It has the world’s largest gas reserves and the second-largest copper reserves, while only three other countries have more oil. Iran is open for business.
Perhaps the most striking aspect about Iran is its potential. Rich in resources, it has a population of just over 80 million people, with 40% of these under 35.
Iran is a country that is in immediate need of investment—not just financial but also technology and skills–so that major infrastructure and resources projects can take shape, Australian commercial law firm Corrs Chambers Westgarth’s Perth-based partners, Alan Churley and David Yates, co-wrote in an article after their recent visit to Tehran.
Parts of the article originally published by the Western Australia-based business media organization, Business News, follow:
In January 2016, the Australian government lifted most of its autonomous sanctions against Iran following the Iran nuclear deal (officially called the Joint Comprehensive Plan of Action). This meant the removal of sanctions in areas such as financial services, banking and insurance, oil and gas, shipping and other transport, and precious metals.
In addition, the [Australian] government is in the process of opening an Austrade office in Iran and should have its trade commissioner in place by August 2016. [Austrade, or the Australian Trade Commission, is the Australian government’s trade, investment and education promotion agency].
Combined, this positions Iran as an attractive proposition for businesses targeting offshore opportunities, particularly so for many of the Western Australian organizations in the fields of infrastructure (including water and power), mining and oil and gas.
However, before an organization enters a foreign country such as Iran, with its own systems and processes, it is essential to secure accurate advice on the relevant corporate structures required, licenses and approvals, tax laws, intellectual property laws and labor laws.
Considerable Misinformation
There is a considerable amount of misinformation in relation to the legal landscape in Iran. For instance, it’s commonly thought that it is necessary for an Iranian national or company to own at least 51% of any company, but this is not the case.
Further, despite certain reports, intellectual property laws in Iran are well developed, and there is a specific intellectual property infringement court that has an active caseload.
There are, however, some key risks and challenges facing foreign organizations wanting to do business in Iran.
Local Iranian banks exclusively provide all banking services in Iran. Foreign banks (including those from Australia) have not yet set up a presence in the country.
While sanctions have been lifted on Australian banks, it is understood that banks are cautious in relation to setting up in the jurisdiction, given recent history. Until some progress is made in relation to foreign banks doing business in Iran, there will be a limit to capital flows into the country that can support major infrastructure projects.
The legal services market in Iran is different from that in Australia. Legal firms tend to be small and often quite specialized; it is a fragmented market. Brand names known in other countries in the region are not present in Iran.
In order to do business in Iran, investors and operators need to have a network of trusted legal advisers in particular practice areas, which can be called upon as and when required.
Recent airport projects agreed with French companies and signed by President Hassan Rouhani prove opportunities are there for foreign companies. The world will be watching how these deals play out for both parties.
With its young and relatively well-educated population, a burgeoning domestic demand, extraordinary natural resources and a collective need to develop following a prolonged period of sanctions, Iran represents a unique opportunity for Australian businesses to export their products, services and skills. It’s an opportunity the rest of the world is noticing, too.
