Business

Iran: Now a business opportunity?

Peugeot bonnet Image copyright Reuters
Image caption Peugeot is among a number of major firms who are keen to explore business in sanctions-free Iran

The deal announcing the lifting of economic sanctions against Iran could open a market of 80 million consumers, but the mood is cautious.

Oil firms Shell and Eni, and car giant Peugeot are among those who have held recent business talks in the country.

Henry Smith, associate director at Control Risks, said managers based in Dubai and elsewhere had been flying to Tehran to consider opportunities.

The accord between Iran and six nations needs formalising and implementing.

Mr Smith says it will be up to companies' head offices to make the final decision because of the perceptions of risk with regard to Iran.

He thinks it will be October at the earliest before sanctions are lifted.

The agreement will be debated in the US Congress, but US President Barack Obama has said he will veto any measure to block it.

Image copyright EPA
Image caption Iranians took to the streets to hail the dawning of a more open economy

'Potential'

Iran is keen to attract big international oil and gas companies as it tries to increase output and investment over the coming months.

In a statement, Shell said that when all appropriate sanctions were lifted, they would be "interested in exploring the role Shell can play in developing Iran's energy potential".

Peugeot is more closely poised to move in. It says the deal "should clear the way for significant progress in our discussions" with its historic partner, Iran Khodro.

A partnership with Iran Khodro involves the re-assembly of older Peugeot models made in Europe, but a new arrangement would move to full manufacturing of cars using the most up-to-date methods.

'Highly educated consumers'

Stock market investors also appear keen. Charlemagne Capital, an asset management group, recently teamed up with a Tehran-based firm to establish a fund to invest in the Iranian securities market.

The firm's portfolio adviser, Dominic Bokor-Ingram, said a lot of people had been contacting him in the wake of the announcement: "You don't often find a closed economy where the stock market is so developed."

Iran's stock exchange is cheap and is less than 1% foreign-owned, but liquidity is low and conditions remain economically and politically uncertain.

Iranian-born Xanyar Kamangar, who runs investment and asset management company Griffon Capital, thinks there are huge opportunities in food and drink, pharmaceuticals and technology.

"Iran has natural resources that compare with Russia. It has highly educated, very tech-savvy consumers and 92% of its adult population have bank accounts."

But solicitor Nigel Kushner, director at the British-Iranian Chamber of Commerce, who advises companies on how to legitimately do business in Iran, says there remain real practical stumbling blocks.

He warns that until cross-border money transfers are relaxed, it will be very difficult to invest in the country.

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