Must-know, Art of Doing Business in IRAN-Chapter Two : Economy Of Iran

Economy Of Iran is a mixed and transition economy with a large public sector. Some 60 percent of the economy is centrally planned dominated by oil and gas production, although over 40 industries are directly involved in the Tehran Stock Exchange,one of the best performing exchanges in the world over the past decade.The latest MENA Economic Monitor Report – Spring 2016, expects Iran’s growth to rise to 4.2 % and 4.6 % in 2016 and 2017, as a result of the lifting of the sanctions and a more business-oriented environment.

  • High potential consuming market :

Iran’s 80 million people, who have been all but cut off from global trade and transactions in recent years, after Iran reached a nuclear deal that will open its markets to the world, officials are warning of economic stagnation as consumers hold off on purchases of domestic goods while they wait for international brands to arrive.From cars to fridges and televisions, shoppers are excited at the prospect of more choice and competition. Iranians love consume & shop, and they have continued to surprise domestic and international brands with their resilience.

  • Currency Fluctuation :

Expect huge and unexpected Fluctuation. Keep in mind it can be up to 6% which can easily destroy your estimated margin especially for products which are selling in volume with small margin.

Example of the Exchange fluctuation since last month

Exchange rate : There are two rates, Central Bank & Open Market which is 32786IRR Vs. 3828 and keep in mind that not every one has an access to Central bank rate. Imagine your competition has an access to Central bank rate and you get your dollars from open market! You will be facing 15% price different.

Interest rate : Again there are two rates and again it is Central bank rate and open market which is 24% Vs. 36% per year.

Inflation rate : inflation In Iran is among the highest i in the world. But after Rohani`s re -election it is going down.

VAT is applicable for whatever your are importing via official channel and custom but sometimes you can not add it to your landed cost. It is about 9%.

This is the end of chapter two, Stay tuned!
Iman Soltani

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