Trade between Iran and Malaysia expected to improve

Nov 19, 2001 01:00 AM

Trade between Iran and Malaysia is expected to improve with greater emphasis given to promote business activities in both countries. With ongoing bold efforts taken by the administration of President Mohammad Khatami to restructure laws related to investment with the objective of creating a business-friendly environment to investors, "the country is hoping for larger influx of foreign investments," Iranian Ambassador to Malaysia, Mohammad Qasem Moheb Ali said.
For example, he said Iran under the Direct Taxation Act amended in 1992 foreign investors may enjoy several incentives such as low corporate income tax, full tax exemption for low- and medium-cost housing projects and agricultural activities. In addition, the Law for the Attraction and Protection of Foreign Investments provides the rights to transfer annual dividends and repatriation of original capital and profit, and equal treatment accorded to domestic entities.

Bilateral trade volume between Malaysia and Iran has improved to RM 257.5 mm ($ 67.8 mm) in the first nine months of this year, compared to RM 234.1 mm ($ 61.6 mm) last year and RM 140.4 mm ($ 36.95 mm) in 1998. Malaysia's major export items to Iran include natural rubber, paper, palm oil, industrial fats and plastics while imports consist of oil and oil products, chemicals, dried fruits, building materials and aluminium.
The use of palm oil from Malaysia in Iran has also increased where imports totalled about 15,000 tons in 2000, and in the first seven months of this year, the amount has climbed to 55,000 tons. "Both countries are active members of the Organization of the Islamic Conference (OIC), and with the current global economic and political uncertainties arising from the terrorist attacks in the US the need for Muslim nations to strengthen their economic cooperation becomes more urgent," Moheb Ali stressed.
He noted that although the traditional market for Iranian goods and products has always been Europe, more attention is now given to develop new markets in the Asian region and Russia. "More efforts should be undertaken between the Malaysian and Iranian chambers of commerce to forge a better business linkage," the envoy stressed.
He proposed that both countries hold regular trade fairs to promote the various export-potential products and services. Malaysian investments totalled some $ 1 bn, mainly in the oil and gas sector. He said Petronas' investment in the oil and gas sector stands at $ 900 mm while the balance is in the telecommunication sector in Isfahan.

Iran produces 4 mm bpd of crude oil with reserves estimated at 12.67 bn barrels or 9.3 % of world's total oil reserves while gas reserves stand at 17 bn cm or 13.7 % of global reserves. As the country rapidly moves towards industrialization, its power needs are also steadily growing. Malaysian companies may participate in the construction of power plants of various capacities in Qazvin, Yazd, east Tehran, Kerman and Tabriz.
Under the third five-year development plan beginning 2001, the ambassador said the Iranian government will further push privatisation and liberalization measures in the transport, agricultural, telecommunication, industrial, automotive and oil and gas sectors. Among the steps taken to encourage foreign investments is the setting up of Free Trade Zones (FTZs) in several parts of the country.
Currently, there are three such FTZs -- Kish and Qeshm islands in the Persian Gulf, and the Chahbahar Port on the Sea of Oman. The FTZs offer, among other things, a 15-year income tax exemption, freedom for the transfer of capital and profit, and free entry of machinery and raw materials to the zones. Foreign investors, for example, can now hold full ownership in the banking sector.

The ambassador said although the oil and gas sector and the petrochemical industry form a major component of the economy, other sectors will also have to be developed accordingly. These include tourism, mining, power generation and industrial products.
"There is tremendous potential to promote two-way tourism traffic between both countries, especially in the wake of the recent OIC meeting on tourism in Kuala Lumpur. "What is needed is a concerted effort to conduct promotional activities and expose various interesting tourist destinations of both countries, which Iran has a lot to offer," he suggested.

Source: IRNA
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