Business & Industry

Feb 29, 2016

NEW GREAT BUSINESS OPPORTUNITIES IN IRAN

After several years of isolation, due to the sanctions imposed since 2006 under the United Nations patronage with the allegation that the nuclear program adopted by the Islamic Republic of Iran had not only civil energy goals but also military purposes, a very comprehensive agreement signed in July 2015 between Iran and the United States of America, Russia, China, Germany, France, United Kingdom and the European Union has removed those sanctions and brought Iran again to the world business community.

In fact, in few weeks, after a historical visit of the President Hassan Rouhani to Italy and France and the visit of several Ministers to other Countries, Iran has signed great deals amounting to more than 40 billion Dollars. The largest is the acquisition of 118 Airbus planes, including 12 A-380, the biggest commercial airplane, an investment of 22 billion Dollars. Other large investments are included in the package, such as the revamping of two large refineries, the expansions of two airport terminals, and a large plant of Peugeot, among others.

But Iran is not only searching for large investments to modernize and recover economical capacity and competitiveness that was limited because of the impact of international sanctions. Being a very large Country, with about 82 million inhabitants and a GDP above 420 billion Dollars, Iran has a very positive current balance, being a large oil and gas producer, as Iran has the 4th largest oil reserves and the 2nd largest natural gas reserves (first after Russia), also has a substantial potential to develop other sectors, as agriculture, manufacturing, renewable energies and tourism, to mention only a few.

Having extensive arable land, including large irrigated areas, Iran is a good destination for food production for the domestic and foreign markets and is searching for new investments in the renewable energy sector, namely in wind and solar power plants for replacing traditional and old thermal plants.

But we would like to raise your attention to the tourism potential of Iran. In spite of the restriction of several Countries for authorizing their citizens to visit Iran and the scarcity of flights and hotels, more than 4 million tourists have visited Iran in 2014 and the projections for 2025 indicate an expectation of 20 million tourists, which means a business pool of about 30 billion Dollars in the next few years, including infrastructures and the construction of new hotels. Besides the search for new business opportunities, of course the main reason to visit Iran is not only the natural beauties – including deserts, sea side and ski resorts – but mainly the fact that Iran has 19 World Heritage Sites classified by UNESCO, being natural to emphasize Persepolis, Shiraz and Isfahan, cities that have been known for many centuries, as the Persian Civilization is one of the oldest (about 3,000 years) during many dynasties, before and after the Islamization in the VI Century. Many travel agencies, including in the United States of America, are now very busy organizing travel tours of thousands of tourists that are wishing to see those historical sites and to learn from this ancient culture.   

Iran is a key partner in any peace process in the Middle East, as a consequence of the historical role that Persia – now Iran –, has always played in the region. But it is very important to recognize the significance of Iran in economic terms. Many trade and investment Missions are nowadays organized in many small and large Countries for visiting Iran and get in touch with Chambers of Commerce and Industry, setting up business partnerships with Iranian business persons and corporations, causing hotels in Teheran to be normally full with visitors from all over the world. But everybody that has already been in Teheran, a very large city with more than 8,5 million inhabitants, says that the people are very friendly to foreigners, expecting that different cultures may live together if there is mutual respect for each believes and behaviors. Therefore, it will not be necessary to wait long to see a substantial increase of direct foreign investment in Iran, in spite of the fact that the United States are still imposing some restrictions to American banks and insurers that have not yet been removed.      

Iran imports more than 65 billion Dollars of goods, mainly from Union European Countries, China, India, Japan, Malaysia and Russia. Now that large part of the world economy is slowing down, the recovery and emerging of Iran is a very good news, showing a quick change in the traditional balance of economic power all over the world.

YOUR VIP PARTNER is always very attentive to the growth potential of Countries that deserve more attention because of the trade and investment opportunities they are creating. Some people were surprised by the move of Iran for reaching the agreement that lead to the removal of sanctions and the immediate opening of the Country for new investors and traders of all over the world. The Authorities and the people show that they want to be part of the solutions for improving growth and quality of life of Iran and most of the people and Authorities in the world are eager to respond to this new challenge. Iran needs to improve infrastructures (energy, transportation), the amelioration of the agriculture and fisheries, the urban development and the need for better housing, more education and health care, the growth of the consumer class, new hotels, etc.

YOUR VIP PARTNER is particularly interested in following the development trends of Iran calling the attention of dynamic investors from other areas of the world to the huge potential of growth in the more attractive Country in the Middle East for new investment and trade reasons.

Iran is a leading oil producer and important member of OPEC, producing more than 3,2 million barrels per day in 2014 (7th in the world), mainly for refining in the domestic market, as only in 2014 the United Nations have started to reduce sanctions, allowing the export of 1,000,000 barrels per day and released part of the funds blocked in accounts abroad. In spite of the sanctions Iran has accumulated about 100 billion Dollars of exchange reserves and now that the sanctions have been removed, Iran is again exporting  crude not only to the traditional buyers, such as India, China, Japan, South Korea and Turkey, but also to Europe, allowing for more import capacity and accumulation of exchange reserves.

But, after many years of sanctions that have isolated Iran, the major attractions for the foreign direct investment are the new opportunities that economic diversification brings, mainly in the expansion and modernization of infrastructures, shopping malls, hotels, office buildings, etc. in the major cities, especially in the capital Teheran.

It is important to state that investors already active in Iran consider this Country is now much more attractive destination for further investments, but it is necessary to recognize that there are still some people still less enthusiastic, in spite of the recent clear improvements. For a fair analysis of the current situation and the appraisal of the new opportunities YOUR VIP PARTNER recommends to potential investors to use the advisory services of reliable consultants with a deep knowledge of Iran, specially how to do business in this challenging Country.

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