International business in Iran

International business in Iran

Intenational business in Iran

Iran formerly known as Persia is located in the Middle East. This nation is bordered by 7 countries: Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, Turkey and Turkmenistan. The country is surrounded by Caspian sea, Persian Gulf and the Gulf of Oman.

Iran’s economy relies on oil and gas exports and has well-developed service, agricultural and industrial sectors. It, in fact, has a large resource bank for natural gas, petroleum, crude oil and other petroleum products. However, the Iranian government indirectly operates large companies and mostly owns hundreds of state enterprises that operate with the country’s security forces. This has resulted in a limited banking system, inflation and distorted price control among other economic setbacks.

Iran Post Sanction Economy

However, Iran had been improving since the UN Security Council lifted an imposed ordeal in the country. As part of the P5+1, the US later imposed a different law in the country to abide by. Since the law had been lifted to ban the nuclear program in the country and unfreeze Iran’s assets, the government had been looking forward to great improvement, opening the country up to international trade and bolstering direct foreign investment to stimulate the economy’s growth.

Global investment into Iran has been steadily increasing since 2013, a year in which the country attracted just three FDI projects. This increased to eight in 2014 and nine in 2015.

Since the sanctions were lifted the leading sector for investment into Iran has been financial services, which has attracted four investments from separate companies with capital expenditure of $60m

The country has also attracted investments from the automotive sector, business services, consumer electronics and textiles, among others, it added.

What are Iran’s Vital Data Points?

Population

81, 824, 270 (2015 est)

GDP (billion USD)

387.6 billion

GDP per capita (USD)

4, 763

GDP per capita (PPP)

17, 300

Purchasing Power per Dollar (compared to the US)

132%

Surface Area (sq km)

1, 648, 195

% of the population living in urban areas

73%

% of GDP added by agriculture – industry - services

9.3% - 38.4% - 52.3%

Ease of Doing Business Index (1 = best; 189 = lowest)

119

Iran’s business Index

In ‘ease of doing business’, Iran ranks 119th out of 189 economies.

Iran’s key business sectors

  • Petroleum
  • Petrochemicals
  • Gas
  • Fertilizers
  • Caustic soda
  • Textiles
  • Cement and other construction materials
  • Food processing - mainly sugar refining and vegetable oil production
  • Ferrous and nonferrous metal fabrication
  • Armaments

Steel, weaving, food processing, car, electrical and Electronics Industries are among the key industries in the country. Iran now produces a wide range of manufactured commodities, such as telecommunications equipment, industrial machinery, paper, rubber products, steel, food products, wood and leather products, textiles, and pharmaceuticals. Iran is also known throughout the world for its hand-woven carpets. The traditional craft of making these Persian rugs contributes substantially to rural incomes and is one of Iran's’ most important export industries

The pharmaceuticals, paper, sugar, packaging and textile segments have been identified as key growth areas of the industrial sector by the Industrial Development & Renovation Organization of Iran.

Iran’s top export commodities

  • Petroleum - 80%
  • Chemical and petrochemical products
  • Fruits and nuts
  • Carpets
  • Ore

Iran’s top export partners (percentage of total exports)

  • China (29%)
  • India (11.9%)
  • Turkey (10.4%)
  • Japan (6.5%)
  • South Korea (4.8%)

What is Iran’s political structure?

Iran is an Islamic republic that follows a Theocratic Republic system.

The Supreme Leader of Iran is appointed for life by an Assembly of Experts. The President is elected by absolute majority population for a term of 4 years.

The next elections are scheduled to be held in June 2017.

What are Iran’s National Holidays in 2017?

National Holidays in Iran are observed with great respect as most are religious in nature.

Here are the main holidays for 2017 on which most offices, institutes, and schools will remain closed:

Date

Holiday

February 11

Revolution Day

March 2

Martyrdom of Fatima

April 10

Birthday of Imam Ali

April 24

Prophet’s Ascension

May 12

Imam Mahdi’s birthday

June 16

Martyrdom of Imam Mahdi

June 26

EId-e-Fitr (End of Ramadan)

July 20

Martyrdom of Imam Sadeq

September 2

Eid-e-Ghorban (Feast of Sacrifice)

September 10

Eid-e-Ghorban

September 30

Tassoua

October 1

Ashura

November 10

Arbaeen

November 19

Martyrdom of Imam Reza

December 6

Birthday of Prophet Muhammad and Imam Sadeq

Conclusion

Iran’s economic activity and government revenues remain dependent on oil revenues, making it a somewhat volatile market. However, the government is implementing a 5-year developmental plan based on a 20-year vision document. This plan is based on 3 main goals - 1) advancement of Science and Technology, 2) cultural aspects and an overall 3) resilient economy.

Iran is, therefore, open to international trade and businesses, and has created strategic reforms to boost economic activity. It is also a popular destination for trade shows of various industries.

For details on these reforms and other investor and marketing plan in Iran, the study detailed market research on the nation’s economy.

This entry in Asia was updated on August 1, 2017 by specialist.