Why Iran ?
There is no doubt, Iran has a lot of potential. It is a country that boasts a domestic market of 70 million people, 11% of the world’s proven oil reserves, 15% of the world’s proven gas reserves, 11 petrochemical complexes, 3 major steel plants and much more.
However, the big question for foreign companies and especially for small and medium-size enterprises is how to turn this potential into concrete business.
Foreign companies that have experienced Iran can tell many stories . The common theme in all these stories is that Iran is, in many ways, different from other markets – even different from other markets in the Middle East. However the foreign companies generally did not understand the peculiarities of doing business in Iran exactly.
Every foreign company is in a different situation and there is no one, universally applicable rule on how to start and how to develop business in Iran. That said, there are a number of common themes that apply to many small and medium-size foreign companies. The most important of these common rules is: Take one step at a time!, test the market and don’t believe those who swear they can perform miracles and get you into business in a blink of an eye .
Iran is certainly a unique market in the Middle East. It is populous, rich in natural resources and apt to technological progress and international developments. The country's natural resources create a significant wealth. In fact, based on a resource-based evaluation, the Iranian economy is the 20th strongest in the world.
Some of the features are highlighted below:
1. Strategic Location: A unique geographical location at the heart of a cross-road connecting the Middle East, Asia and Europe, empowered by many inter- and trans-regional trade, customs, tax and investment arrangements.
2. Market Potentials and Proximity: Vast domestic market with a population of 65 million growing steadily as well as quick access to neighboring markets with approximately 300 million inhabitants.
3. Labor Privileges: Large pool of trained and efficient manpower at very competitive costs in a diversified economy with an extensive industrial base and service sector.
4. Developed Infrastructure: Territory developed networking in the area of telecommunication, roads and railways across the country.
5. Low Utility and Production Cost: Diversified range of energy, telecommunication, transportation, as well as public utilities.
6. Abundant Natural Resources: Varied and plentiful reserves of natural resources ranging from oil and gas to metallic and non-metallic species reflecting the country’s accessibility to readily available raw materials.
7. Climatic Characteristics: A four-season climatic endowment as a privilege to agricultural activities throughout the country and throughout all seasons.
8. Fiscal Incentives: Reduced tax rates from 65% to a flat fixed 25% rate of tax income despite various tax holidays highlighted as follows:
Activity |
Level of Exemption |
Duration of Exemption |
Agriculture |
100% |
No Time Limit |
Industry and Mining |
80% |
4 Years |
Industry and Mining in Less-Developed Areas |
100% |
10 Years |
Tourism |
50% |
No Time Limit |
Exports |
100% |
No Time Limit |
9. Political Stability: Representative system of government based on friendly relationship with
other nations.
10. New Investment Legislation: Enactment of new Foreign Investment Promotion and Protection Act (FIPPA) to substitute the former Law Concerning Attraction and Protection of Foreign Investments in Iran (LAPFI) providing full security and legal protection to foreign investments based on transparency and international standards.
Country Overview
Geography, Population & Climate:
Geography:
Located in the expanse between the Persian Gulf and the Caspian Sea, Iran borders Armenia, Azerbaijan and Turkmenistan to the north, Afghanistan and Pakistan to the east, and Turkey and Iraq to the west. With an area of 1,648,000 square kilometers, Iran is one of the largest countries in the Middle East. The central plateau is mostly sand or rock desert, and the settled areas are largely confined to the foothills of the mountain ranges – the Alborz in the north and the Zagros in the south and west.
The Caspian Sea in the north of Iran is the world's largest lake. Its altitude is about 25 meters below sea level. Meanwhile, in the south, the Persian Gulf and the Sea of Oman provide Iran with its main access to international waters.
Population:
The years following the 1979 revolution saw a rapid increase in the population of Iran. The latest official figures for the Iranian year that ended in March 2001 show that the annual growth has now been stabilized at about 1.7%. The present population size, provided by the Iran’s Statistic Center, is about 64.5 million. (It is worth mentioning that the same statistic estimated by the United Nation Information Center surpasses 70 million; though, when contacted, the UN said that they are currently studying the discrepancy.)
Based on the last census taken in 1996, over half (51%) of the country's population is under 20 years old, while two-thirds of the country is under 30 years old. The urban areas accommodate over 63% of the Iranian population. Greater Tehran is inhabited by over 10 million persons.
Iran's unique location at the crossroads of Arabia, Turkey and Central Asia has resulted in many ethnic groups being found within its borders. Just over half of the population is of Persian origin; while a quarter is Turkishspeaking Azeri. A large group of Kurds and smaller minorities of Lors, Arabs and Baluchis also exist in certain regions.
Climate:
Iran experiences four seasons and extremes of climate, ranging from very cold winters in most parts of the country to hot, dry summers. The northwest is the coldest part of the country, with temperatures from December to February falling well below zero. To the south, on the central plateau and bordering the Persian Gulf, summer temperatures can reach 50°C (122°F). Humidity along the southern coast can be very oppressive during the summer months. Spring and autumn are generally pleasant in most parts of the country.
The severe climatic difference between the north and south of the country means that in late winter, one can ski down the slopes nearby Tehran, and take a night dive later that evening after a short flight to Kish Island.
Most of the country is quite arid and the majority of rain falls on the mountainous areas in the north and along the shores of the Caspian Sea, where the annual average is up to 20 centimeters (12 inches).