Economy, Business And Markets

Look Again!

Professor of Economics
Look Again!
Look Again!

Today I spent a couple of hours with an old friend of my father, who is a fourth-generation businessman. I have always respected his insight and advice. He has served in war and now lives a quiet life. We talked of the new business inquiries and how everyone is getting ready for a big leap forward. We agreed that the attitude toward Iran and the future of its economy have changed significantly. And it shows in conversations, questions and brainstorming meetings across Tehran. However the question remains: How much has actually changed? He believes a lot and not so much!

Many businessmen and businesswomen agree that the bureaucratic process has remained the same. While Cabinet ministers, bank presidents and leaders of business community speak of great opportunities and the need to move forward, bureaucrats and mid-level managers have not changed much. Many other things are intact as well: the number of permits one needs to start a business, the privatization process and the trade policies. The market is the same. It is true that it hopes for sanctions to be lifted, however the average businessman in Iran dreads the officer in charge of customs more than any sanction. The dominant organizational culture has not changed.

Iran has signed an accord with international powers; one would wish to see Foreign Minister Mohammad Javad  Zarif making the case for Iranian businesses with the officials in different government offices. Can he succeed where many others have failed? Few doubt that economic reforms must be carried out to make the most out of available opportunities. Then why did my friend also said a lot has changed?

The people have changed. My friend believes “they think differently and act differently than just a few years ago”. That is true. It seems Iran’s business community has gone through an evolutionary phase. People think and talk differently. I met another businessman in his office in Tehran the other day. He is working on attracting investors to Iran. I talked to him about foreign direct investment in Iran after the nuclear deal. He surprised me by saying: “We need investment consulting; we need to know what the latest practices are and how we should behave.”

This is indeed a leap forward from days when many expected foreigners to arrive, to invest through publicly run projects and then to leave.

Iran’s private sector and its aspiring entrepreneurs are eager to take the lead here. They want to talk to investors themselves, to make their cases and to offer guarantees. Iran’s business community is not looking for detached investors but for partners. One appreciates this change even further when they remember foreign direct investment was a government-dominated sphere until recently.

This is a welcome change, the one my friend referred to it. He told me, “You need to look again; we have changed”. It seems the next set of economic reforms will happen because they are demanded by the private sector. These will not be engineered in the government offices, but they will be implemented as mutually agreed upon steps. This is the main change in Iran’s business community.

To a foreign observer detached from Iran’s realities this might be a surprise. However, during the past decade, Iran’s private sector has come into its own. It is present at all levels, may be not in an ideal way but it is standing on its own feet getting ready to step on the international stage. Any potential investor must look again at Iran’s economic scene to take note of this. The government is not the only available partner anymore.