Iran gears up for trade and investment boom

(MENAFN- Arab News) DUBAI: Iran is preparing for a trade and investment boom that could reshape the region after agreeing with world powers to curb its nuclear program paving the way for sanctions that have stifled its economy to be lifted.
With just under 80 million people and annual output of some $400 billion Iran is set to be the biggest economy to rejoin the global trading and financial system since the break-up of the Soviet Union over two decades ago.
'This is the deal that we have been waiting for the one that will open the doors' said Iranian investment banker Xanyar Kamangar founding partner of Griffon Capital an asset management and corporate advisory firm in Tehran.
The toughest sanctions look likely to remain in place for at least several more months; the agreement says measures such as US and European banking restrictions will be lifted only when the International Atomic Energy Agency has verified that Iran is keeping to its side of the bargain.
For this reason and because Iran needs to repair its dilapidated infrastructure some of the benefits of lifting sanctions will be slow to come. It may take years for oil exports to return to the pre-sanctions levels of four years ago almost three times the 1 million barrels per day that Iran exports now.
But the nuclear deal will provide an immediate boost to Iran by making companies around the world more comfortable dealing with it and by encouraging the Iranian diaspora to send money home businesspeople said.
Economists estimate that a third of Iranian industry may have been idled by the sanctions which the US Treasury estimates cut Iran's GDP by a fifth; much of this could now revive as trading ties with the West are re-established.
Meanwhile the modernization of Iran's oil industry and infrastructure projects that were put on hold during the sanctions years are expected to boost imports of commodities such as cement and steel.
Iran's trade with the European Union last year totalled 7.6 billion euros ($8.4 billion). In 2011 before banking sanctions hit it was 27.8 billion euros a measure of the ground that may be recovered.
Portfolio investment into Iran may also increase quickly as frontier market funds enter a $100 billion stock market that is very cheaply valued by international standards.
Further out many firms are likely to establish a presence in Iran through representative offices partnerships and franchise agreements. Some Western fast food and clothing franchises are already present operating via Turkey Tehran businessmen say.