After sanctions that had stood for years had been removed from the nation, foreign governments, international corporations, and the people of Iran expect to realize a change in the investment climate. However, if you go through some of the headlines from the nation of Iran that have been printed in the recent past, you might be left wondering if indeed the potential of the Iranian market was exaggerated. The economy had not received the promised boost in 2016 and major banks that had left the country had not returned. The slow pace in change of investment market has left more questions than answers in the mouths of many leaders of global companies. The leaders are in doubt if indeed the economy will come back to its familiar past. However, it is of essence to state that in spite of the protracted sanctions’ effects, uncertainty in markets, and a weak economy, Iran still remains a potential market for multinational companies that wish to invest in developing markets.
If we were to compare Iran with the other countries in Middle East which are rich in oil, it would be evident that Iran has a diverse economy. The tourism sector is on its way to major uplift and the political stability of the nation is also looming due to the reduced political threats. A majority of the country’s population is urbanized and many of them are in the middle class. As such, they have an unending preference for overseas products in spite of the restrictions brought about by the U.S sanctions and a delicate economy. Serious business people and senior business leaders should not fear to navigate the challenges that are clear in Iran since the country has immeasurable investment opportunities.
Once the United States enacted sanctions from 1979 and increased them in the recent years, a large number of European and U.S companies restricted their business presence in the country and some left Iran completely. These activities continue to haunt the nation even today and a number of companies cannot invest or do business with Iran. Some of the sanctions that remains enforced to date are in the areas of business, trade, and finance. These ones remain enforced due to the tainted image of the human rights record of Iran. As such, many companies from the United States cannot do business in Iran since they fear terrorist attacks, the Iranian program of ballistic missiles, and other orthodox weapons. This fear is anticipated to go on into the foreseeable future. Some of the exemptions from the sanctioned fields are health care, agriculture, civil aviation, and food produce.
For non-US based corporations, most of the sanctions imposed by the United States have been removed. In addition, a number of restrictions that targeted EU companies and other national corporations were done away with once the nuclear deal was signed in January 2016.
Weeks after the nuclear deal was signed, the country recorded over $50 billion deals in business. These deals included the Airbus agreement that was said to be worth $25 billion and it involved the sale of 188 planes.
The deal was struck once the Iranian President, Hassan Rouhani, visited France. Furthermore, the deal was supposed to include air traffic management support, airport operations, and pilot training. The deal did not only involve Iran and France. The United Kingdom also benefited from the business deal since the wings of the Airbus planes are manufactured in Wales.
Another deal that was struck after the removal of the sanctions was the development of the rail network of Iran by a railway company from Italy. These projects have been delayed in being financed since U.S sanctions are still enforced. Some of the global European banks are not committed to return to Iran even with permission.
The woes of the Iranian market is not confined to sanctions. The Iranian government overly relies on revenues from oil. However, as a result of the sanctions, the government has acted well to diversify ways of getting revenue. The energy sector provided over 37 percent of government revenues. The prices of oil have been reduced significantly since November 2013. This means that Iran has little oil revenue as compared to five years ago.