The two parties signed a memorandum of understanding in April of last year, with Tooba agreeing to inject $2 billion into the region over a period of ten years. (image: Yonhap)
CHEONGJU, South Korea, Nov. 18 (Korea Bizwire) – Iranian traditional medical company Tooba promised North Chungcheong Province it would make a $2-billion investment in Osong, after signing an agreement with the provincial government in 2015.
Although highly regarded at the time, recent circumstances are breeding skepticism, with many questioning the legitimacy of Tooba’s assertions, and fear spreading that the project might end up in turmoil.
The two parties signed a memorandum of understanding in April of last year, with Tooba agreeing to inject $2 billion into the region over a period of ten years. The agreement covered a wide spectrum of medical and pharmaceutical enterprises, including the establishment of a research institute for Iranian traditional medicine, a pharmaceutical factory, and a clinical hospital.
However, Tooba failed to deliver the initial capital scheduled for July and August 2015, and is currently months overdue on rental fees for its Korean office. And despite the Chung Buk Free Economic Zone Authority (CBFEZA), which oversees the project, insisting that everything is on track, experts on Iranian business are skeptical that such a massive investment is possible given Iran’s current economic situation.
Iran finally regained its place in international society in January when UN sanctions were lifted after the signing of a nuclear deal with the P5, Germany, and the E.U. But because of the U.S. sanctions still imposed on Iran, the country’s economy, including trade and foreign investments, is still in chains.
“Local banks have not yet been rated by international credit rating agencies because of U.S. sanctions,” said President Hossein Tanhaee of the Iran-Korea Chamber of Commerce & Industry. “In another words, they’re not in a position to make trade guarantees or payments.”
Tanhaee also added that he has not heard of a company named Tooba.
“There are several traditional medical companies, but it’s certainly not one of the better-known ones,” he said, indicating that Tooba is not the kind of company with the financial capacity to invest huge sums of money overseas.
An official from the Embassy of the Republic of Korea made a similar claim, saying that “although we did confirm the actuality of the company named Tooba, investing such capital overseas won’t be an easy task, especially given Iran’s economic circumstances.”
“Its economy is still very uncertain. Investments and business agreements must be made after careful evaluation.”
Nonetheless, the CBFEZA is maintaining its confident outlook, claiming that Tooba’s reconfirmation letter to the province included the signatures of both the Tooba CEO and the President of the Agricultural Biotechnology Research Institute of Iran, Iran’s state research institute.
“It is difficult to inquire about the financial status of Iranian companies given the country’s current economic conditions. Corporate information is not shared the same way it is in Korea,” a CBFEZA official said. “This must also have been the reason that the local Chamber of Commerce & Industry wasn’t aware of Tooba.”
By Kevin Lee (kevinlee@koreabizwire.com)
