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Business with Iran

Business with Iran

Iran is emerging as new economic power in the region and is expecting foreign investments of up to $185 billion in its oil and gas sector in coming years. Pakistan has signed gas pipeline dealt with Iran, India is investing in Chabahar port and China wants its share of business in that country by connecting with new Silk Road. Wary of western powers, Iran is ready to accommodate all three countries, Pakistan, China and India in the business and trade. Ironically, India is rival of Pakistan and China on political ground, but partner in business and trade with both the countries. Iran is trying to normalize its trade activities after lifting of sanction and the three countries can work as partners on the Iranian ground rather than rivals. However, India will have to mend its hegemonic, jingoistic and hostile posture against Pakistan and China to take full benefits of business, trade and investment. Iran should be treated as common destination for the investment from three countries and not as a battleground to fight for personal gains.

Pakistan is religiously, culturally and geographically in a better position to get lion share of economic gains in Iran. However, policymakers in Islamabad are unprepared to deal with the emerging situation. Pakistan, Iran and China are uncomfortable to deal with various European countries due to separate reasons, but the four countries can emerge into a new economic bloc. Again, if Turkey is included, the five countries block can spur economic growth in the region and change the lot of the one third of the world population living in the countries. The State Bank of Pakistan had allowed domestic banks to establish link with Iran, but none of the bank has come forward with viable proposals to facilitate traders in financial transactions. The government will have to establish and restore banking channels with Iran but official red tape has come in the way to reach an urgent solution. The government should remove the reservations of the private banks to establish links with their Iranian counterparts.

During his visit in March this year, the Iranian president had expressed the hope that trade between the two countries will reach $5 billion in five years. Both sides had also signed various agreements to enhance cooperation in trade, services and investment sectors. The State Bank of Pakistan and the Central Bank of Iran have already signed a Letter of Intent to enhance mutual cooperation and establish direct links between the banks, but things are moving at snail’s pace. The trade bodies of Pakistan should also take initiative to sense export opportunities in Iran which is right next door with minimal transportation costs.

Pakistan-Iran trade of one billion dollars is now hovers around $270 million. Pakistan’s exports to Iran are limited to rice and a few other products. There is a need to start work in various fields, including customs, banking transactions and tax system to boost trade between the two countries.