Iran: land of the opportunities waiting for the end of the sanctions

iran landmark cutThe Italian government has just organized a massive two-days business event in Teheran with its Vice Minister of the Economic Development, together with ICE – Italian Trade Agency and the major banking and industrial institutions. It’s an unprecedented event, involving more than 180 Italian companies, 12 banks and investment groups, and 20 top industrial association, focusing on the key segments that will reshape the next future of Iran: automotive, industrial machinery, construction materials and technologies, medical industry, green energy, oil & gas. A proper showcase with the ambitious goal of restoring the 6 billions USD trade volume that connected the two countries before the international sanctions, currently stuck at a 1 bln level and far below the potential of a 78 mln people country.

Mohammad Reza Nematzadeh, Minister of Industry, Mine and Trade of Iran (AP Photo/Ronald Zak)

Mohammad Reza Nematzadeh, Minister of Industry, Mine and Trade of Iran (AP Photo/Ronald Zak)

Mr. Nematzadeh, Iranian minister of Industry, Mining and Trade, clearly defined the regional and global role Iran is aiming to: “a global hub to reach all the markets in the region”. Following the agreement signed in July, strongly endorsed by the US government despite the intense contrast with Israeli government (remember the historical speech of Mr. Netanyahu at the US Congress?), the sanctions will be removed during the first quarter of 2016.

It’s a clear message to the world by the Iranian government: Iran aims to achieve a key role through industrial partnerships and foreign investments and it’s not only a target market for other exporting countries. The industrial development will recover the manufacturing potential widely weakened by years of international isolation. Four MoUs have been signed with the Italian institutions and industrial associations, from the leather industry to the natural stone sector, and even the cultural partnership between Maxxi museum in Rome and the Teheran Museum of Contemporary Arts.

 

At the starting blocks: the end of the international sanctions

The international agreement signed last July has now entered the so called adoption stage that realized the legal implementation of measures in the EU and US law that technically allow the removal of the great part of the economic sanctions. Everything is in stand by until the final check and green light of the AIEA on the Iran nuclear programme agreement and the so called implementation day  that will practically open the economic borders of the country hopefully in next February during the next presidential elections. It’ll be also possible to transfer money without the current tricky triangulations due to the isolation from the main international banking networks and the financial sanctions imposed to the Iranian market.

Iran Khodro

Mohammad Reza Nematzadeh, Minister of Industry, Mine and Trade of Iran (AP Photo/Ronald Zak)

Strong expectations are growing on all the key industries mentioned, while the automotive industry has a major role in the next industrial development of the country. Iran would easily absorbe the know how and restore its technological potential to achieve the 8th global position in the automotive manufacturing country within few years (Iran Khodro and SAIPA are the top players). Italian and foreign companies of the automotive industry, especially auto parts and machinery manufacturers have a true business opportunity in this context.

 

Construction industry: great potential

Italian construction companies and building materials manufacturers attended several B2B meetings with local companies at the Iranian Construction Syndicate that involves the top player in the Iranian market: developers and building companies with huge projects in the residential, commercial and community segments. The Italian Trade Agency market insights provided to the companies, highlight positive figures: construction projects in a stratup stage are increasing with a +10,5% year over year trend, with an overall value of 490 IRR billions, and accounting more than 25% of the total market value. Investments have registered a 21 billions of USD volume in 20145 with an average ROI of 30%, in a country where the estimated need of new residential units is above 750.000 new homes per year and the current supply is over 27% below this level.

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Also machinery companies are paying attention to the great opportunities in the market, especially natural stone technology manufacturers and Italian leading companies in this sector, are teaming up with Iranian quarry owners, natural stone producers and industrial associations (the Italian leading association Confindustria Marmomacchine recently signed a MoU in this field).

There are good market spaces for foreign companies that established competitive advantages especially in the high end and luxury market segment to successfully face price-oriented competitors from China, Turkey, India. Teheran is a dynamic hub willing to reinvent its chaotic urban development and recover from the current alienating layout poisoned by traffic jams and smog clouds. Landmarks that express this dynamic soul and huge potential have been internationally awarded and recognized as architectural jewels: Tabiat bridge, Pars Five Stars, University of Broadcasting. The Tabiat bridge, above all, achieved a wide international coverage and is one of the most interesting architectural landmarks in the Middle East designed by the 26 years old architect Leila Araghian. She designed a futuristic bridge that connects two parks and set up a unique meeting point in the city, with three levels of shops, cafès, and walking trails. The true soul of a country willing to set the latest trends of architecture with its roots in a millenary tradition.

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