Iran's Revival : What Should the Market Strategies Be?

Tehran, March 10, 2016 (Newswire.com) - ​​​​​​Last January 16th 2016, a historical announcement was made - ending 37 years of successive sanctions on Iran. For the Iranian government, this means immediate access to USD 150 billion in frozen assets and an opportunity to rebuild the country’s industrialized economy. For businesses, the most immediate and significant sanctions to be lifted against Iran are the financial sanctions that have barred the country from playing in the global financial markets. Solidiance has released a white paper on this topic, providing a review of the Iranian economy and comparing it to lucrative emerging markets in the Middle East and Asia such as Turkey, Thailand, Indonesia, and Malaysia. Solidiance outlines Iran’s economy in comparative terms and delivers a case for why Iran is a major contender in becoming the “Next Golden Boy” of emerging markets.

Iran’s economic prowess and industry highlights

Iranian financial institutions used the SWIFT system more than 2 million times in 2010, resulting in transactions worth USD ~35 billion with Europe alone.

Mark Dubowitz & Jonathan Schanzer, Foundation for Defense of Democracies

With an economy that is currently home to 1.5% of the global GDP and is the 18th largest economy in the world, Iran has many strengths that should present a strong business-case for significant Foreign Direct Investment (FDI). There is no question that Iran is poised to be the largest and most attractive market for foreign players to invest and play in, amongst the Middle East and North Africa (MENA) region after post-sanctions have been lifted.

For starters, Iran has the 2nd largest proven natural gas reserves, 4th largest proven oil reserves, and was not so long ago the 5th largest automotive manufacturer in the world. The country also has the 4th largest zinc deposits in the world, the 9th largest copper deposits in the world, and is the 2nd largest cement producer in the MENA region. Unlike its neighbors in the Gulf, Iran is also blessed with a diversified economy, where roughly half of the country’s GDP comes from the Oil & Gas sector, while the rest of the country’s economy is well distributed in the Automotive, Agricultural, Manufacturing, Mining and Services sectors.

The most important indicator of the opportunity in Iran perhaps lies in its population: at ~80 million people, of which 64% are below the age of 35, Iran is home to the most educated population in the Middle East. In fact, Iran is estimated to be the world’s 5th largest producer of engineering students and 13.3% of the country’s working age population has completed a university education – putting it ahead of other markets such as Brazil and Indonesia. Furthermore, Iran has a 73% urbanization rate, which puts it on par with industrialized countries. 

Challenges for the multinational companies

​Despite the depth and breadth of opportunities in Iran, the country also poses a number of challenges for companies wishing to invest. Lack of transparency, corruption, a strong grey market (due to sanctions), and a market not foreign to counterfeit products, are major setbacks for foreign investors when entering the Iranian market. However, the country has its work cut-out for it should it wish to attract the USD 1 trillion in FDI it seeks over the next decade.

Beyond the sanction-induced challenges, the country also poses a number of other challenges that companies interested to invest must measure and evaluate carefully. Solidiance highlights these challenges along with  other findings, in an attempt to highlight the investment opportunities and risks in Iran today.​

To gain full access to the report, download the white paper here : www.solidiance.com/white-papers