EMB
5+1 REASONS
TO INVEST IN IRAN
Just as a group of 5+1 world powers were behind Iran’s nuclear
talks, here are 5+1 reasons why foreign companies and investors
should be there if and when the FDI floodgates open.
MARKET SIZE. Iran is home to 80 million
consumers, 73 percent of whom live in cities
and 65 percent are young. Moreover, after
decades of sanctions, the market is thirsty for
new products that offer something other than
“made in Iran”.
GEOGRAPHICAL LOCATION. Iran's location
places it within a five-hour flight of four billion
people world-wide. Having a presence inside
Iran would open corporate doors to the Gulf
region, Pakistan, India, Afghanistan and most
of the CIS countries, as well as China and a
host of African markets.
In addition to significant monetary wealth, Iran also boasts a
wealth of human resources. Approximately 64 percent of the
Iranian people are under the age of 35 years old, and the na‑
tion is well-educated compared to several other emerging
markets. For instance, 13.3 percent of the population holds
a bachelor’s degree, compared to 12.5 percent in Mexico,
11.7 percent in Brazil and 6.9 percent in Indonesia. Further‑
more, there are 4.4 million students at university in Iran, with
females representing more than 60 percent of that figure. At
undergraduate level, 44 percent of students are majoring in
sciences, technology, engineering and mathematics.
More broadly, Iran’s illiteracy rate stands at less than
13 percent of the total population and at only two percent
among young people between 15 and 24 years old. These
statistics fall into the context of a country in which the majority
of the population (73 percent) resides in cities—the hubs of
Iran’s economic growth and of future foreign investment.
With the numbers stacking up, Iran appears to have two key
parts of the ‘doing business’ formula: the money and the
human capital. But so do many other countries around the
world. The big question here is: what does Iran have that the
others don’t?
For Dr. Mohammad Reza Monjazeb, faculty member of
the University of Economic Sciences in Tehran, the lifting
of sanctions on Iran has played a big part in increasing the
country’s appeal amongst international companies.
“The sanctions gave Iran’s economy a big challenge to
try and succeed without international help, and they
did,” Monjazeb says. (The Iranian GDP per capita is
around US$17,000—that’s higher than China and Brazil,
despite the sanctions). “A lot of companies have already
started planning to invest in Iran, and that’s just the beginning”,
he continues.
CASH FLOW. At a time when the world is
cash-poor, Iran’s coffers are filling fast. Just
a few hours after the sanctions were lifted,
Iran received more than US$42 billion of
its own money, and there is more to come
with the country expected to receive another
US$58 billion over the next few months.
LOW EXCHANGE RATES AND LOW CURRENCY
VALUES. The lifting of sanctions has allowed
Iran to restore its frozen funds abroad, the
value of which is estimated at a combined total
of US$100 billion dollars. These funds were
racked up in large part from Iran’s oil sales,
but had laid dormant in global banks during
the sanction years. Moving forward, this new
cash injection is set to contribute to increasing
the exchange rate of the Iranian rial and the
financing of projects. So, invest now—be it with
US dollars, euros or British pounds—and you
and your company stand to gain.
RAW MATERIALS. Iran is one of the richest
countries on Earth where raw materials such
as oil, gas and water are concerned. As a
result, related industries including steel and
agriculture are also full of potential. Moreover,
for companies and investors looking to set up
shop inside Iran, there would be little need to
import goods or services from outside.
CHEAP YET SKILLED LABOR. The relatively cheap
Iranian rial combined with Iran’s high unemployment
rate of 17.5 percent among men and 35 percent among
women, bodes well for companies seeking to employ
skilled and well-educated human capital at economical
rates. It’s worth noting that the minimum wage in Iran is
US$198 dollars per month for a skilled worker, which is
not vastly more costly to companies than the US$185 per
month minimum in China and US$180 in India.
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