SINGAPORE: A new milestone in Singapore relations with Iran. The two countries have signed a Bilateral Investment Treaty (BIT) following the reintegration of Iran into the global economy after years of international economic sanctions.
The delegation led by the Singapore Business Federation into Iran has been touted as the largest trade delegation from Singapore to the Middle East. The 51-strong trade mission is accompanied by Singapore's Trade and Industry Minister S Iswaran.
During his two-day visit to Tehran, Mr Iswaran inked the BIT with Iran’s Minister of Economic Affairs and Finance Ali Tayyebnia.
Among its features, the agreement will grant investors common investment treaty protections. These include the right to fair and equitable treatment, most-favoured-nation treatment, national treatment, protection against expropriation, and a guarantee of free transfer of capital.
"This visit is an important step in the journey of deepening our economic collaboration and business ties between our two countries, between the two governments," said Mr Iswaran.
"We’ve signed the bilateral investment treaty which is a signal of the whole government’s commitment to promoting stronger economic ties and also a signal to the business community that their investments will be afforded appropriate protection," he added.
The recent lifting of the international trade sanctions against Iran has opened up fresh trade and investment opportunities with the region’s second largest economy, which boasts an estimated gross domestic product of US$406.3 billion.
Iran will now have access to about US$100 billion in frozen funds. It will also allow the country to increase its oil revenue exponentially to the tune of between US$3 billion and US$4 billion dollars a month by the end of the year even at the current low crude oil prices.
The injection of funds will unleash a strong demand internally and offer numerous business opportunities for countries that trade and do business with the Islamic Republic.
Before sanctions were imposed, Singapore’s bilateral trade with Iran amounted to US$6.6 billion dollars in 2011. Trade however fell to US$2.6 billion dollars in 2012, before hitting a record low of about $171 million dollars last year.
The new treaty is expected to help change all that.
"I (spoke to) many of my members, who used to trade with Iran, either via import or export," said SBF chairman Teo Siong Seng. "With the sanctions, they had to stop their activities. I think with the slowdown of the economy it will give them a lot of opportunities during the difficult period."
"Well, it’s a big economy, I think everyone has to look at their own industry and assess what opportunities there may be," said MTQ Corporation Limited's Group CEO Kuah Boon Wee. "It’s hard to find growing markets nowadays. And given the base that they’re at, this is definitely one.”
During his visit to Tehran, Mr Iswaran also met with Iran’s Minister of Industry, Mine and Trade, Mohammad-Reza Nematzadeh before returning to Singapore on Tuesday.