Financial Tribune, Iran

Jan 20 2018

 

 

 

A rmenian Prime Minister Karen Karapetyan said trade between Iran and Armenia during the 10 months of 2017 was worth only $62.5 million, excluding energy.

 

“The trade growth rate between our countries is one of the most insignificant in comparison with other countries, only 9-10%. So our Iranian partners and we believe that we will have much to do, and there is a great potential for a sharp growth in trade,” he was quoted as saying by ARKA News Agency at a parliamentary session on Wednesday.

 

Armenia’s exports to Iran include meat, paper, steel, mechanical and medical equipment, coffee and mineral water while Iranian exports to Armenia include natural gas, bitumen, oil, petroleum products, household products, fertilizers, glass, fruits and vegetables.

 

Karapetyan said the free economic zone located in the southern Armenian town of Meghri on the border with Iran could play a role in increasing trade between the countries.

 

The free zone, inaugurated by Karapetyan on Dec. 15 last year, embraces a wide range of fields, including agriculture, manufacturing, trade, cargo shipment, storage and tourism, among others.

 

Given its geographical position, commercial and logistical capabilities as well as Armenia’s multi-sector preferential trade regimes, the free zone can help link Iran, the Eurasian Economic Union and the European Union.

 

Companies operating in Meghri FEZ will be exempt from profit tax, value-added tax, excise tax and customs fees, as it would have to only pay income tax.

 

Armenian officials expect the zone to attract 50-70 companies in the coming years, investing a total of $100-130 million and creating more than 1,500 jobs.

 

“The launch of Meghri Free Economic Zone will help increase the trade turnover volumes between Armenia and Iran, exchanging experience with Iranian free economic zones,” Iranian Ambassador to Armenia Kazem Sajjadi said at the inaugural ceremony.

 

Since Armenia’s borders with both Turkey and Azerbaijan have long been closed due to the Nagorno-Karabakh conflict, Iran is one of the only two conduits for landlocked Armenia to the outside world.

 

About a rail project to connect Iran and Armenia, the Armenian premier said the need for a railroad link between the two countries depends on the volume of commodity that can be transported by it.

 

“I believe that today the construction of a railroad to Iran is not an end in itself, because if built it might not be used to transport as much of commodity as to become commercially viable,” he said.

 

Karapetyan said Armenia may go ahead with the project only after trade turnover between the two countries grows significantly.

 

Agreement on the construction of the rail link was approved by Armenian and Iranian governments back in 2009. In 2012, the Dubai-based Rasia FZE Investment Company was granted a 50-year concession by the Armenian government to build and manage the 305-kilometer railroad from Armenia to Iran, to be named the Southern Armenian Railroad.

 

By late 2013, Rasia FZE developed a feasibility study for the project, estimated to cost $3.5 billion. The high cost is explained by mountainous terrain through which it is supposed to pass. The 305-km-long railroad was to have a 19.6-km-long 64 bridges and 60 tunnels of 102.3 kilometers.

 

The Armenian government said that the railroad was to run from Gagarin Station in Armenia’s Gegharkunik Province to Agarak in southern Syunik and may transport up to 25 million tons of cargo a year.  

 

The railroad would provide the shortest transportation route from the ports of the Black Sea to the ports of the Persian Gulf and establish a major commodities transit corridor between Europe and the Persian Gulf region.