With an estimated population of 80.8 million people, Iran has one of the most diversified economies in the Middle East and the world’s largest untapped emerging market. The country ranks 18th in the world by purchasing power parity (PPP), with a Gross Domestic Product (GPD) of US$ 406.3 billion, making the country the Middle-East’s second-largest economy. This large population in the region not only provides a suitable market for foreign products but also can serve as a launching pad for re-export, production under license with lower labor and production costs (energy cost) aiming at other markets in the region.
Iran, a country with its continental climate, has at any given time over 40 degrees difference in temperature from one part to another. In terms of trade, this means not only an excellent tourist attraction and business but also a land of 4 season vegetables, fruits and natural products with ample sunshine and natural light for animal husbandry and crop production with much lower costs than in Europe and the Americas. This geographical diversity can be a great asset for foreign agricultures.
Another feature of Iran which makes it unique among the countries in the region is its position to serve as a corridor for export of Western products to Central Asia, Afghanistan, the Caucasus region and all land locked countries in that area. This provides a good transit corridor for particularly the export by sea which is more economical for heavy shipment. Conversely, Iran is a safe transit road for energy from the region to Europe from energy rich countries of Central Asia. Although alternative routes have been explored in this field mainly for political reasons, yet the Iranian transit road is the most economical and logical route for it.
Although it may seem a bit strange to talk about safety and security in the Middle East yet if one looks around the countries neighboring Iran, one can easily conclude that Iran is much safer for trade and business than many countries in the region.
The country has the distinction of holding the world’s fourth-largest oil reserves and the second largest natural gas reserve, contributing to more than 20% of Iran’s GPD. The Iranian oil industry is the oldest in the region and it enjoys both the energy resources and human expertise to work with them.
Iran has a diversified economy consisting of public, cooperative and private sectors. The role of the latter is steadily increasing in priority due to recent reforms implemented to boost investments and social changes. More than 500 large companies have been privatized since 2006, enhancing the country’s self-sustainability and increasing export opportunities.
The Tehran Stock Exchange (TSE) has emerged as one of the best performing exchanges in the world over the last decade. Most notably, more than 300 companies are directly involved in trading shares at the stock market. The TSE offers efficient online services, investor protection and is currently opening to new international investments.
The potential of Iran in emerging as a new economic superpower is being boosted by the increasingly likelihood of the UN, EU and even US sanctions being phased out in the coming year. The elimination of these international sanctions that had so far been crippling the Iranian economy will further integrate Iran internationally through better access to global markets. As a consequence, foreign traders and investors, who have been so far contemplating and examining this vast market and its high returns on investment, will rush to benefit for a first mover advantage and highly attractive investment opportunities. Consequently, a considerable surge in the country’ inward Foreign Direct Investment is to be followed in the years to come.
Nonetheless, the Iranian market can prove to be challenging (especially for SME’s) to penetrate due to its emergent and mystical nature. Businesses are advised to take sufficient time to carefully analyze the market segment in which they are interested and carefully select a strong Iranian partner that is capable of providing them with a strong foothold and reputable name in the country.
East-West Trade & consulting encourages foreign firms and investors’ to draw their attention to the following interesting areas of cooperation.