2012, Iran imported 27% more than in the previous year. Which products and commodities is Iran importing the most?

We divide imports into three sections: raw materials, investment commodities, and consumer goods. The breakdown is 70% for raw materials, 18% for investors, and 12% for ready-made consumables. These are the imported commodities that come into our country. Raw materials come to Iran from various countries and are distributed to many industries and factories. In 2011, we imported 5,000 tariff commodities. We cannot say which particular commodities come from which countries, but steel is a very important raw material that we import, especially from China and the UAE.

Assuming that your exports and imports are mainly to and from Asian countries, how do you anticipate changes?

Everyone in the world tries to link imports and exports, and we also think about both. For 2012, we planned a value of $75 billion for exports, and compared to 2011 it was a 30% increase. Regarding imports, we expect $70 billion, a 10% increase compared to 2011. This marks an impressive increase.

How much of the Iranian GDP is represented by imports and exports?

Exports and imports comprise 49% of GDP. My forecast for import and export activity is that it will increase in the coming year. Investment is dependent on exports—what we invest in and produce. I also hope that the world is going to increase the volume of international trade. I would like to add that Iran is a member of the World Customs Organization (WCO) and we are also focusing on the larger aims of the organization for our program. In 2011, we changed our customs rules and regulations, and we are trying to use IT to reduce the formalities for exports and imports. With some countries, where our trade activity is frequent, we are trying to sign bilateral agreements between customs agencies. We have already signed agreements with more than 45 countries where we plan to export. Through these agreements, we can exchange information and share our facilities.

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