US sanctions, enacted in 1979 and strengthened in subsequent years, resulted in many American and European companies restricting their presence in Iran or exiting altogether. Many sanctions banning financial, trade and business transactions still remain in place, so most US companies can’t do business there.
For non-US companies, many sanctions have been suspended, and most national- and European Union -level restrictions were eliminated after the nuclear deal in January. Within weeks, there was $50 billion in foreign business deals, but remaining US sanctions are delaying their financing.
The country remains reliant on oil revenue, and because oil prices have dropped, Iran is collecting less money than anticipated. The situation is encouraging the government to raise revenue through other means, including new taxes and subsidy reform — good news for sustainable economic growth, but bad news for economic recovery in 2016.
Finally, some powerful Iranian institutions are suspicious of Western influence. This dynamic can stall important change.
The opportunities Even with these challenges, Iran’s diversified economy is attracting companies across industries. In particular, consumer-oriented sectors are counting on a large, while its inclusion in China’s new Silk Road could boost trade between those countries.
How to plan for doing business in Iran Here are five notable challenges that deserve immediate attention:
Updating global compliance policies: Companies must consult an external sanctions lawyer to formulate a comprehensive compliance strategy.
Overcoming a lack of market data: Companies should track macroeconomic indicators of specific customer segments. Focusing on data such as population growth, inflation and GDP growth is a way to anticipate market developments.
Finding the right local partners: Using local distributors at first is strongly advised.
Reclaiming brand equity: Customers may have distorted views of foreign goods that are in Iran illegally. Be ready to combat gray market trade and counterfeits.
Accessing foreign exchange: Local companies often wait weeks for access to foreign currency to import goods.
FAR Law Firm