Foreign investors have polarized views on the investment environment in Iran. Some believe the country is so full of opportunities after the signing of the Joint Comprehensive plan of Action (JCPOA) that doing business there is like “sailing in the golden sea”, while others consider its geopolitical and foreign investment environment complex, and as treacherous as “sitting on a powder keg”.
The Iran nuclear issue has always been the biggest factor affecting the country’s investment environment. According to the JCPOA, reached on 14 July 2015, all UN Security Council sanctions, as well as multilateral and national sanctions by the EU and US relating to Iran’s nuclear programme, will be gradually lifted as long as Iran meets its nuclear commitments. But it is undeniable that the Iran nuclear issue has not yet been completely solved, and the interest balance among all stakeholders is still fragile. Therefore potential deterioration of the situation brings a big uncertainty to the investment environment in the country.
For years, Iran has been isolated from the global financial system due to economic sanctions from the US and some European countries. It is difficult to make even normal exchange or settlement of foreign currency in the country. So far, both its inflow and outflow of foreign exchange are not yet free and still rely heavily on agent banks. For foreign investors, it is difficult to make transfer payments through normal financial channels.
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Wang Jihong is a partner and Sun Lifeng is a senior associate at Zhong Lun Law Firm
Zhong Lun Law Firm
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