“They have to start everything from scratch”: Armenian economist on entering the Iranian market
Economic cooperation between Armenia and Iran
In the next two months Iran intends to open a shopping center in Yerevan where more than eighty Iranian companies will be represented.
According to the trade representative of Armenia in Iran, Vardan Kostanyan, a similar center for Armenian goods could be opened in Tehran. Negotiations on this prospect are underway.
Economist Armen Ktoyan believes that Armenian entrepreneurs are not taking advantage of the Iranian market’s potential.
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According to the Armenian Ministry of Economy, Armenian-Iranian economic relations are expanding.
“The opening of the trade center will contribute to increasing the level of trade between Armenia and Iran and strengthening Armenian-Iranian business ties,” the ministry believes.
The shopping center to be opened in Yerevan will occupy an area of about 18 thousand square meters, and will be financed by Iran.
In turn, if a shopping center for Armenian products opens in Tehran, Armenia will cover the costs.
Trade relations data
The Armenian Foreign Ministry periodically publishes data on business and economic ties with partner countries. According to information updated at the end of June 2022, Armenia exports electricity, meat, timber, and scrap metal to Iran.
The main products imported from Iran are
- gas,
- oil products,
- polymers,
- fertilizer,
- construction materials.
In 2021, import volume exceeded export by almost six times.
The Armenian Foreign Ministry believes that tourism also contributes to the development of bilateral economic relations, and reports a regular increase in the number of visitors from Iran.
Commentary
According to economist Armen Ktoyan, the Iranian market is large and dynamic.
“I cannot immediately give an estimate in numbers, but it is obvious that there is potential for cooperation that is not fully utilized,” the JAMnews expert said.
He believes that Armenia-Iran economic cooperation could be mutually beneficial, but so far it is one-sided. Armenia imports several times more than it exports:
“Iran can also be used to enter the Persian Gulf. In terms of exports there are other interesting markets in the region.”
According to the economist, the Iranian market is underestimated in many respects, unlike, for example, the Russian market.
“Our manufacturers are not very comfortable building relationships there due to cultural differences and language barriers. They have little experience in this market and have to start from scratch. And the Russian market can be seen as a continuation of former Soviet ties. If difficulties can be overcome, a qualitative shift in exports to Iran may occur,” Armen Ktoyan stated.
He did not undertake to say which local goods will be more in demand if an Armenian shopping center opens in Iran; this would become clearer with a study by industry.
“It is possible that competitive advantage will be found in areas that we do not even count on,” he said.
Economic cooperation between Armenia and Iran
