You will have no doubt heard that trade sanctions got lifted against Iran a few months ago. The country is now able to buy freely and sell products and services with new foreign partners. If your business sells to emerging markets, you might be considering selling to Iran.
But, is it a wise move? In today’s blog post, I look at the real pros and cons surrounding such a decision. Be sure to read this article in full so that you can make an informed choice. Here is what you need to know:
Pro: A new country to do business with
Businesses often need to seek out new foreign trade partners if they wish to grow. Iran is a nation that is well-known for its oil resources. Petrochemical firms, for example, could build lucrative and long-lasting relationships with Iranian suppliers. Plus, it can also reduce their dependence on other oil-supplying nations like Saudi Arabia.
Con: Poor track record of money laundering
The sad truth about Iran is that it’s still a nation dogged with corruption and money laundering. The IMF said in a recent media interview that Iran needs to up its game to reach international standards. There is a lot of Iranian money overseas, much of which comes from questionable sources.
Pro: Iran is a country in need of modernization
With sanctions placed against Iran for so long, it had to resort to buying from the black market. Now that international trade is open, the country is in desperate need of modernization. The infrastructure of public sector services, for examples, needs bringing into the 21st century.
Iran wants to do business with foreign companies that can help them achieve that goal.
Con: Iran supports terrorism through proxy organizations
Mark Dubowitz of American think-tank FDD has documented proof of Iran’s terror links. The country funds terrorist groups like Hamas and even al-Qaeda in various ways. For example, they provide financial support, arms and even shelter to their fighters.
Foreign banks aren’t happy about their customers dealing with a country that supports terrorism. It’s something you should consider if you plan to do business in Iran.
Pro: Iran needs help improving its oil extraction infrastructure
One of the reasons foreign firms have an interest in Iran is because of the country’s oil resources. With tensions between the West and Saudi Arabia running high, there is a need to source oil elsewhere. Iran is a potential future supplier.
But, there’s just one problem. The machinery used to extract oil in the country is old and needs replacing. Companies that work in the oil and gas industries are likely to make the most money by dealing with Iran.
Con: Financing operations in Iran might be hard
If a company wishes to invest in a large-scale operation in Iran, they might come across a big hurdle. Banks in the West aren’t too happy about working with Iranian businesses. If you need to borrow money for your Iranian venture, you may struggle to get the cash from your bank.
Of course, there are other ways around the problem. For example, a group of like-minded investors may be willing to help you.