17/02/2016
Why Iran ?
There is no doubt, Iran has a lot of potential. It is a country that boasts a domestic market of 70 million people, 11% of the world’s proven oil reserves, 15% of the world’s proven gas reserves, 11 petrochemical complexes, 3 major steel plants and much more.
However, the big question for foreign companies and especially for small and medium-size enterprises is how to turn this potential into concrete business.
Foreign companies that have experienced Iran can tell many stories . The common theme in all these stories is that Iran is, in many ways, different from other markets – even different from other markets in the Middle East. However the foreign companies generally did not understand the peculiarities of doing business in Iran exactly.
Every foreign company is in a different situation and there is no one, universally applicable rule on how to start and how to develop business in Iran. That said, there are a number of common themes that apply to many small and medium-size foreign companies. The most important of these common rules is: Take one step at a time!, test the market and don’t believe those who swear they can perform miracles and get you into business in a blink of an eye .
Iran is certainly a unique market in the Middle East. It is populous, rich in natural resources and apt to technological progress and international developments. The country's natural resources create a significant wealth. In fact, based on a resource-based evaluation, the Iranian economy is the 20th strongest in the world.
Some of the features are highlighted below:
1. Strategic Location: A unique geographical location at the heart of a cross-road connecting the Middle East, Asia and Europe, empowered by many inter- and trans-regional trade, customs, tax and investment arrangements.
2. Market Potentials and Proximity: Vast domestic market with a population of 65 million growing steadily as well as quick access to neighboring markets with approximately 300 million inhabitants.
3. Labor Privileges: Large pool of trained and efficient manpower at very competitive costs in a diversified economy with an extensive industrial base and service sector.
4. Developed Infrastructure: Territory developed networking in the area of telecommunication, roads and railways across the country.
5. Low Utility and Production Cost: Diversified range of energy, telecommunication, transportation, as well as public utilities.
6. Abundant Natural Resources: Varied and plentiful reserves of natural resources ranging from oil and gas to metallic and non-metallic species reflecting the country’s accessibility to readily available raw materials.
7. Climatic Characteristics: A four-season climatic endowment as a privilege to agricultural activities throughout the country and throughout all seasons.
8. Fiscal Incentives: Reduced tax rates from 65% to a flat fixed 25% rate of tax income despite various tax holidays highlighted .
9. Political Stability: Representative system of government based on friendly relationship with
other nations.
10. New Investment Legislation: Enactment of new Foreign Investment Promotion and Protection Act (FIPPA) to substitute the former Law Concerning Attraction and Protection of Foreign Investments in Iran (LAPFI) providing full security and legal protection to foreign investments based on transparency and international standards.
