Tehran is not alone in rejoicing after the successful conclusion of negotiations over a Nuclear Agreement with Iran and the lifting of international sanctions against the Islamic Republic. The export market can also look forward to the opening up of an attractive new market with plenty of purchasing power and pent-up demand.
Listen to the interview(only in German available) with Suhail el Obeid, Senior Consultant for Iran at Switzerland Global Enterprise
But it will still be a while before the sanctions are actually lifted – in all likelihood around six months. Most experts are assuming that it will be by some time at the beginning of 2016. A considerable number of export companies are ready for the off even now - ready to expand into Iran or develop activity that is already there. This is where Switzerland Global Enterprise (S-GE) can offer advice and assistance to Swiss and Liechtenstein companies. S-GE is inviting them to come along to a “Business Outlook Iran” event in Zürich on 27 August, where export potential in Iran and current business opportunities will be among the topics addressed.
Last year, Switzerland exported goods to the value of 610 million Swiss Francs, whereas goods to the value of 30 million were exported from Iran to Switzerland in the same year. In the first quarter of 2015, exports reached 82.1 million Swiss Francs and imports 5.9 million
But the potential is much greater. In Germany, for example, exports to the Islamic Republic are expected to triple after the sanctions against Iran are lifted. A degree of magnitude that is totally within the realms of possibility as far as Switzerland is concerned, confirms Suhail El Obeid, Senior Iran Consultant at S-GE. After the long period of economic isolation, strong demand is on the cards, especially in the infrastructure development, consumer goods (foodstuffs in particular), pharmaceuticals and medical sectors. The cleantech industry could also find an attractive market in Iran.
And the business outlook is very promising for Swiss companies, too. Swiss Made has an excellent reputation, standing for high quality and reliability in Iran, too. Once the embargo has been lifted, the economy, per capita income and the middle class should see rapid growth in Iran, with interest in Swiss quality and premium products and the willingness to pay more for it increasing as a result.
With a population of around 80 million people, Iran is the economy with the biggest potential for growth in the Near and Middle East region. An economy that, due to its rich resources in raw materials (mainly crude oil and natural gas), also has the necessary resources to finance the expected import boom with the development of energy exports (no longer restricted with the lifting of sanctions). However, in order for international finance to really come on stream, Iran first has to be linked up to the necessary networks (e.g. SWIFT), and foreign banks need to develop a local presence again. With the lifting of sanctions, the light is also set to green again in the finance sector.
All in all: a little more patience is required - from both the Iranian people and foreign exporters. Suhail El Obeid estimates that it will be at least a year before the Iranian economy starts to feel the benefit of the lifting of sanctions. All the same, companies can still open out their planning and enjoy a new degree of certainty, also giving some guarantee of more ambitious long-term investment. In the midst of all the euphoria, we should not forget that sanctions could be re-introduced at any time if Iran fails to keep to the Agreement negotiated in Vienna.