IRAN IS OPEN FOR BUSINESS

Some European companies are ready to seize business opportunities Iran. Iran is the second-largest economy in the Middle East-North Africa region after Saudi Arabia with an estimated nominal GDP of $ 397 bn in 2015. Iran has the second largest population in the Middle East with around 80 million people. Over 60% are estimated to be under 30 years and the workforce is highly educated.

EU trade with Iran currently stands at around $ 8 bn and is expected to quadruple in the next 2 years.

Iran's economy is currently reliant on the oil and gas sector, though the country is looking to diversify its economy. Iran also possesses significant agricultural, industrial and service sectors. The main imports to Iran are non-electrical machinery,, iron and steel, chemicals and related products, transport vehicles, electrical machinery, tools and appliances.

The Iranian Government is keen to attract foreign investment, with foreign direct investment needed across all major economic sectors. Over a trillion $ of investment in infrastructure is likely to be needed in the next 10 years. 

Areas of interest

1. Auto Manufacturing: Auto manufacturing is one field where interest could be strong. Daimler AG's truck division foresees joint production of trucks and engines and a marketing company; it plans to reopen its representative office in the first three months of this year.
2. Airports and Infrastructure:  Iran's aviation structure is in significant need of investment. Airports in Iran are managed by Iranian Airports Company. There are 54 airports around the country, including eight international airports. The most significant of these include Imam Khomeini International and Mehrabad Internationa, both in Tehran, and the international airports serving other major cities such as Mashhad, Isfahan, Tabriz and Shiraz as well as the Gulf islanbd of Kish. Investment is planned at a number of the country's airports, not least to provide for the expected surge in visitors as Iran returns to the international mainstream. Iran's airlines have among the oldest fleets in the world at 23 to 27 years on average. Iran plans to buy 100 commercial airplanes from Airbus.
3. Rail Sector:  As of 2015, Iran has a mainline rail network of 10,223 km, including 1,839 km of side adn shunting tracks and 949 km of industrial and commercial tracks. The network is centred on Tehran. From the capital, lines run northwest to the borders with Turkey and Azerbaijan, northeast of the Caspian Sea port of Bandar Torkaman, and east to Mashhad and Sarakhs on the Turkmenistan border. The main line network is operated by Islamic Republic of Iran Railways (RAI), which is controlled by the Ministry of Roads and Urban Development. The RAI has plans to extend its network to 25,000km by 2025. A lot of construction work is planned or underway. Siemens is interested in infrastructure projects in the rail sector.
4. Pharmaceuticals: Novo Nordisk plans to build a Pharmaceutical plant.
5. Oil: Iran holds 9% of the world’s proven oil reserves, but its current output is only about 4% of the world's total. The amount of oil it holds surpasses that of Iraq, Kuwait and the United Arab Emirates (fourth largest crude of oil reserves- 158bn barrels, equivalent to more than 150 years of production at the rate of extraction recorded in 2014.  Its natural gas reserves are considered among the biggest in the world. The investment priorities in the oil and gas industry include oil recovery projects and the construction of liquefied natural gas (LNG) export facilities. Iran shares the largest gas asset with Qatar and has the potential to become a leading LNG exporter if it can access the right technology. Saipem (Drilling subsidiary of ENI) will offer engineering, construction, drilling services. Other oil companies such as BP, Shell, Total, Statoil and Lukoil are all reported to have shown interest in Iranian oil and gas.
6. Retail and Luxury Goods: Iran has a sophisticated economy with young consumers eager for western goods (e.g. BMW, Burberry and Cartier. There is significant interest in retail, consumer products, leisure, hotels, financial services.

Challenges of Doing Business in Iran

• Risk of bribery and corruption. Iran scores high on the Corruption Perception Index.
• Influence, direct or indirect control by the Iranian security services of many Iranian companies.
• Inflation, price control and subsidies reduce the potential for private sector growth.
• Iran ranks low on the World Bank Ease of Doing Business report ranking 118th in 2015-2016 report.
• Lack of investment in infrastructure.
• Risk of bureaucratic delays.
• Some sanctions on Iran remain in place.