Text size:

  • Small
  • Normal
  • Large
Until June 2010, Iran was the top export destination for the members of the Dubai Chamber of Commerce and at its peak Iran trade accounted for 7 per cent of the UAE's GDP. Antonie Robertson / The National
Until June 2010, Iran was the top export destination for the members of the Dubai Chamber of Commerce and at its peak Iran trade accounted for 7 per cent of the UAE's GDP. Antonie Robertson / The National

Dubai traders call for relief on Iran exports

Exports to Iran by members of Dubai chamber have slumped by more than 80 per cent in the past two years and the downward trend is unlikely to change without an easing of global sanctions, said a senior Dubai official.

Exports to Iran by members of the Dubai Chamber of Commerce and Industry have slumped by more than 75 per cent in the past two years and the downward trend is unlikely to change unless global sanctions against Tehran are eased, said a senior Dubai official.

Levels of average monthly exports and re-exports had slid to Dh1.8 billion (US$490 million) from about Dh7bn two years ago, said the chamber's director general Hamad Buamim.

"We have lost a big chunk of our trade with Iran," he said. "The biggest factor is sanctions and secondly there are limitations on financing trade with Iran. Thirdly, the depreciation of the Iran currency has made it difficult for Iranians to trade."

The data is a signal of the dramatic turnaround in the once bustling flow of goods to Iran from Dubai, which for centuries has acted as a gateway for the onward shipment of all manner of goods to the country.

As recently as June 2010, Iran was the top export destination for members of Dubai chamber and at its peak Iran trade accounted for 7 per cent of the UAE's GDP.

But obstacles to trade have emerged as the international community has agreed to sanctions over the past two years aimed at tightening the net around Iran's economy in an effort to bring pressure on the country over its suspected nuclear weapons programme. Tehran says its nuclear ambitions are peaceful.

Mr Buamim believes that without an easing of the sanctions, there will be little improvement in the outlook for Dubai's commercial ties with its near neighbour.

"If the restrictions on trade the sanctions have imposed are reversed with international blessing, we can gain some of the lost trade back," he said. "But until then Dubai will be affected as Iran will build a relationship with other countries that are dealing with them."

In an effort to beat sanctions, Iran has sought to secure millions of tonnes of wheat through barter deals with India and Pakistan. Food is exempt from the global sanctions. But the UAE has so far not attempted a similar deal.

Arms and machinery and equipment for Iran's energy and aviation sectors are among exports barred under sanctions.

However, exporting other goods to the country has become trickier as banks and exchange houses have cut their dealings with the country in response to pressure from the West and the UAE Central Bank.

Many lenders have reduced letters of credit or other forms of finance to fund goods. Iran's deteriorating economy has also taken its toll on trade.

Iran's currency, the rial, has lost about half its value in open trading in the past year, pushing up the cost of foreign-made goods and stoking demand for locally produced items.

The currency sells at about 30,000 to the US dollar in the open market. A rate of 12,000 to the dollar is available for the import of some basic goods.

The rial's collapse has also made it difficult for many Iranian buyers to pay for goods. The National reported in March that Dubai traders were owed more than Dh1bn by Iranian buyers.

"It's still too risky for many businesses in Dubai to do trade with Iran. Many who do will only do business in cash and not many people can afford to pay on the other [Iran] side," said Ali Sowdagar, a marketing representative with Iran Insurance, a Dubai insurer of export credit.

Re-exports to Iran from the UAE dropped by nearly a third in the first half of 2012 from the year earlier period, Dow Jones Newswires reported last week, citing a UAE Ministry of Foreign Trade official.

 

tarnold@thenational.ae

Back to the top

More articles


Editor's Picks

 Cityscape Abu Dhabi 2014 will run until April 24, 2014. Fatima Al Marzooqi / The National.

In pictures: Cityscape Abu Dhabi 2014 opens
at Adnec

Key developments and master plans are being unveiled at this year’s property exhibition in the capital.

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Designed by London-based Thomas Heatherwick, founder of Heatherwick studio, the park will feature an outdoor cinema, an organic garden, picnic areas and cafes and restaurants. Photo courtesy Salama bint Hamdan Al Nahyan Foundation

Futuristic Abu Dhabi park to be built in the desert shade

Spread over 125,000 square metres, Al Fayah Park, on Airport Road, will be covered by a sand-coloured canopy, 20 metres high, with the appearance of cracked desert land from above.

 Room with a view from one of the 21 duplex penthouses located in the Gate Towers sky-bridge. The sports courts and swimming pools can be seen below. Courtesy Alda

In pictures: Aldar’s Gate Towers Penthouse Collection on Reem Island

Aldar launched its Gate Towers Penthouse Collection at Cityscape Abu Dhabi. The launch features 21 penthouses spanning the skybridge, with each having a private indoor pool and incredible views.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National