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Omani report urges local manufacturers to export to Iran

Posted on: Thursday, 25 September 2003, 06:00 CDT

Text of report in English by Oman Daily Observer web site on 23 September

Muscat: A market study on export potential of local products in Iran found that a few Omani products have good export prospects there. The Omani products that have competitive advantage in Iran are automotive batteries, fruit juice and fibre optic cables.

The market survey, concerning the possibility of exporting 21 Omani products, was carried out by Tadvin Co (a member firm of Ernst & Young International) on behalf of the Omani Centre for Investment Promotion and Export Development (Ociped).

"Low tariffs on battery components and a large market make this an attractive area," said the study report.

Foreign brands are prevalent in automobile parts shops, with many European and American brands being sold alongside lower priced ones from South East Asia. "Our field study results suggest that some 15 per cent of all batteries sold are imports," it noted.

The latest statistics show the existence of over 4m vehicles on Iranian roads. The extreme weather condition in most parts of the country, bad roads and a high average age of vehicles result in high replacement rates, new batteries being installed every 18 months.

"On average, this means there is demand for some 2.8m batteries per annum", the study report noted.

Another Omani product that has good export potential in Iran is fruit juice, despite a ban on imports. "The high quality and attractive packaging of Omani fruit juices means that they have a good opportunity to enter the Iranian market," it said.

Although imports are effectively banned, a wide variety of juices from a range of sources are imported and brands such as Lancor and Chiquita can be found in shops in Tehran and the wealthy areas of other large cities.

As with most other foodstuff whose import is banned, fruit juice is imported through Kish Island or by traders in the Nowruz Khan quarter of Tehran Bazaar.

Juice production in Iran is restricted to Mediterranean-type fruits, and tropical juices such as mango, pineapple and guava are not locally available.

Fibre optic cable is another Omani product that can be exported to Iran on a large scale. The ongoing development of Iran's telecommunications network and the fact that the sole local manufacturer of optic fibre cables has never been able to achieve satisfactory quality or quantity mean that the country represents a very suitable market for imported optic fibre cables.

Shahid Ghandi Communication Cable Company, a wholly-owned subsidiary of the Ministry of Post, Telephone and Telegraph, is Iran's sole manufacturer of optic fibre cables and the largest consumer of optic fibre, which it purchases through tender.

The other major user of optic fibre cables is the National Iranian Railway Company, which also makes purchases through tender. Relatively small quantities are purchased by local cable manufacturers and incorporated in their cables. In order to win any sizable orders, manufacturers from the Sultanate must take part in tenders.

The study also highlighted that possibility exists for Omani companies to export its cement products for the oil sector. Iran has been importing small quantities of certain types of cement and this is the only area where exporters from the Sultanate may have an opportunity.

However, the abundance of raw materials, cheap energy, low cost of labour and heavy government investment have turned Iran into one of the region's largest producers of ordinary cement.

Among other products included in the survey, the prospects are low in the case of aluminium profiles, biscuits, ceramic tiles and sanitary ware, diapers and sanitary napkins, electric cables, fire extinguishers, fish, leather shoes, mattresses, paints, PVC pipes, vegetable oil, water heaters and wheat flour.

However, there are no prospects for exporting Omani dates, detergents and marble, the study said.

The report said that proximity to the Sultanate, the absence of customs duties and no visa requirements make Kish an easy and low cost route to enter the Iranian market.

The study further noted that it was quite clear that Omani exporters have not been successful in penetrating what is potentially one of the region's largest markets.

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