Yesterday, Frontier Strategy Group’s Senior Analyst for Middle East & North Africa and Turkey, Zeynep Kosereisoglu, was featured on CNBC’s Closing Bell to discuss FSG’s views on the Boeing Deal and doing business in Iran.
The risks of doing business with Iran can be categorized into three main categories:
- Exposure to existing sanctions: There are still restrictions on the businesses multinational companies can work with in Iran (mainly related to the Iranian revolutionary guards), even with the nuclear deal. Companies must make sure they do their due diligence and investigations to ensure they aren’t working with companies that have connections to blacklisted companies
- Uncertain future of sanctions deal: While FSG’s base case scenario expects the deal to continue to be implemented, there are clear risks against its implementation, especially by the US. This leaves American companies in particular exposed to sudden changes in the legal status of their ability to operate in Iran
- Regulatory/macro-economic risks: We must recognize the story beyond sanctions in Iran; a risk of not achieving targets exists for overly optimistic companies. The Iranian government is quite protectionist, there is high regulatory unpredictability, high cost of international financial transactions, some political uncertainty as we have May 2017 presidential elections, an economy weakened by years of sanctions.
In summary, the answer to whether doing business in Iran is good or bad is increasingly diverging between American and European/emerging markets companies. For companies that are looking for a new market to drive additional growth and can limit their risk exposure, Iran represents a clear opportunity. For American companies, whether business with Iran will be “good or bad” depends on the sector they operate in and their risk adversity.
Interested in learning more? Read our recent report: IRAN MARKET SPOTLIGHT: ACT NOW TO CAPTURE IRAN’S LONG TERM OPPORTUNITY
- FrontierView Platform Subscribers: Click here for client access
- Non-Subscribers: Click here to purchase the report on our online store
View the entire CNBC clip here: