After the election of President Hassan Rouhani in 2013, Iran saw a surge in interest and hope that the country will rejoin the club of powerful world economies. Rouhani, elected last year after pledging to ease sanctions against the country and offering to loosen the state’s grip on state-run companies, invited its citizens overseas to come back.
While there are no confirmed data on Iranian expatriates, some figures put the number as high as 6-7 million at the very least.
A government committee has been set up in recent months to assess the eligibility of potential returnees - some of whom have been outside the country for over 30 years.
Iran as an investment destination hasn’t been ignored by wealthy expatriates either, many from North America, Europe and Australia who know too well the opportunities of their homeland. In almost every sector of Iran’s marketplace, those with the knowhow and financial backing can make quite sustainable long-term businesses. It has been proven time and again, that although Iran has a well educated urbanized workforce, many necessary skills are absent due to Iran’s disconnection from many markets in recent years as a result of western sanctions.
Investment & Financing
Another hurdle for those wishing to re-enter Iran are the financial constrictions imposed on transactions between Iran and other countries. Ever since the 1980s, Iran has been faced with a barrage of worsening financial restrictions from outside. American-Iranians have been faced with multiple lawsuits from the US government and in some cases, they’ve been sent to jail for “violating” US-led sanctions. British-Iranians have also faced punitive actions, with many long term residents of the country having their bank accounts closed without any prior notice. Canadian-Iranians – which are the fastest growing sub-group – have also faced intense pressure and harassment from their banking institutions. Many of the problems regarding money transfer to Iran can be boiled down to a few specific situations; firstly, as many Iranians live and work abroad, their parents who are generally less willing to leave Iran, often receive cash from them in old age: This simple transaction can raise the ire of foreign governments and their banks, with many people being unable to transfer money. Secondly, as no official money channels exist between Iran and western countries, people often have to resort to intermediaries (bureaux de change) to send money. This option is fraught with difficulties and is not a preferred choice for most, but a necessary evil. Thirdly, any person caught with taking large sums through an international airport is going to have to have a very good reason as to why they’re carrying such large sums of greenback. These problems however small are real bugbears if you’re trying to invest in the country.
Reality
With all the mentioned hurdles, the prospect of opening a business in the Iranian market is still a considerable proposition. The matter of setting up a business inside the country is far less troublesome than the obstacles before arriving. When a person wants to set up a business in Iran, the prospective CEO would already be familiar with the processes needed to setting up a firm. Like what’s happening in developed countries, governmental procedures in Iran are on a par with those anywhere else, and with the current push for e-government, bureaucracy and waiting periods should decrease.
Another prospect for returnees is the favorable tax situation in Iran, unlike its European counterparts; Iran is generally more hospitable to those wishing to start businesses. Though those wishing to come back and start a business are going to struggle to find investment from commercial banks, as interest rates remain stubbornly high.
There are other options slowly coming online for those wishing to create a new business. Iran in recent months has been awash with the very western concept of “Startup Acceleration.” This new investment mechanism has seen large growth over the past few years with many new digital startups using this as their kick start for growth.
What Is the Government Doing?
During summer, the Rouhani administration pledged to decrease its involvement in trade issues and to restructure bureaucratic processes. The government also said it was aiming to work on its financial discipline and money-supply management approaches and to contain government debt to banks and companies.
So far, the government has kept its promises, with the Central Bank of Iran (CBI) announcing that it is tightening the reins on companies and banks. This week the central bank issued its ultimatum to commercial banks to honestly announce their financial holdings in companies which are not directly related to the banking sector. They also said, “Banks shouldn’t be working beyond their financial remit.” The reason why the CBI asked the commercial banks to declare their assets was due to what happened over the past few years.
The CBI’s decision to come down hard on large financial institutions and banks is in itself a message to the private sector that the economy is on the mends. The government has also begun the process of de-nationalizing large industries, which, in itself will further the rationalization of the economy and open it up to private sector funding.
Where does this leave the returnees? These people are in the very fortunate position of helping their country’s economic development, by bringing their learned skills and passing on their knowledge, and also bringing foreign investment with them to boot. One cannot predict the number of returnees that may come back, but if the Rouhani government, along with its counterparts in the central bank can continue with their current policies, foreign Iranians will presumably take note.
