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Confidence in Contracts |
The
Iranian-British Trade and Investment Mission visited Iran for the second time, looking
into partnership for trade and investment. The mission consisted of British trade figures
and company managers. Iran International interviewed Sir Jeremy Hanley on this occasion. A
chartered accountant who later went into politics, he spent 15 years as a member of
Parliament and 8 years as a government minister. Sir Hanley is now the chairman of the
British Iranian Chamber of Commerce and co-leader of the British mission. Excerpts of his
remarks:
I believe the 1999 trade and
investment mission was successful for a number of reasons. Thirty-five Britons established
contacts with a wide range of Iranian government officials including vice ministers,
deputy governors of banks, etc.
“Shell” signed a very big buy-back contract. HSBC opened up a branch office.
Many other companies have made companies for joint ventures. At least 10 companies that
came here entered into negotiation to create joint ventures. They all learned about free
zones. There are tax holidays in free zones for those who invest, and there is a stated
intention that what happens in the free zones might, if the experiment is indeed a
success, stretch to the mainland Iran. Then people can see there is a flexibility of
approach by the government.
Building on that we have the second mission, without oil companies – because oil
companies are now very much served. We have here, instead, financiers, who are mostly from
banking services, engineering and computer services and the like.
With the visits of both countries’ officials, things are accelerating in the trade
field and trade is leading to better political relations, too. We can see the government
is making very great steps in its Third Five-Year Plan: to increase privatization, to try
to balance its budget. We see a raise in the oil price which makes a difference in the
economy of Iran. What we also see in the Plan is the intention to attract $80 million in
Foreign Direct investment over the next 15 years into Iran and the United Kingdom wants to
play its share.
Iran has a population of about 66 million and a working population of 14 million. Those at
the school age or university age are 20 million. And the people, who come out of the
Iranian education system would be in demand of jobs of the right quality. Therefore,
President Khatami and his government have stated that Iran needs about 800,000 new jobs a
year. The country needs to make investment to achieve that. It is in our interest in
Europe that Iran is profitable and stable and it is a wonderful market; not just the
market in Iran, but the whole region with a population of 400 million. There is a great
market here: raw materials, well-educated people, young people who need jobs.
We can see Tehran-London political relations are going back to normal, and as a result,
confidence in contracts between the two nations will be more normal. Another progress is
that Export Credit Organization offers better credits for Iran than they did two years
ago.
We are looking for partners to establish long-term relationships. We get the traders to
meet someone in the same business in order to have a partnership. I want the trade to
double each year for the next five or six years.
I believe Iran’s stated intention to join the World Trade Organization (WTO) is a
positive statement indeed. Because it is not an easy series of steps to achieve. Much
reform has to take place which shows “we want to join WTO”. There are some
issues which might create difficulty for those who want to invest in Iran, such as
restrictions on imports, tariffs, bureaucracy, taxation system, etc. If one wants to join
WTO it must resolve these things and Iran shows it wants to do so, and therefore is
setting up a committee to look into advantages and disadvantages. We would ask our
government to put Iran on the agenda of WTO.
With the progress made in Iran only during the past
12 months, I think Iran is becoming the most attractive place for business in the future.
In a decade, I see Iran as the leader of this region financially; as the hub for regional
trade into the CIS countries. I see Iran as a major player in the economic framework of
the world.
Far More
Interested in Iran |
Neil Condon
was back in Iran in September, this time heading another British Trade Mission. Condon was
for many years the operations director of an international engineering service company
with extensive interests in the Middle East. That experience led him to the position of
trade relations director at the Middle East Association. Having attended some major trade
events of Iran for the past few years, Condon can now comment on the past, present and the
future of trade ties. Sitting in a luxurious suite in Laleh International Hotel, he
answered to the questions of Iran International about the new era in Tehran-London trade
ties:
The Middle East Association is an
organization dedicated to the promotion of trade between the United Kingdom and the Middle
East. As an example of the Middle East Association’s endeavors to promote
trade has been the oil, gas and petrochemical exhibition. Britain took 50 stands at the
exhibition, while the next largest foreign group of exhibitors were the French with 18
stands. The Middle East Association also hosts a number of events in its premises in
London in connection with Iran.
From among other countries in the Middle East, we are far more interested in Iran. Iran is
so wealthy regarding its oil and gas resources. As always, we have been very well received
in Iran. The message I got back from the delegates on this mission was extremely positive.
This is while the Iranian business community is becoming more aware that the mission is in
town.
The next event in which British companies are taking part is the Tehran International
Trade fair, in which more than 50 British companies are taking stands. This is another
positive move from the British business community.
We know that Iran has huge mineral resources such as copper, silver, steel, coal, etc.
British companies are very interested to cooperate with Iran in this field and the British
government is commissioning a survey to see how Britain can help diversification of
Iranian exports. Agriculture is another field in which Britain is interested to cooperate
with Iran.
Iran is ambitious to become self-sufficient as far as it is possible. Free Trade Zones are
a good way of enabling foreign companies to invest in Iran and establish manufacturing
processes within Free Trade Zones. All I know is that when it comes to overseas
investment, Britain invests more per head of population than any other country in the
world.
I personally think that Iran’s potentials as an exporter is not generally realized
throughout the Western world. Iran needs to do a lot more to make people know what it can
offer. Britain’s marketplace is one that is open to all and Iran should endeavor to
benefit from this opportunity. It should make the British business community be aware from
its capabilities.
The biggest advantage that Iran enjoys is a very large work force that is very well
educated and capable of operating the most advanced machinery and equipment, and the
opportunity is ripe now to join Iran to produce goods.
If the British companies are going to invest in Iran they want to be sure that their
investment is secure here, and see it grow and if the day came that they want to sell
their investment, they can do it and take their capital back freely. So, flexibility in
ownership, security of ownership and the ability to make a profit on their investment are
the most important factors for potential foreign investors.
If you look at a country like Egypt for example, you can see it had quite restrictive
investment laws, but 10 years ago, they relaxed their investment regulations and as a
result it became attractive for investments. So security is very important, but I
don’t think ownership is that important. Foreign companies are looking for something
not over-regulated and not so much bureaucracy involved.
In about a decade, I see Iran as an industrial base for the whole Middle East region. It
is a democratic country. It is a moral society and it is geographically in a good
position. It is stable and peaceful. I think the next 10 years will be very positive and
Iran will be progressing. It would be a major progress. |
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