Hamid Zadboom
We talked to the Islamic Republic of Iran’s Ankara Embassy Commercial Counselor Hamid Zadboom about the economic opportunities created by the Nuclear Agreement signed between Iran and the 5+1 countries. Zadboom stated that many Turkish companies carrying out frenetic research and feasibility studies about Iran are willing to invest in the infrastructure, tourism, construction and energy sectors and warned: “During the long years of embargo, we conveyed to our dear friends the Turkish government and business leaders who we work closely with our desire that they take advantage of their investments in Iran first. Losing the friendship, partnership, closeness and trust that increased among Turkish and Iranian companies and investors during this period would be a great loss.”
By M. Ferhat YÜKSEL
Hamid Zadboom, who was assigned as the Commercial Counselor for the Islamic Republic of Iran’s Ankara Embassy in 2014, completed his undergraduate studies in economy at the Tehran University and his post-graduate studies in economy as well. Zadboom, whose field of expertise is Iran’s foreign trade, completed his first post abroad at the Islamic Republic of Iran’s Saudi Arabia Embassy as the Trade and Economy Counselor. Before coming to Ankara, Zadboom served as General Manager at Iran’s Trade Undersecretary Assignment Director for seven years, and also served as a lecturer on the economy in Iran at private and state universities. Zadboom is a married father of two.
TURKEY’S EXPORTS TO IRAN INCREASED
Can you talk about the bilateral trade and total trade volume between the two countries?
Today, the current total trade volume between Iran and Turkey is around $10-12 billion. Based on the possibilities each country has and the neighborly relations between the two countries, this number should be more than $30 billion. The total trade volume for the year 2014 between Turkey and Iran was $14.2 billion. In the first eight months of 2015, Turkey’s exports to Iran was $2.488.000.000. In 2014, this number was $4 billion. During the same period, Iran’s imports to Turkey was $4.368.000.000 including petrol and natural gas. Comparing the first eight months of the year before, we see that Turkey’s exports from Iran have decreased. The reason for this decrease is the global decrease in gas and petrol prices. While Turkey’s general exports decreased 8.7 percent in the first eight months of 2015, the exports to Iran increased by 18 percent. Looking at it in general, the bilateral trade relations are at a good level. If we hadn’t experienced problems with border security in the last two months, I think that our trade would be at a better level.
‘OUR TURKISH FRIENDS HAVE PRIORITY’
How will economic relations and mutual investments be affected by the Nuclear Agreement signed between Iran and the 5+1 countries?
Because of the embargos enforced on Iran, we had problems regarding many subjects, especially money transfers. Following the agreement, there has been a serious increase in the number of businessmen and trade delegations that have visited Iran. Many European countries have sent delegations to determine the points and areas of investments in Iran. Many Turkish companies carrying out frenetic research and feasibility studies about Iran are willing to invest in the infrastructure, tourism, construction and energy sectors. During the long years of embargo, we conveyed to our dear friends the Turkish government and business leaders who we work closely with our desire that they take advantage of their investments in Iran first. Losing the friendship, partnership, closeness and trust that increased among Turkish and Iranian companies and investors during this period would be a great loss. The investment projects in Iran will be presented to investors with a convention or large fair soon. Recently, the road, construction projects and tenders were announced to investors that included Turkish companies. In the upcoming months, The Iranian Ministry of Petrol and the city of Tehran will reveal their projects. We announce our projects related to construction to the Turkey Contractors Union and its members already.
TRANSACTIONS WILL BE EASIER
Can you share with us the current information on energy trade volume and the purchase and sales of energy between Turkey and Iran?
Last year we exported a total of $7-8 billion of crude oil and gas to Turkey. There weren’t any problems, even in the period when there were embargos on energy trade. After the embargos were lifted, if Turkey demands more energy to cover its energy deficit, of course as Iran we would like to meet this demand of our neighboring country Turkey. The biggest ease that will come from the lift of embargos will be that the transactions will be easier. Right now we purchase and sell, but experience serious problems in money transfers because of the embargo.
THE GOAL IS A FREE TRADE AGREEMENT
Can you talk about the contribution of the Preferential Trade Agreement (TTA) that came into effect at the beginning of 2015 on the trade between the two countries?
I was personally present in all stages of the TTA meetings from the start to when it was put into effect to now. After long negotiations, the agreement was finally put into effect on January 1, 2015. As part of the agreement, tariff discounts and increased quotas for Iran on 140 products (mostly trade products) based on Turkey’s 6-tariff position as well as tariff discounts for Turkey on 125 products based on Iran’s 6-tariff position has been decided.
The TTA has led to discounts in the custom taxes of 265 products, and we expect it to include 300 products by the end of 2015. According to the data we have, exports in both countries have increased in the last eight months. The 265 products included in the agreement have led to a trade of $425 million.
The point that is important for both countries is that the number of products increases every year and the TTA is expanded even more. By next year, 15-25 new products from both sides will be included in the agreement. Our goal is to sign a Free Trade Agreement between the two countries in the future. We have to take certain steps to bring our trade to $30 billion and the TTA is one of the steps that will lead us to this.
How will this agreement reflect on the economy of Turkey, Iran and the region in the long run?
As Iran and Turkey, however much we increase the bilateral trade volume, the prosperity of the two countries Muslim people will increase the same level and will contribute to the increased prosperity and to ensuring peace in the region. However much economic power and independence increases, we can be that much influential and active in the region, which will clear the path to bringing peace and stability to the region.
Following the Nuclear Agreement, what will be the advantageous sectors and opportunities created to invest in Iran? Why should Turkish businessmen choose to invest in Iran?
Right now the advantageous sectors that present great opportunities in Iran include petrol, natural gas, petrol products, petrol infrastructure, and related sectors, mining, industry and production raw materials. You’re asking why Turkish businessmen should choose Iran. We can count many reasons such as advanced logistics infrastructure, advantageous strategic and geographical location, rich underground and natural resources, cheap energy and workmanship, and the fact that investments and investors are fully safe and secure. First of all, most of Iran’s citizens have received higher education. Iran has qualified, skilled and low-cost labor. Iran is surrounded by the Caspian Sea, Middle East, Central Asia and the Indian Ocean and is in a strategic geography where it serves as a bridge between Turkey and Asia. In addition, many raw materials such as polyethylene that Turkish industrialists use in production is available for cheap in Iran. All of these things that I have listed are criteria that investors look for.
FREE ZONES ARE VERY ADVANTAGEOUS
How easy is it to do business in Iran?
Establishing a company in Iran or opening a branch takes two weeks in Iran if the necessary documents are present. In addition, our Foreign Investors Institution under the Ministry of Economy is responsible for the safety of foreign investors and the healthy advancement of investments. The fact that energy is very cheap and costs are lower is a serious investment anyway. In addition, free trade zones will present investors with serious opportunities. In Iran, cities instead of areas have been designated as free trade zones, contrary to how it is in Turkey. Similar to your organized industrial zones, we have 22 free zones and special investment areas called Foreign Investors. Our Maku and Aras free zones are very close to Turkey. There are Turkish investors who are currently investing and producing in the Aras area. Investors are exempt from all taxes in these free zones. They are subject to taxes only when they try to bring the products they produce into Iran. When you produce in a free zone, you can bring the raw material to your factory, produce and export without paying any taxes.
LOCAL CURRENCY IN TRADE
When will the agreement on using local currency in the trade between the two countries going to be brought to life and what advantages will it present?
Why should two countries who share a common language, culture and neighborly values trade with and be tied to a foreign currency? Trading with local currency is the ideal of both countries and we wish to trade in this way. Enforcing this depends on the negotiations ongoing between the central banks of the two countries. So far a clear result has not been reached.
One of the most serious obstacles hindering the agreement is that the currency of the two countries is unstable and follows a very fluctuant exchange rate. My personal opinion is that it is very important for the two currencies to preserve their stability. Converting to a mutual currency will lessen the two countries’ dependence on foreign countries, and the two Muslim countries will show their own power. In addition, losses due to foreign exchange differences while exchanging money during trade with a foreign currency will be prevented while providing psychological trust and peace of mind.
What is the volume of Iranian investments in Turkey and which sectors do they focus on?
There approximately 4,000 businessmen actively trading in Turkey. Outside of sectors such as stones and sugar, generally Iranian businessmen in Turkey deal with trading and import-exports between Turkey-Iran as well as from Turkey to Europe, Asia, Latin America and Africa.
What services does the Iranian Embassy Trade Attaché offer for Turkish investors and businessmen?
As the Islamic Republic of Iran Trade Counselor office, our first duty is to promote Iran and explain the business opportunities in the related sectors, introduce investors from the two countries with companies within their balance sheet values, and follow the projects until completion. We carry out many tasks such as examining the Turkish Trade Law to inform Iranian investors and businessmen, directing them, organizing trade delegation visits, informing Turkish businessmen and companies of international fairs in Tehran, hosting and entertaining. As a counselor, I personally attend these fairs to get to know the companies closer. We create relationships through visits with the chambers of commerce in Turkey. We mediate between Turkish and Iranian companies to solve disagreements.
