C O N F I D E N T I A L MUSCAT 000007

SENSITIVE
SIPDIS

E.O. 12958: DECL: 2020/01/05
TAGS: ECIN ECON ETRD PINR PREL MU
SUBJECT: OMAN AND IRAN TO ESTABLISH A $50 MILLION JOINT VENTURE
INVESTMENT AUTHORITY

CLASSIFIED BY: Richard Schmierer, Ambassador, Department of State,
Embassy Muscat; REASON: 1.4(B), (D)


1. (SBU) The Omani Center for Investment Promotion and Export
Development (OCIPED) recently announced on its website that it is
in the process of establishing an Oman-Iran investment company with
an initial capital input of $50 million. The head of OCIPED, Dr.
Salem Nasser Al Ismaily, signed an agreement for the establishment
of the company with Dr. Mahdi Radwi, the Chief Executive Officer of
Iran Foreign Investment Company. The purpose of the company is to
"further enhance the commercial and economic cooperation between
the Sultanate of Oman and the Islamic Republic of Iran." OCIPED
foresees the company as playing an important role in increasing the
economic cooperation and trade exchange between the two countries.
The joint venture comes six years after OCIPED established an
economic cooperation office in Bandar Abbas to provide commercial
services to businesses and investors from Iran and Oman. The office
also provides information on commercial and investment
opportunities and coordinates with the public sectors in both
countries. OCIPED also assists Omani exporters in entering the
Iranian market.




2. (C) OCIPED is the government body tasked with promoting Omani
exports and is a department within the Ministry of Commerce and
Industry. As part of its active promotion of trade linkages, OCIPED
has entered into numerous Memoranda of Understanding, including
with South Korea and Malaysia. In a recent meeting with EconOff,
the Acting Director General of Export Development, Faris Al Farsi,
stated that Oman had contracted for market studies on to how to
enter the market of/maximize trade with a number of non-GCC Arab
states or states with which there are traditional ties; Libya,
Syria, Yemen, Iran, Kenya, Tanzania and Sudan. (NOTE: OCIPED used
the U.S.-based firm Ernst & Young for the Iranian market study. END
NOTE)




3. (C) COMMENT: It is OCIPED's mission statement to promote Omani
exports. Iran is a logical export destination as an historic
trading partner and the inexpensive shipping costs given its
proximity. As Oman, a country of comparatively limited wealth in
the GCC context, looks to diversify out of oil dependency, it makes
economic sense to pursue these ties. While this new investment
authority may boost Oman-Iran trade ties, the overall economic
relationship between the two countries remains limited in light of
the two countries' location and historic trade relationship.
Notably, Oman is also concurrently pursuing strengthening its trade
relationship with the U.S., with which Oman has its most
comprehensive bilateral trade agreement. END COMMENT.
Schmierer