More than meat and butter on exporters' Middle East menu

By David Barber

Friday 2nd June 2000

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Zespri, Connectel, New Zealand Post and Tait Electronics are among a group of companies taking advantage of new trade opportunities in the Middle East.

Relations with Iran have moved on to a new plane offering potential for economic cooperation in the Middle East.

The connection between this country and Iran had long dominated by Tehran's demands that the government direct oil companies to import more Iranian product in return for buying cut price surplus meat and butter.

But high level talks in Wellington last week saw both sides confirm a shift in economic links to a broader, more mature relationship that officials believe offers real prospects for exporters, service industries and consultancies to capitalise on Iran's strategic location in the region.

This country opened its embassy in Tehran 25 years ago. A joint ministerial commission was established to put trade links on a political level in 1985 and last week's meeting was the first attended by private sector representatives.

It marked the tentative emergence of Iran, whose centrally planned economy is in a severe domestic recession caused by declining prices for oil which accounts for 90% of export earnings, onto a wider international stage.

Back in the mid-1980s Iran bought up to $400 million worth of New Zealand's over-production of meat, butter and wool at cheap prices, and complained bitterly this country did not buy its oil in return.

Now Iran is largely self-sufficient in those commodities and total exports were worth only $58 million last year, while coincidentally New Zealand is buying more Iranian oil, pushing imports up to a record high of $34 million.

Iran now sees this country as a source of technical expertise and a potential partner in joint ventures for exporting to the big markets of the bordering central Asian republics and elsewhere in the Middle East.

Saeidi Kia, the Iranian Minister of Construction Jihad, who has wide development responsibilities, identified forestry and agriculture as key potential areas for cooperation when he led his delegation to the monisterial commission.

But the talks also covered a range of non-traditional sectors, with Consultel making a presentation on behalf of telecommunication companies interested in privatisation studies for the Iranian market and New Zealand Post offering its management consultancy services.

The number of joint ventures is already growing.

They include a Zespri International project to grow kiwifruit on the Caspian Sea and ensure year-round supply in the Middle East, and a New Zealand-Australian pilot geothermal plant with Iran's Ministry of Energy.

Tait Electronics has a contract to provide telco equipment to the new Tehran international airport and Intermech, of Auckland, is converting part of the capital's bus fleet to CNG as a trial project.

Mr Kia told The National Business Review this was an important project for Tehran, which wants to reduce pollution in the city, while finding new uses for gas from their fields, much of which is burned off in oil production.

Business representatives asked Mr Kia and his officials to pursue a number of problems they had struck in dealing with Iran, including difficulties in obtaining business visas, complex tax laws and delays in remitting contract fees.

The Iranians outlined a number of areas in the agricultural sector where they were seeking New Zealand technical assistance, including control of fire blight on apple trees and kiwifruit pests and diseases.



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