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Iran Economy Update
Issue 93/2017
TUESDAY OCTOBER 24TH
The first Korean-made ship to join Iran’s fleet in five months
The Islamic Republic of Iran Shipping Lines (IRISL) announced on Sunday that the first Korean- made ship will arrive in Iran in the Persian month of Farvardin (21 March 2018 – 20 April 2018).
Ten months later, the other ships will join the country’s fleet, and with the entrance of such Korean vessels, the average age of the Iranian shipping fleet will be reduced to 12 years from 16 years. According to Tasnim news agency, IRISL Managing Director Mohammad Saeedi has explained that in the contract for purchasing ships from Korea, 78 percent of the finance will be provided by the Korean side.
...and Iran says a 700mn euro deal has been signed on buying Korean railbus..
.In a separate development, an official from the Islamic Republic of Iran Railways said a 700-million euro contract for procuring railbus systems from Korea will be finalized this year, ISNA reported on Monday. Managing Director of the Islamic Republic of Iran Railways IRIR Saeed Mohammad- Zadeh said under this contract, a consortium comprising the Iranian and Korean companies as well as the IRIR will be formed to procure a portion of the Iranian fleet in four years.ISIRI published list of 85 new and revised automobile standards
The Institute of Standards & Industrial Research of Iran (ISIRI) has published the list of 85 new automobile standards that will be effective as of 22 December 2018, Mehr news reported on Monday. In March 2017, the ISIRI announced that as part of an agreement between this institute and the ministry of Industry, Mine & Trade, the number of automobile standards in Iran will increase from 55 to 85. According to the defined timeframe, 61 automobile standards will become effective by December 2017, and by 22 June 2018, two more standards will be effective, and finally, 22 additional standards will be effective by 22 December 2018. ISNA wrote that if an automobile fails to observe the 61 standards by December 2017, its production will be halted. Click here to read the full Farsi list of 85 new standards.
Customs administration published report on five month foreign trade
The following table shows the latest statistics on Iran’s trade volume during the first five months of the current Persian year, covering a period from 21 March to 22 August 2017. As the table shows, Korea has been the third main trade biggest partner in exporting goods to Iran, and the country’s fourth major trade partner in importing Iranian goods.
21 March – 22 Aug 2017
21 March – 22 Aug 2016
y-o-y change
imports $19.442bn $16.690 16.49%
non-oil exports $17.193bn $18.088 -4.95%
Source: Iran’s customs administration
2 Iran’s non-oil exports from March to Aug 2017-10-22
country
21 March –22 August 2017
21 March – 22 August 2016
value (Billion $)
share in total (%)
value (Billion $)
Share in total (%) China 3.743 21.77 3.414 18.87
Iraq 2.604 15.15 2.504 13.84
the UAE 2.583 15.02 3.023 16.71
Korea 1.676 9.75 1.551 8.58
India 1.199 6.97 1.215 6.72 other 5.387 31.33 6.381 35.28 Total 17.193 100 18.088 100
The daily Shargh draws attention of the readers that more than 50% of the goods that are listed in the non-oil export category are petrochemicals and condensates, and are oil-driven indeed!
As the table above shows, Korea’s share as one of Iran’s non-oil export targets has increased from 8.58% in 2016 to 9.75% in 2017. Similarly, as you see in the table below, the Korean contribution to Iran’s total imports has increased, from 1.27% in 2016 to 1.34% in 2017.
Iran’s top import sources from March to Aug 2017 country
21 March –22 August 2017
21 March – 22 August 2016
value (Billion $)
share in total (%)
value (Billion $)
Share in total (%) China 4.256 21.89 3.894 23.33 the UAE 3.341 17.19 2.876 17.23 Korea 1.346 6.92 1.272 7.62 India 1.266 6.51 0.929 5.57 Turkey 1.138 5.85 1.085 6.50 other 8.095 41.64 6.633 39.75 Total 19.442 100 16.690 100
China, 21.77%
Iraq, 15.15%
UAE, 15.02%
Korea, 9.75%
India, 6.97%
other , 31.33%
Iran's top five non-oil export destinations (March - Aug 2017)
3 Meanwhile, Mehr news has re-published the statistics of the Iran-China eight-month trade, which has been released by the Chinese’ customs administration. The report shows a 24%
increase in bilateral trade volume in 2017, compared with the similar period in 2016. From Jan to Aug 2017, trade volume between the two countries reached $24.17 billion, up from $19.5 billion during the same period last year.
Tehran mayor and Korean Ambassador met in Tehran
EghtesadOnline, an online Persian-Language economic news website wrote on Saturday that upon the return of Tehran Mayor Mohammad-Ali Najafi from Korea, he was welcomed by the Korean Ambassador in Tehran. Mohammad-Ali Najafi told Korea’s Ambassador Kim Seung-Ho that one of his plans as the mayor of Tehran is developing economic cooperation with different countries including with Korea in undertaking urban projects. In this regard, said Najafi, I held meetings in Seoul with a number of Korean large company mangers and I also asked Iran’s ambassador in Korea to follow up on the issue of the Korean companies that are interested in investment in projects in Tehran.
Iran celebrates 21st Nation Export Day
In his message on the occasion of celebrating the 21st National Export Day (21 Oct), Minister of Industry, Mine & Trade Mohammad Shariatmadari said on Sunday that the government is determined to eliminate barriers, renovate the industry, attract the private sector, and develop cooperation with the neighboring, regional and world countries. According to IRNA, the minister underscored that implementing the “Economy of Resistance” policies (endogenous) along with an outward-looking approach, with a focus on boosting non-oil exports is the only remedy for Iran’s ailing economy. Improving efficiency and resolving the problems facing by the coutnry’s exporters were the other issues the minister said he is going to address.
On the same occasion, ICCIMA President Gholam-Hossein Shafeie expressed dissatisfaction with the country’s meager share in the global export trade as well as what he termed as the less added value of Iran’s export commodities, Tasnim news reported on Sunday. Shafeie said Iran’s share in global export is 0.34 percent if oil being included and 0.24 percent if oil being excluded, and said considering Iran’s capacities, this share is too low. He also said a major segment of the coutnry’s non-oil export items are agricultural products and raw mineral materials the exports of which are attractive because of the subsidies allocated on such types of exports. He said Iran’s
China, 21.89%
UAE, 17.19%
Korea , 6.92%
India, 6.51%
Turkey, 5.85%
other , 41.64%
Iran's top five import sources (March - Aug 2017)
4 industry lags behind the world in terms of technology, and added that the high cost price of Iranian products has taken away their competitiveness in the global markets. The ICCIMA chairman also expressed dissatisfaction with the country’s insufficient efforts in establishing free trade and preferential tariff agreement with its trade partners. “While our rivals have already launched such trade privileges, we’ve failed to establish free trade and preferential tariff agreement even with our neighbors,” Shafeie criticized. This has increased our costs, he said.
High transport costs, low transport speed and high banking interest rates were the three other problems the ICCIMA president cited as the problems facing Iran’s non-oil exports.
Speaking at the same occasion, 1st Vice President Eshagh Jahangiri preferred to draw a more bright picture of Iran’s economy and exports. Jahangiri said the value of Iran’s [annual] non-oil export has reached $47 billion, and expressed hope that this figure reaches $50 billion soon and moves towards $100 billion later. (The following table shows Iran’s non-oil trade in the last Persian year).
1395
(21 March 2016- 20 March 2017) imports $43.684 billion
non-oil exports $44.042 billion
Source: Iran’s customs administration
“That our non-oil export revenues are twice that of oil exports is a great job,” added the first vice president, and boasted that the economy of Iran ranks 18th or 19th globally, and that the existing three million jobless people can be employed with the boom that occurs in the coutnry’s business by the private sector. Jahangiri said the government has put developing an “economic diplomacy” on its agenda and explained that the ministry of Foreign Affairs is making an overhaul in its structure in order to realize this objective.
...
Iranian govt. Insists on using national currency in foreign trade...
According to Tasnim news, Jahangiri said that at this juncture of time, the government “insists”
on using currencies other than the US dollar, such as euros. In line with this objective, we are going to reach agreement with the trade target countries to work with national currencies. “In my recent visit to Turkey, the two central bank governors agreed to use national currencies in bilateral transactions,” added Jahangiri. “If we manage to take similar measures in trade relations with countries like China, Russia and the neighboring states, the economic benefits of the importer and exporter is secured and we will certainly follow this path,” he added. (Last week, Jahangiri and Minister of Industry, Mine & Trade Mohammad Shariatmadari who is also the head of the Iran-Turkey Joint Economic Commission visited Turkey to hold talks on increasing bilateral annual trade to $30 billion.)
Petroleum minister says Total has started implementing gas deal with Iran
Petroleum Minister Bijan Zangeneh said Total has started implementing its [gas] contract with Iran and has also put [signing] other contracts on its agenda, ISNA wrote on Sunday. He made the remarks during a session he held with the country’s lawmakers in the parliament. The minister also gave a clarification about the Total CEO’s recent remarks, and explained that this European company has said “if the international community” and not “if the US” makes any decision [to sanction Iran], we will respect it. “This is a good [fair] stance”, said Zangeneh.
...Iran’s oil plus condensates exports averaged 2.8 mn bpd in first half of 1396...
Zangeneh also said Iran’s oil [plus condensates] exports during the first six months of the current Persian year (21 March – 22 Sep) have averaged 2.8 million bpd, and its proceeds are fully repatriated. “Although we have some problems with a limited number of countries, we have
5 no problems in money transactions with Europe,” added the minister. Zangeneh said Trump’s [anti-Iran] remarks have so far made no impact on the oil market. “The oil market and the Iranian oil sector disvalue Trumps remarks and we continue moving forward strongly.”
Value of contraband smuggled into Iran amounts to $15 billion annually
The Sunday issue of the daily Shargh focused on the contraband smuggling in Iran, the value of which according to some official statistics amount to $12-15 billion, or almost a third of the country’s official imports. The daily wrote that most of the goods smuggled into the country are consuming commodities that are already and adequately produced inside the country. Shargh has quoted Dr. Farshad Momeni, a professor of economics as saying that every one billion dollars of smuggled goods destroys 25,000-100,000 job opportunities in the country.
“The main difference between smuggling in Iran and other countries is that in the latter, only those goods the imports of which are prohibited are smuggled but in our country, the goods that can be imported through legal channels are smuggled,” Ali-Akbar Pour-Ahmadnejad, the secretary of the Tehran Province Commission of Countering Smuggling of Goods & Foreign Currency told Shargh. He cited the low quality of home-made products and the prevailing misperception of many Iranians who think foreign goods are of higher quality as the reasons for the smuggling of foreign goods that can be produced domestically.
Iran’s foreign economic relations at glance country Note
Iran- Germany
The 1st Energy Committee of Iran and Germany began in Tehran on Tuesday, participated by Ambassador of Germany and Deputy Petroleum Minister Amir-Hossein Zamani-Nia. The 2-day committee is attended by Iranian and German companies, and is scheduled to discuss methods for bilateral cooperation in energy sector. The Iranian delegation of this committee is chaired by Hossein Esmaeili, the Petroleum Ministry’s director general for European, Americana &
Caspian Sea states, and the German delegation is chaired by the coutnry’s deputy director general at ministry of Economy and Energy. (Shana)
Iran- Austria
In an interview with a senior Iranian oil & energy journalist, the Austrian Ambassador to Tehran said his country has trusted SMEs and has been successful in it, and underscored that what Iran exactly needs is the partners that come to stay for long term that seek trust and win-win situations. He said Austria can be here to transfer technology, machinery, and green energy.
Iran- Korea
Upon his return from Korea, Tehran Mayor Mohammad-Ali Najafi said the two countries can cooperate in 3 areas to develop Tehran, which include Korean companies’ involvement in construction, especially in subway lines, providing rail wagon and affiliate electric systems, and software systems in subway/bus. Reffering to his meeting with the head of the Korean Tourism Organization, Najafi expressed hope that movements of tourisms get facilitated in the future.
Iran -
IOCs
Deputy Petroleum Minister for International & Commercial Affairs Amir-Hossein Zamani-Nia announced on October 18 that Iran is currently negotiating with more than 15 companies from Europe, Russia and Asia to conclude contracts. "These are not overambitious figures and expectations," he told the 'Oil and Money' conference in London. "Our policy is to be able to manage and finalize at least 10 contracts by the end of the Iranian year." He said Iran had so far signed MoUs for 28 different projects with companies including Total, Eni and Shell, Russian firms Rosneft and Lukoil, and China's Sinopec and China National Petroleum (CNPC), among others. (CNBC)
