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Mehrdad Syadatnasab – Reopening Of The Economy To Global Business

New Beginning For Iran’s Economy
Iran is an important and historical country with an ancient civilization in the Middle East Region. Situated in strategic location, with a population of about 80 million, it is the world’s 17th-most-populous market. The economy of Iran is the eighteenth largest economy in the world by purchasing power parity (PPP). In fact, Iran is a very young nation and it is not only about quantity, but also quality.

Iran, as a major energy producer in the Middle East, holds 10% of the world’s oil reserves (second largest oil producer) and second largest reserves of natural gas (15% of the world’s total) and it has the potential to become an energy superpower.

The economic fundamentals are strong. It has been described as the Germany of the Middle East; comprising an educated workforce, developed infrastructure and a proud tradition of manufacturing with seven Free Trade-Industrial Zones and 30 Special Economic Zones. The country has competent farmers, carmakers, drug firms and a fairly sophisticated service sector with abundant potential in engineering and technical services (721 Techno-Engineering projects have been executed in 42 countries by Iranian companies over the last 10 years), making it less dependent on oil, now at rock-bottom prices, than other big producers such as the Persian Gulf states.

The economy of Iran has been hit by sanctions and extensive trade restrictions in recent years, yet the nuclear deal has opened a clear path for total obliteration of sanction policy against the country. Although being sanctioned has been a big issue for the economy, we can address this issue as an opportunity rather than a threat.

After years of intensive negotiations, all the misunderstandings around Iran’s nuclear activities have finally cleared. In July 2015, Iran signed a historic deal with the P5+1 group of international mediators and now are taking the next step towards integrating more deeply into the global economy.

In 2015 and 2016, Tehran hosted a flurry of trade delegations and signed new contracts to boost cooperation and promote various opportunities in tourism, transportation, technology, foodstuff, aviation and machinery as well as oil and gas and other sectors. (Around 60 foreign delegations visited Iran in 2016; at least a dozen were from Europe.)

As the largest untapped market with a very young population, the lifting of sanctions will bring around a host of new opportunities to foreign businesses with a prior presence in Iran as well as those interested in entering the Iranian market. New Iranian legislations such as the Foreign Investment Promotion and Protection Act have come into force to attract more foreign investment, removing previous restrictions on the percentage of foreign shareholding in Iran, and the possibility of registering an Iranian company with 100% foreign capital as well as unlimited transfer of capital and dividends where applicable.

The country has one of the lowest levels of external debt in the world, which makes it more resistant to global shocks. (The external debt to GDP is less than 5 percent). Considering the substantial amount of notsatiated demand in almost every sector, an industrial base which requires renovation and the rich natural resources mainly underutilised due to investment deficiency in recent years, Iran has extra ordinary expansion and investment potentials in the fields of oil, gas, petrochemicals, mines, industries, agriculture and service sectors and it’s easy to see why investors and international companies are getting very excited about Iran.

It is worthwhile to mention that, the removal of international sanctions along with the government’s continued privatisation drive will open new investment and trade opportunities for Iran, in both its oil and non-oil sectors, such as infrastructure, automotive and transportation and we can say that the Economic Renaissance has started and Iran’s Golden Times are not far away.

 Mehrdad Syadatnasab, Commercial Attache of Iran Embassy.JPG

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