Iran’s big market tempts European firms despite hazards
Frankfurt : With many barriers to dealing with Iran suddenly lifted as part of a deal to curb its nuclear activities, some European companies are ready to seize business opportunities in a tempting market of 78.5 million people.
At first glance, the allure is obvious the second-largest economy in the Middle East-North Africa region after Saudi Arabia; the second most populous country after Egypt; and with lots of infrastructure and vehicles way overdue for an upgrade after years of sanctions.
Once inspectors confirmed that Iran was taking steps to curb its nuclear program, the United States and European Union on Saturday dropped many of the economic sanctions that have been keeping foreign companies from doing business there.
But those that take the plunge face serious risks from the remaining sanctions relating to other issues, from geopolitical uncertainty and from red tape and corruption.
Here’s a look at who might be interested and the hazards they will face if they venture in.
Auto manufacturing is one field where interest could be strong. Before sanctions, Iran was a major market for France’s Peugeot.
One of the first out of the blocks after the announcement was Daimler AG’s truck division, which on Monday announced joint ventures with Iranian partners that will enable it to restart its business there a presence that went back to 1953 before being interrupted by sanctions from 2010 to 2016.
Daimler foresees joint production of trucks and engines and a marketing company; it plans to reopen its representative office in the first three months of this year.
Division head Wolfgang Bernhard said in a statement he saw “huge demand” for commercial vehicles in Iran, where the company’s Mercedes-Benz brand is well-known.
The president of the Federation of German Industries, Ulrich Grillo, said that “Iran’s need for making up lost ground in modernizing its industrial infrastructure is extraordinarily large,” adding exports could double in five years from 2.4 billion euros (USD 2.6 billion) a year currently.
From their side, Iranian officials are touting the investment possibilities. Iran’s transport minister told the official IRNA news agency on Saturday that his government had agreed to buy 114 new planes from the European consortium Airbus.