More than 3 decades of political and economic isolation has not negatively impacted Iran’s attractiveness as an emerging market.
Iran’s emergence from isolation could be the most significant opening of an economy since the fall of the Soviet Union.
Iran has long been of geostrategic importance because of its central location in Eurasia and Western Asia.
With an area of 1,648, 195 m2 Iran is the second largest country in the Middle East and the 18th largest country in the world. Its area roughly equals that of the United Kingdom, France, Spain, and Germany combined, or somewhat more than the US state of Alaska.
The country has a population of 77 million ranking number 17 in the list of countries by population. Half of this population is under the age of 35 and there is literacy rate of 93%.
With a population of 7,705,036, Tehran is the country’s capital and largest city. It is as well known to be the leading cultural and economic center of Iran. The other major cities of the country are: Mashhad, Karaj, Isfahan, Shiraz and Tabriz.
Iran is a major regional and middle power, exerting considerable influence in international energy security and the world economy through its large reserves of fossil fuels. Iran has the second largest proved gas reserves in the world after Russia and also ranks fourth in oil reserves.
Iran’s economy is a mixture of central planning, state ownership of oil and other large enterprises, village agriculture, and small-scale private trading and service ventures.
The Iranian government’s officially stated goal is to establish a new world order based on world peace, global collective security and justice.
Attractive factors for any investor may include
-An established banking sector
-Transportation, aviation and energy infrastructure
– Brand conscious consumer market
– Large number of port facilities in Persian Gulf and Caspian Sea
-Rich natural resources of gas, oil, copper, aluminum, silver and gold.
-More than 20 free trade and special economic zones ready to serve international companies- some are actually tax free environments.
– A gateway for shipments and business to and from South-West Asia and Central Asia Caucuses.
-Attractive law on foreign investment
The sectors that could attract investment in Iran are broad. The first and foremost obvious destination for development would be the energy sector which has been set back by the lack of new equipment and technical expertise as oil major entities haven’t had presence in the country. The other attractive sectors include aviation, retail, and automotive sectors.
With the lifting of sanctions, the entry of official retail outlets will be able to tap into a large brand conscious population. This will boom the construction and retail sectors.
Despite the promising picture we described, there are clearly obstacles to do business in Iran that would go beyond just sanctions. Any investor looking for investment in the country would face a set of challenges that is primarily due to not having much precedent of foreign investment during decades of isolation. Thus, having a business strategy, local knowledge and legal expertise will mitigate risk and maximize profit of investment in Iran: the last frontier market.