Iran and Qatar bilateral relations have entered a historic phase by clinching an agreement to set up a joint free trade zone. Delegations from both countries have visited the designated areas in order to hammer out the details of the agreement. In an interview with Tejarat Farda, Akbar Torkan, Secretary of Supreme Council of Free Trade Zones, talks about the potential that lies in such collaboration particularly at a time when Qatar is preparing to host ۲۰۲۲ World Cup. He considers this important and a rare chance for Iran to transform her biggest gas partner to her biggest trade partner.
Iran and Qatar bilateral relations have entered a historic phase by clinching an agreement to set up a joint free trade zone. Delegations from both countries have visited the designated areas in order to hammer out the details of the agreement.
In an interview with Tejarat Farda, Akbar Torkan, Secretary of Supreme Council of Free Trade Zones, talks about the potential that lies in such collaboration particularly at a time when Qatar is preparing to host 2022 World Cup. He considers this important and a rare chance for Iran to transform her biggest gas partner to her biggest trade partner.
For the first time in history, Iran has entered an agreement with a neighbor to set up a joint free trade zone. How plausible is it?
Iran needs to export commodities and therefore, it has to identify target markets. This is one of the functions of free trade zones although neglected in the past few years. During our recent visit to Qatar, an MoU was signed based on which the parties agreed to allocate pieces of their lands in order to facilitate trade. To this end, a piece of land in Bushehr and one piece of land in Al- Ruwais port have been respectively allocated to Qatar and Iran for exchanging goods and commodities between the two ports. The work will start initially by exporting construction materials including sand and later food. The mutual agreement intends to improve the situation of Iranian merchants and provide for storehouses for commodities boosting trade volumes.
Is Iran eyeing to utilize investment chances provided by 2022 World Cup in Qatar through this cooperation?
We are looking forward to 2022 World Cup and have planned for it. That is why we have agreed to swap wharves and work in both FOB and CFR methods. In FOB shipping, the goods are loaded in our wharf on board a vessel designated by Qatari side while in CFR, the Iranian merchants ship construction materials to Qatar on boards of their own vessels. We seek to involve our shipping and transportation in business value chain through CFR.
Why was Bushehr designated? Who decided on this?
Iranian free trade zones are located in borders. They are supposed to collaborate with particular business partners. For instance, Makoo free trade zone with Turkey and Qeshm Island with Persian Gulf littoral states. However, Bushehr was picked up by the Qatari delegation headed by Mohammad Bin Abdollah Al-Ramihi, director for Free Trade Zones and Deputy Minister for Foreign Affairs during their visit to the three Iranian ports namely Qeshm, Bandar Abbas and Bushehr.
The point is Bushehr is not a free trade zone. Is it still a good alternative for trade?
Although approved to serve as one, it is yet to be officially designated as a free trade zone as the bill is awaiting submission to the Parliament. Free trade zones are exempted from labor code, customs, taxation, money and visa regulations and that meets some of the requirements for trade.
When do you expect the bill to be presented to the Parliament? How much time is needed to finally call Bushehr a free trade zone?
As the usual practice, it will take long. But given the support promised by the Spokesman of the Parliament, Mr. Larijani, and his recent visit to Jask Port, I am very much hopeful to finalize it shortly.
According to your earlier remarks, Iran proposed three regions to set up the joint free trade zones, what were Qatari proposals in this regard?
The Iranian delegation comprising of five officials from free trade zones, Bushehr governor and nine officials from Tehran and Bushehr Chamber of Commerce paid a visit to Qatar in order to review alternatives as agreed before. As the nearest land to Iran in the north, the Qatari officials suggested Al- Ruwais port which is new and yet to be completed. There is a 7-meter-deep U-shaped basin for loading activities which means the capacity is limited. The basin is connected to the sea via a 5-meter-long channel. In the course of negotiations, the Qatari side numerated their needs as construction material and food. As to construction materials export, we discovered that loaded barges weighing 15,000 to 20,000 tons can pass through Al-Ruwais wharf at times of tide. So we approved the location. As for food, we visited a wharf in Duha where the Iranian boats exporting vegetables, herbs and summer crops to Qatar were facing difficulties and limitations as the buyers did not unload the goods all at once and used their boats to store the purchased goods for up to 20 days while the Iranian merchants had to wait without entering the country given the difficulties in obtaining entry visa. We raised the issue in a meeting with Qatari officials and requested them to issue 72-hour visa for Iranian sailors and merchants to ease their business. So, finally, it was decided to designate Al-Duha port for the export of food and crops.
How long will the project last and when will it kick off?
No specific timeframe is set. Bushehr governor, Mr. Salari, has been assigned to embark on the preparation upon his return. What is clear is that the two governments have completed the formalities and the rest lies in the hands of private sector including the Chambers of Commerce of Tehran and Bushehr and other merchants in order to identify the bottlenecks and inform us. Every three months, the representatives of the private sector and Free Trade Zone Organization are set to get together so that required facilities are identified and supplied duly. Therefore, the timing depends on when the private sector organizes the project.
What commodities are to be imported from Qatar?
We have not decided on any particular item yet. They can meet our needs on a competitive basis. What is important is to create a competitive environment for the merchants to compete in. For sure, if a particular commodity is offered in lower price, the demand for it will go up. Therefore, the Qataris are free to compete with each other in any areas and enter our markets.
Have you conducted any negotiations on the type of goods? Are they consumer goods?
Qatar has not made any proposals yet and we have also left the doors open for further discussions. In the realm of bilateral trade, proposed conditions should be attractive for both sides. For instance, Qatar needs to import beef, chicken and food. To this end, Iranian or Qatari merchants can each compete in supplying the required cooling facilities.
How is it ensured that the imported and exported commodities meet the required standards?
The buyer will control the quality and is responsible to supervise the process. To this end, the buyer places order while defining the precise requirements and then, assigns inspectors to take samples from the concerned shipment.
As Qatar is interested to import construction materials from Iran, should Construction Engineering Organization get involved?
No. The project concerns business and trade and has nothing to do with construction and therefore, no intervention is required from the said organization.
Is there a ceiling for trade volume?
Given the huge number of construction projects, Qatar requires 20 million tons of sand each year. Last year, Iran exported only 40,000 tons. Therefore, we are determined to get the utmost and to this end, no ceiling has been defined.
Are construction materials limited to sand or include other items as well?
Qatar needs to import sand. So for the time being, we plan to export sand. However, there is huge work when it comes to phone parts, valves, pre-fabricated parts, frames, pipes, switches and sockets and electrical appliances. Iran stands strong in terms of producing construction and building materials. They are not luxury but of good quality. Except for some foreign imports in this area, we are almost self-sufficient.
Where is the exact location of land in Bushehr to be allocated to Qatar?
Negin and Sadat region. Opposite Bushehr wharf, a large unexploited piece of land of 4000 acres is located. Bushehr officials are currently constructing a port by the help of private sector in order to revive the region. We are looking forward to the completion of the said project and remain hopeful that the Free Trade Zone Organization renders required support.
Have the two parties discussed the exact measures of lands?
We are yet to discuss the details but I do not see any problems on the way as we need to export and they need to import. Our responsibility is to prepare the Iranian side. To this end, as Qatar is a target market, we need to treat customer orientation as a priority.
Is preferred trade with Qatar on the agenda?
The initiative is just the beginning. We still have a long way to get there.