Iranians urged to brace for competition in Iraqi market

Financial Tribune – Iraq is a market full of challenges, but a golden one, the head of Iran-Iraq Chamber of Commerce and a member of the Board of Directors at Tehran Chamber of Commerce, Industries, Mines and Agriculture said.

“Iraq needs at least $150 billion to recover and Iran, enjoying advantages such as close proximity and expert human resources, can have an important role in Iraq’s recovery,” TCCIM also quoted Yahya Al-e Es’haq.

“But as much as the Iraqi market is a golden opportunity for Iranian businessmen, it comes with special challenges,” he added.

Iraq is Iran’s second biggest market after China. However, the type of export items sent to China is different from the ones sent to Iraq. China mainly imports petrochemical and oil products from Iran, but Iran’s exports to Iraq mainly include construction materials and dairy products.

Until recently, there was no serious rival in this market due to insecurity and only China, Turkey and Jordan were considered as Iran’s rivals.

According to Al-e Es’haq, as Baghdad is emerging from a war against the self-styled Islamic State terrorist group, many active economic players such as Italy, Germany and the UK have considered the Iraqi market to be a proper platform for the next 10-15 years.

“Therefore, we will have fierce competition,” he added.

According to Nasser Kan’ani, the head of Iraq’s Special Committee at the Ministry of Foreign Affairs, the damage inflicted on Iraq during the war is estimated at $100 billion, stressing that since Iraq does not produce much, it can be a unique market for doing business.

Moreover, Saudi Arabia is trying to prevent the presence of Iran, especially in the fields of investing in Iraq’s infrastructural activities.

Al-e Es’haq noted that Saudi Arabia has allocated around $100 billion to provide financing in Iraq’s development projects.

The official said Iraq’s new import tariffs are barriers to increasing exports to this country.

“Iraq is seeking to become independent in production by adopting a new approach. For instance, they have increased dairy tariffs from 15% to 40%. They have almost ceased the import of cement and clinker, and have limited the import of other items by applying new tariffs,” he said.

According to Al-e Es’haq, problems related to transportation, insurance and visa issuance persist for Iranians. He stresses that Iran should find new ways and take a new approach to solve the problems in Iraq.

“Losing Iraq is neither right nor wise,” he said.

He noted that Iran should compete with rivals in Iraq by producing quality and reasonably-priced products and offering good after-sale services. In other words, Iranian production units should prepare for a business war.

Al-e Es’haq called on the Iranian government to expand its investment in Iraqi security by forging closer economic ties with the neighboring country.

Last week, Iranian officials reached agreements with the head of Iraq’s General Customs Authority, Munther Abdul Amir Asad Haider, on issues hindering bilateral trade.

According to Iran’s commercial attaché, Nasser Behzad, who represented the Iranian side along with an economic team from the Iranian Embassy in the business meeting held in Baghdad, the two sides agreed to clear Iranian food and dairy exports without undergoing border examination and screening, provided the quality approval certificate is presented by Iranian organizations within the framework of Iraq’s regulations.

Behzad added that new tariff cuts will be implemented for Iranian exports as of early 2018.

As per the agreement, tariffs on gold, silver and mineral products will go down from 5% to 0.5%, while it is set at 10% from the current 10-40% for food, dairy and plastic products.

For construction materials, stone, cement, leather, animal hides and cars, the rates will reach 15% from 5-30%, and 30% from 5-40% for electrical appliances, TV, home appliances, tobacco and cigarette.