The removal of sanctions on The Islamic Republic of Iran (Iran) in January, 2016 has led to an increased interest in that country. This short profile on Iran has been prepared by the Pakistan Business Council (PBC) to highlight some of the opportunities & challenges that post-sanction Iran offers for Pakistani businesses and other stakeholders
Iran is the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia. In 2014 Iran’s total exports were $73.9 Billion while imports were $ 53.7 Billion. China continues to be Iran’s top trading partner with Iran’s exports to China being $9.2 Billion while Iran’s imports from China were worth $12.5 Billion in 2014. Iran’s exports to India in the last ten years have gone up from $0.64 Billion to $2.15 Billion. Iranian imports from India in the corresponding period increased from $1.01 Billion in 2004 to $4.1 Billion, in 2014.
There is a Preferential Trade Agreement (PTA) which governs Pakistan Iran trade, this PTA has been operational since 2006.Of the top 50 items exported by Pakistan to Iran, only 12 items (24%) have a preferential tariff under the PTA. Of the top 50 Iranian exports to Pakistan 22 items (44%) enjoy a tariff preference when imported by Pakistan.
As in the case of Pakistan’ trade with China, there are considerable discrepancies in trade figures as reported by both countries. This discrepancy is not only in figures but also in the items traded. Iran reported exports to Pakistan in 2014 of US$837 million while Pakistan reported imports from Iran of US$185 million. Similarly while Pakistan reported exports to Iran of US$43 million; Iran reported imports from Pakistan of US$261 million in 2014.
Discrepancy can also be seen at the tariff levels as nearly all of Iran’s reported top 20 exported products do not fall under Pakistan’s reported top 20 imports from Iran. This discrepancy is also there in Pakistan’s reported exports to Iran and Iran’s reported imports from Pakistan.
Major opportunities for Pakistani export items to Iran include Rice, Cotton & Petroleum Oils. Iran can be a major import source for Mineral Fuels, Organic Chemicals, Ethylene glycol, Plastics & Articles etc.