I.R. of Iran and Portugal · Med & High-Tech Exports Share in ... Agreement establishing Commercial...

(ITSR)

I.R. of Iran and Portugal:

Improving Ties to

Boost Mutual Cooperation

Mohammad R. Razavi (PhD) Institute for Trade Studies & Research

Ministry of Industry, Mine and Trade

Table of Contents:

1- Iran and Portugal: Economic Comparisons

2- Trade Relations between Iran & Portugal

3- Measures to Promote Trade Relations

4- Potentials to Enhance Mutual Cooperation

5- Concluding Remarks

Attachments

1-Iran and Portugal: Economic Comparisons

1-1. Macroeconomic Indicators

1-2. Market Indicators

1-3. Competitive Industrial

Performance

1-4. International Trade

1- Iran and Portugal: Economic Comparisons

1-1. Macroeconomic Indicators (2014)

Source: World Bank

Portugal Iran

230.1 425 GDP (US$ billion)

272 1290 GDP, PPP (constant 2011 US$ billion)

22132 5443 GDP per capita (US $)

26184 16507 GDP per capita, PPP (constant 2011 $)

0.37 0.68 Share of world GDP (%)

52 18 GDP Global Position (Rank out of 144)

-0.3 15.5 Inflation rate (%)

14.2 12.8 Unemployment, total (% of total labor force)

10.4 78.1 Population (million)

Highlights: Iran’s market Potential is High and Portugal’s

higher GDP means a more Productive Capability .

Complementary Characteristics.

2014 2015 2016 2017

Potgl* Ir** Potgl Iran Portgl Irn Potgl Ir

GDP growth

(%) 0.9 4.3 1.5 0.8 1.6 4.3 1.8 4

Inflation(% ) -0.2 15.5 0.5 15 0.7 11.5 1.1 8.3

Unemplt (%) 14.1 10.6 12.6 11.7 11.7 12.2 10.8 12.3

Economic Outlook for Iran & Portugal

*Eur Com, European Economic Forecast, 2016 **World Economic Outlook

European Commission predictions for Portugal:

“Gradual Recovery, slow growth and lower unempl.

IMF predictions for Iran:

“Significant improvement in growth, lower inflation (due

to contractionary monetary and fiscal policies)”.

1-Iran and Portugal: Economic Comparisons

1-1. Macroeconomic Indicators (2014)

1-Iran and Portugal: Economy Comparison

1-2. Market Indicators: (Rank out of 140)

Source: World Economic Forum (Global Competitiveness Report, 2015-2016)

Portugal Iran

(51) (18) Domestic Market Size

(53) (28) Foreign Market Size

(35) (75) Extent of Market Dominance

(61) (81) Control of International

Distribution

(35) (112) Value Chain Breadth

$130.2 (135) $12.2-- (9) Government Debt, % GDP

Room for work of Strong Companies in Iran,

Very Low Risk of Participation in Financing of

Projects, and in Expanding Value Chains of

Products that Satisfy Mutual Interest.


1-3. Competitive Industrial Performance

Portugal Iran

2280.2 324.9 Manufacturing Value (MVA) Added per

capita (2005$, 2013)

26.4 43.9 Med- and Hi-Tech MVA Share in Total

Manufacturing (percent)

37.8 31.7 Med & High-Tech Exports Share in

Total Manufactured Exports (percent)

Upper Middle

quintile

Middle

quintile State of Industrial Competitiveness

Source: UNIDO, Industrial Development Report, 2016 (statistics for 2013)

Considerable potential for industrial cooperation

and mutual investment .

1-Iran and Portugal: Economy Comparison 1-4. International Trade Comparisons, 2014

Portugal Iran

Merchandise Exports (US$ bn) 63.9 88.8 Share of world (%) 0.34 0.47 Export per capita (US$) 6162 1126 No. Of Partners 207 150 Merchandise Imports (US$ bn) 78.2 51

Share of world (%) 0.41 0.27

Import per capita (US$) 7550 647

No. of Partners 177 129

Despite her relatively smaller per capita income and

import, Iran can be a desirable market for Portuguese

products - particularly intermediate and capital goods – as

a result of its significant absolute value of imports.


1-4. Iran’s Major Diversification Effort

China 23%

UAE 22%

Republic of Korea

8%

India 8%

Turkey 7%

Others 32%

Iran’s Main Import Partners

China 39%

India 16% Turkey

14%

Japan 8%

Iraq 8%

Others 15%

Iran’s Main Export Partners

Sanctions Highly Concentrated Import

and Export Markets in 2015

2-Iran and Portugal: Trade Relationship

2-1. Bilateral Trade between Iran and

Portugal (2004-2015)

2-2. The Impact of Sanctions on Iran –

Portugal trade profile

Source: http://www.irica.gov.ir

2-Iran and Portugal: Trade Relations

2-1. Bilateral Trade between Iran and Portugal (2004-2015)

80 % drop in overall Trade from $70 mil in 2009 - Huge Drop

in Portuguese Exports to Iran - Large Fluctuation of Iran

Exp to Potgl Mainly due to Sanctions, also other Factors.

1.37.8 13.3

4.8 6.8 11.05.1

20.7

42.3

9.321.1 24.6 21.9 18.7

32.1

55.064.5

12.5 10.35.2

-80.0

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

2003 2004 2005 2006 2007 2008 2009 2010 2013 2014

Export Import Trade Blance Trade

US

$m

il


2-2. Impact of Sanctions on Iran – Portuguese Imports

Iron

and

steel,

88.29

Salt;

sulph

u 6.44

2008 2014

Iron steel, 98.31

other, 1.69

Practically, Iran exports only Iron and Steel, no

other product despite the fact that the World

imports a number of other products like Petrochem,

|Chemicals, and ……. From Iran


2-2.The Impact of Sanctions on trade profile

2008 2014

Iran’s Main Import form Portugal(%)

Wood

26%

Elec

mach 20%

Vehicl,

Parts

13%

paper

12.41

iron

steel, 6

iron&

steel,

22%

boilers

mach

18%

Pulp, wood

16

Elec

mach, 6%

Pharm

5%

Effect of sanctions: Considerable change in

the composition of import, Lower share of

manufactured goods. $55 Mil. fell to $5 Mil.

3- Measures to Promote Iran-Portugal

Economic and Trade Relations

3- Activities for the Promotion of Iran-Portugal

Economic and Trade Relations

Exchange of trade delegations between Iran and Portugal in the last 10 years

6 times Iranian delegations having visited Portugal

4 times Portuguese delegations having visited Iran

upto 2010

Once (2015)

Aside from

Pedro Del !

Portuguese delegations having visited Iran

since 2011

98 Int’l Deleg. From Visiting Iran in 2015

3- Measures to Promote Iran-Portugal Economic

and Trade Relations

Memorandums of Understanding and Protocols of Cooperation between Iran and Portugal

2000 Agreement & Protocol of Coop between Chambers of Commerce

2003 MoU for Eco Coop between Trade Promotion Org of Iran and

Trade and Tourism Institute of Portugal

2003 MoU for coop in the field of housing and urban development

2005 Agreement establishing Commercial Council of Iran and Portugal

2005 Protocol of Cooperation between association of female company

owners of Portugal and female business owners of Iran

2015 MoU for Coop between Ministry of Agriculture of Iran -- Ministry

of Food Affairs, Agricultural and Maritime Research of Portugal


4-1. Industrial Development Goals in Iran

4-2. Investment Opportunities in Iran: A strategic country

4-3. Market Potentials and Proximity

4-4. Low Utility and Production Costs

4-5. Different Tax Holidays

4-6. Legal Protection through New Investment Legislation (FIPPA)

4-7. International Legal Infrastructure, Affiliations and Relations


4-1. Industrial Development Goals in Iran

Targeted Industries: Petrochemicals, basic metals,

Auto, Mineral Products, Chemicals, food, Med Devices

Recently Formuated Goals and Objectives in Iranian Industrial

Development Plan Emphasizes International Cooperation

4- Potentials to Enhance Mutual Cooperation (cont.)

4-2. Investment Opportunities in Iran: Strategic Position

Iran enjoys a unique location at cross-road of ME, Asia & EU,

with many regional trade, customs, tax & invest. arrangements.


4-3. Market Potentials and Proximity

Trading with Iran means a Large domestic market of

79 million people, And easy access to neighboring

markets with app. 420 million inhabitants.

Iran borders Afghan, Armenia, Azerbaijan, Iraq, Pakistan, Turkmen and

Turkey by land and UAE, Bahrain, Kuwait, Oman, Qatar and Saudi by sea.



► Second Gas Reserves in the World After Russia

Developed in spite of Sanctions

► Very Low Prices on Heating Gas and Electricity

also Very Low Prices on Ethane-Based Crackers

►Close to Global Bench-Mark Prices on Ethylene,

Thus very low cost feed for Petrochem & Polymers

Iran Plans to attract $50B Investment in these Ind.

► Availability of Large Pool of HR Particularly in

Engineering: 1.7 Mil. Univ Students (37% of Total

Students) in Engineering and industrial-related areas,

mind you: 60% female

Foreign Investment Promotion

and Protection Act (FIPPA)

provides legal protection to

foreign investments (based on

transparency and internationl

standards) as well as


4-5. Legal Protection thru FIPPA Legislation


4-6. Attractive Tax Holidays

Investors in Iran Pay a Flat Fixed 25% Tax Rate On Income But

There are Many Tax Holidays:

Another Tax Reduction for JVs (with foreign parties)

That Export At Least 30% of Production.


4-7. Internatl Legal Infrastructure, Affiliations & Relations

5- Concluding Remarks (Key Areas)

Iran, keen to enlarge mutual Economic Coop.

with Portugal & Europe in many sectors:

Petrochemicals, Plastics and Chemicals

(Port Facilities, Sea Trans.,**Molding,..)

Home Related (Hi Household formation in

the Region: Home Appliances, Const.

Material, Auxiliaries, Furniture,

Iran-Portugal Cooperation: A Bridge Linking Many

Markets in Europe, Middle East and Africa.

5- Concluding Remarks

Support by Gov’t. and a Vibrant Private

Sector. Ex: Expansive Energy Saving Programs

By The Oil Ministry: Huge Potential for the Cork Ind, & other energy saving tech. in the Region

Electrical Machinery (Elecromotors, etc.)

Hi-tech, Esp. ICT, Med Devices and Biotech

Food Ind. & Fruit Preservation &Transport

Iran-Portugal Cooperation: A Bridge Linking

Many Markets in Europe, Middle East and Africa.

Iran-Portugal Cooperation In Third

Markets:

Long-term Sanctions Self Sufficiency

Capacity and Tech. to Produce Key Basic Goods

and Services that Can Be Used by Angola or

Mozambique:

• i.e. Power Stations &Grid, Dams,

Irrigation Tech., Gasoline, Med Devices

(war) and Services, and many more.

• Taking African nations Oil and Mining

Industries to a higher level of Value-Added.

5- Concluding Remarks (cont.)

Iran-Portugal Cooperation In Third

Markets:

Also Iran is Looking Beyond Boots and

Guns in the Region: Iraq, Syria, Afghanistan,

Turkmenistan, Yemen, Pakistan , etc

To Initiate Programs that will Generate

Regional Channels and Mechanisms for

Promoting Cooperation.

Looking for Partners, Ideas, Old Hands in

Europe where major Effort were Undertaken

5- Concluding Remarks (cont.)

Thanks for your attention

5- Attachments



Source: Organization for Investment, Economic and Technical Assistance of Iran

Diversified range of energy, telecommunication, transportation, as well as developed

public utilities in Iran means Low Utility and Production Costs.


1-4. International Trade

Export Potentials (2014)

A review of export capacities and

import needs of both countries

shows that:

There is a potential to increase

the volume of bilateral trade to

18 Billion Dollars.

17,3

16,6

4,6 4,3

4,2

Mineral oilsand products

Plastics andarticlesthereof

Dairyproduce

Iron andsteel

Articles ofiron or steel

19.9

12.7

8.6 7.9

7.1

mach& andmech

appliances

Vehicles andparts

Pharmaceutical products

Elec &mach andequipment

Plastics andarticlesthereof

Iran to Portugal

Portugal to Iran

I.R. of Iran and Portugal · Med & High-Tech Exports Share in ... Agreement establishing Commercial...

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