Iran’s non-oil goods can conquer part of European market

Iran’s non-oil goods can conquer part of European market

Baku, Azerbaijan, Oct. 12

By Azer Ahmadbayli – Trend:

Last Iranian fiscal year (ended March 20, 2017), the country’s non-oil exports accounted for $43.93 billion, which made 88 % from annual target of $50 billion, according to data from Iran’s Trade Promotion Organization (TPOI).

The same was observed in the first half of the current year (March 21-September 22), when total non-oil exports amounted to $20.5 billion, which made nearly 39% from the planned annual target of $53 billion.

So, it comes obvious that for the time being Iranian non-oil export is strongly limping.

Meanwhile, almost all of the non-oil export items are the derivatives of hydrocarbons (liquefied propane, liquefied butane, gas condensate, methanol, film grade polyethylene etc.), and exported mainly as raw materials. The only real non-oil export products found in the top 10 were iron ore and semi-processed iron and steel products.

The top 10 countries, where Iran exports about 70 percent of its non-oil goods are: China, Iraq, UAE, South Korea, India, Afghanistan, Turkey, Pakistan, Thailand and Taiwan.

Iran’s exports, let’s be honest, are of Europe’s economic interest in the first place due to hydrocarbons. The EU ranks 5th among Iran’s trade partners, mostly at the expense of importing hydrocarbons.

Iranian sources, based on latest data from Eurostat, say that Iran’s exports to EU’s 28 nations exceeded €5 billion, from which €4.4 billion fall to petroleum, petroleum products and related products, during the first half of 2017. Only €600 million fell to manufactured goods and agricultural products.

Does the one-sided export reality suit Iran? Probably not. Iran most likely is able to offer a range of high quality goods that might be attractive to European customers.

The “Resistance Economy” concept put forward by Supreme Leader of Iran Ayatollah Khamenei is still relevant due to high potential of re-imposition of sanctions by the US administration, but at the same time it’s vital to explore every avenue for non-oil export development.

Today, it is hard for Iran to find a free market niche in Europe and compete with such exporters of consumer goods as China or Turkey. Nevertheless, in addition to well-exported superior goods like caviar, hand-made carpets, crocus and pistachio, Iran has some other options in its product portfolio that can be put into commercial production for further export (given their acceptable price).

It is worthy to mention famous Iranian rice, dried fruits, jewelry, and natural stones. Some of the products are being exported to several European countries (travertine, for instance) but Iran is able to do much more in this regard.

Iran’s non-oil export approach has at least three serious shortcomings that have to be improved. First of all, instead of making a fast buck through selling raw materials, Iran could get its labor force, including those unemployed, involved into processing and finishing, by opening new processing enterprises. Second, Iranian high quality goods should have presentable packaging, European style. The third is lack of national brand.

Formation of supply chains for domestic products is one of the key conditions for non-oil export growth.

Take jewelry, for example.

The Islamic Republic is among the 10 major mineral-rich countries. It possesses 7 percent of the world’s total mineral deposits with about 68 kinds of commercially valued minerals. The volume of Iran’s minerals is estimated at 57 billion tons.

However, great bulk of precious and semiprecious stones and precious metals does not reach processing stage to turn into a well-packed dainty piece of jewelry - necklaces, rings, or bracelets – but is sold as a primary product.

Having cheap but skillful labor could help Iran conquer a part of the EU market.

By the way, figure of Faravahar symbolizing good thoughts, good words, and good deeds could probably be the best option to become a national brand mark for “Made in Iran” goods.

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