Record increase in Iran - Lanka trade ties

TRADE: The volume of two way trade between Iran and Sri Lanka has increased by over 400 per cent in the last decade, Minister of Trade and Commerce and Consumer Affairs, Marketing Development and Highways Jeyaraj Fernandopulle said yesterday.

Speaking at the inauguration of the eighth session of the Sri Lanka Iran Joint Commission for Economic Co-operation in Iran, he said: "During the past ten year from 1995 to 2005, the two-way trade has increased from US $ 111 million to US $573 million. Though the growth is so high, the trade expansion between the two countries has been confined to mainly three basic commodities - tea and coconut products from Sri Lanka and petroleum crude oil from Iran.

These three commodities represent almost 95% of our bilateral trade transactions, which is not a satisfactory phenomenon in our trade exchanges given the enormous potential for export diversification of both countries.

"As Iran is considered by Sri Lanka as a reliable and trustworthy source of supply, we import more than 65% of our country's crude oil requirements from Iran. In addition to crude oil, Sri Lanka is also purchasing from Iran, small quantities of variety of products including petroleum bitumen, synthetic rubber, carbon black, urea and copper waste and scrap.

The Minister also thanked the Iranian Government for taking prompt action to cancel the recent adverse campaign against Sri Lanka tea in the Iranian media which caused a great deal of concern in the minds of the Sri Lankan business community.

Tea accounts for about 95% of the total value of Sri Lanka's exports to Iran amounting to more than 25,000 metric tons of tea to Iran in 2005. In addition to tea, Sri Lanka's other export items to Iran are coconut products, fibreboard of wood, natural rubber, rubber tyres, garments, footwear, ceramic tableware and kitchenware. The two countries have not fully exploited the potential that could be offered by each other to maximise the gains from our bilateral trade.

"Exports by both sides have to be expanded to maximise the mutual benefits. One way of achieving this, is through product diversification which could be worked out with creation of joint ventures between our two countries on the basis of comparative advantage.

We must, therefore, vigorously follow up any joint venture proposals that could be negotiated and agreed upon between our two sides," the Minister said.

(AGP)