by Yvonne Rivera, International Business Strategist at ICC
For many years now, Iran has suffered commercially due to extensive sanctions from the UN, and it was due to this that UK companies were unable to conduct much trade with Iran. However, last year on 14th July 2015, the E3+3 (France, Germany, UK, China Russia and USA) announced that they had reached an agreement with Iran on a nuclear deal which gave Iran the opportunity to demonstrate to the world an exclusively peaceful nuclear programme, and that as a result many sanctions would be lifted.
Therefore, since 16th January 2016 there are now fewer sanctions due to the International Atomic Energy Agency confirming that Iran had completed all necessary steps to reach “Implementation Day”. It is important to point out though that some sanctions not affected by the nuclear deal remain in place, in particular those related to human rights and support for terrorism. Primary US sanctions, including the US trade embargo, also still remain in force.
As far as we know at International Corporate Creations, EU trade with Iran before “Implementation day” already stood at $8bn/year, and this is now expected to multiply by 4 over the next couple of years. In view of these recent developments, the UK Government is fully supporting the expansion of UK-Iran trade and investment relations, and encouraging UK companies to benefit from business opportunities that may arise.
In my opinion, this is a huge market opening for UK businesses looking to expand internationally. Iran is the second largest economy in the Middle East after Saudi Arabia, with an estimated GDP of $397bn. It is also the second largest in population at 80 million. Opportunities for UK businesses should arise across all major economic sectors like energy, automotive, airlines, manufacturing and consumer goods.
That said, having read articles on this topic, many comment on the multiple challenges that UK companies might be faced with when doing business in Iran such as corruption, bureaucratic delays, inflation or price control. These are common when starting business in new markets, as unfortunately not all destinations are straightforward, but in my opinion this should not discourage UK companies looking at entering the Iranian market. Other more complicated factors depend on the type of business activity and a company’s other existing international markets.
Currently travel between the two countries is not as easy as we would hope, mainly due to the visa requirements and the fact that neither the Iranian Embassy in the UK or the British Embassy in Iran offer visa service. Iranians still need to apply for visas in Abu Dhabi or Istanbul, and British citizens need to apply for visas at the Iranian Embassy in Dublin or Paris.
So if you are looking to expand or invest in Iran, please come and talk to us at ICC where would be more than happy to discuss the specific factors you need to be aware of to help your business succeed, ensuring that the appropriate due diligence measures are taken before engaging in any activity.
To discuss in more detail, call me on +44 20 7278 9210, or email email@example.com