CUBA & IRAN: IS IT TIME TO INVEST?
Given that foreign direct
investment was all but absent for
decades, Iran does not have a law in
place to protect it. While this may
change, for the time being at least,
investors enter at their own risk.
A note of caution however. Given that foreign direct investment
was all but absent for decades, Iran does not have a law in
place to protect it. While this may change, for the time being at
least, investors enter at their own risk.
And the risks extend beyond a lack of FDI protection. According
to Louis Habika, the political and military tensions that prevail
in the Middle East, and the direct and indirect interventions
of Iran in many conflicts in the region from Yemen to Syria,
to Iraq, raise the risk of investing in the country, especially
for Western companies. These politics-induced risks—most
notably the tensions between Tehran and its neighbors—still
deter Western companies and banks from committing large,
long-term investments.
Commenting on the topic from Iran’s neighboring UAE, Dubaibased businessman Hicham Al-Chiraoui, shares a view that is
indicative of a broader sentiment amongst the local business
community: “We’re ready to go there [Iran] and invest our
money, but it’s not safe. They need to change their regional
politics. They can’t succeed without their neighbors.”
Meanwhile, just as Iran’s external interventions are cause for
concern, so too is the stability—or otherwise—of its political
regime on the domestic stage. The current Iranian government
is opening up to the West, but who knows what the next regime
will make of the “the Great Satan” as Ayatollah Khomeini
famously used to call the US and Europe.
30 Emerging Markets Business Summer 2016 • Issue No. 1
MAGIC CARPETS
The Persian carpet, one of the most famous and sophisticated
in the world, has suffered in recent decades, due to the impact
of global sanctions as well as competition from cheaper rivals
in India and China. Thirty-five years ago, Iran was the biggest
exporter of carpets in the world, with the USA its biggest client.
Now, the country is content with a spot amongst the top 10. But
things are looking up. Following successful nuclear talks and
the gradual lifting of economic embargos, Iran’s carpet industry
is set to rise once more. According to official figures, the
country exported US$330 million in carpets—mainly to regional
neighbors—last year. That figure represents only one third of
the total annual carpet production, but with its US client set to
return, experts forecast that Iran’s carpet industry will grow by
between 10 percent and 15 percent over the next five years.