SPRI. Iran. A world of opportunities guide to do business in Iran

1October 17th, 2016

A WORLD OF OPPORTUNIT IES GUIDE TO DO BUSINESS IN IRAN

ARHAX CONSULTING TEAM, SARMAD AFARINESH & HABIB ALLAHDAD

IN ASSOCIATION WITH SPRI

CONSULTING

This content is; (a) copyright protected. (b) figures are based on public data. +1 (646) 233-1145 www.arhaxconsulting.com

2October 17th, 2016

ISLAMIC REPUBLIC OF IRAN

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3

HISTORY

October 17th, 2016

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4

GEOGRAPHY

October 17th, 2016

Iran is the 2nd largest country in the Middle East

Located between the Persian Gulf & Caspian Sea

Borders with:Armenia, Azerbaijan & Turkmenistan to the NorthAfghanistan & Pakistan to the EastTurkey & Iraq to the West

The Persian Gulf, the Sea of Oman & the Caspian Sea provide Iran with strategic access to International waters

DNI (direct normal irradiation) of 2100 kWh/m2, an average of 300 sunny days per year, and high-wind locations in the mountainous regions (Alborz) north-west of Tehran, by the Caspian Sea and the Gulf of Oman.

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DEMOGRAPHICS

October 17th, 2016

•2nd largest population in the Middle East

•Diverse country composed of many ethnic groups

•Religion: Muslims (98%) & Other Religions (2%)

•Language: Official language is Farsi yet there are various ethnic languages as well as Turkish & Arabic.

•70% of population is under the age of 35.

•8 Major cities with population over 1 million

•Annual growth rate of 2 %

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1 2

5

3

4

Iran’s Urbanization Rate by Province and Cities (2012)

Iran’s 5 biggest cities will provide access to Iran’s 2.6 million wealthiest end-users and 13+ million middle-class

Shiraz

Isfahan

Tehran

TehranProvince

RazaviKhorasanProvince

IsfahanProvince

FarsProvince

EastAzerbaijanProvince

Tabriz

Mashhad

Target Cities by Potential End-users (2014, million)

6

DEMOGRAPHICS

October 17th, 2016

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0.3

0.4

0.4

0.5

1.0

Tabriz

Shiraz

Esfahan

Mashhad

Tehran

Population 15+ yrs (with income in the top 10%)

Population 15+ yrs (with income in the middle 65%)

Province Capital

60% - 69.99%70% - 79.99%80% - 89.99%> 90%

Source: Solidiance’s research and analysis

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POPULATION & URBANIZATION

October 17th, 2016

1950: 17 million

2000: 66 million

2015: 80 million

2050: 105 million

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ECONOMY

October 17th, 2016

• Iran at ~ $400 Billion is the 27th largest economy in the world

•Ranked upper middle income economy by the World Bank

•The main driving forces contributing to the GDP are the Energy, Mining, Industry & Agriculture sectors

•Unemployment rate is at ~ 10%

• Inflation official ~ 10%

• Iran is the second largest economy in terms of population and the fastest growing country in the MENA Region

•With a young, Internet-savvy population, vast oil and gas resource base and a strategic location, Iran is poised for growth following sanctions relief, which could boost GDP growth to 5% a year by 2018.

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OUTLOOK FOR GDP COMPOSITION

October 17th, 2016

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0

25

50

75

100

2005 2010 2015 2020

GovernmentSemi-stateinsVtuVonsPrivatesectorCooperaVves

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ECONOMIC PRIORITIES

October 17th, 2016

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WiththesigningoftheJointComprehensivePlanofAction(JCPOA),Iran’saimwillnowbetomodernizeitsexistingindustrialbaseandupgradeitsinfrastructure.Estimatessuggestcapitalrequirementsofcloseto1trillionUSD.Theoilandthegassectoraloneareestimatedtorequire400billionUSDormoretoupgradeandexpand.Keysectorsinclude:

OilandGas

• World’slargestgasandthe4thlargestoilreserves• Productiongrowthopportunities• Newcontractualframeworktoattractinvestment• 49priorityprojectsannouncedatvariousstagesofexplorationanddevelopment

Energy-IntensiveIndustries

• World’s15thlargestcementproducer• ProducessameamountofsteelasFranceand15%morethanUK

PetrochemicalSector

• Majorinvestmentstoexpandexportpotential• Developingpetrochemicaldownstreamtoaddvalue

MiningSector

• Majorinvestmentinminingindustrydevelopment• 64priorityprojectsannouncedbyIranianMinesandMiningIndustries

DevelopmentandRenovationOrganization(IMIDRO)

TelecomsSector

• Mobilepenetrationof110%(about85millionsubscribers)• NeedforITandtelecomsolutions• Smartphoneusers:8million+• Digitalanddataopportunities

Food,WaterandWastewaterSector

• Waterscarcity• Needforanewconceptforfoodsecurityandwatermanagement• Needformodernequipment

PowerGeneration/EnergyEfficiency

• Successfulindigenousindustry,butenergyinefficient• 5GWofgenerationcapacityexpectedannuallytoreachacumulativeoutputof

96GWby2020

AutomotiveSector

• LargestproducerintheME(1.6millioncarsproducedin2011)

• Needstorespondtomarketdemandandmodernizetheexistingcapacities

AirandOtherTransportSector

• Domesticairtravelstuntedduetolackofaircraft;estimatessuggest300-500moreplanesareneeded

• Substantialinvestmenttoexpandmetroandinter-citytrainnetworks

PharmaceuticalSector

• Pharmamarketstandsatapprox.3.6billionUSD,outofwhich33.5%isimportedandtherestdomesticallyproduced

• Needtoupgradeexistingcapacities• Needforinvestmentsinnewmedicine

ConsumerGoodsSector

• Countryof78millionhasbeenallbutcutofffromglobaltradeforyears• Significantamountofbrandloyaltystillexists

CapitalMarketsSector

• Under-developedcapitalmarkets• Stockmarkettradesover100millionUSDperdayandhasamarketcaptoGDP

ratiooflessthan30%

14

IRAN DEVELOPMENT PLANS

October 17th, 2016

• Iranian authorities have adopted a comprehensive strategy encompassing market-based reforms as reflected in the government’s 20-year vision document and the recently issued sixth five-year development plan for the 2016-2021 period. The sixth five-year development plan remains ambitious, comprised of three pillars, namely, the development of a resistance economy, progress in science and technology, and the promotion of cultural excellence. On the economic front, the development plan envisages an annual economic growth rate of 8% and considers the implementation of reforms of state-owned enterprises, the financial and banking sector, and the allocation and management of oil revenues among the main priorities of the government during the five-year period.

•The resistance economy, pioneering in science and technology and the cultural superiority are three main pillars of the document which has been formulated after long-term research, studies and consultations with Iran’s Expediency Council. Following the issued decree, this provision plan will be applied as a basis for the budget planning next year. This national plan also addresses a wide range of affairs: Economy, technological innovation, information and communication, social issues, defense and security, foreign policy, legal, judicial, cultural, and scientific issues.

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Iranhasmadethetransitionfromanominalconstitutionalmonarchytoademocratictheocracyafterareferendum.Iran-Iraqwarbeganin1980andcontinuedfor8years.

1979-1989

AliAkbarHashemiRafsanjanibecomespresidentafterIran-Iraqwar,theyearsofhispresidencycalled“Constructionperiod”.RafsanjaniisaninfluentialpoliticalpeopleinIran.

1989-1997

MohammadKhatamiwinspresidentialelection.Hisperiodtimecalled“Reformstime”.

1997-2005

MahmoudAhmadinejad,Tehranmayor,whocampaignedasachampionofthepoorandpledgedtoreturntothevaluesoftherevolutionof1979,electedpresident.

2005-2013

HassanRouhaniwinspresidentialelection.Positiveinteractionwithworldisthemaingoalofhispresidential.

2013-now

Iran is a developed country, onfirst place in the region in therealms of economy, knowledgeand technology; with an Islamicand revolutionary identity, aninspirationfortheworldandwithp ro d u c t i ve a n d i n f l u e nt i a linteractions in Internationalrelations.

2025IranVision

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IRAN DEVELOPMENT PLANS

October 17th, 2016

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Iran is a developed country, on first place in the region in the realms of economy, knowledge and technology; with an Islamic and revolutionary identity, an inspiration for the world and with productive and influential interactions in International relations.Vision

2025Iran

8.6%Economicgrowthrateof

Investmentgrowthrateof10.9%

Percapitaincomegrowthrateof7.2%Inflationrateof7%

Laborproductivitygrowthrateof 4.4%Unemploymentrateof 7% attheendofthehorizon

Industrialexportsworth US$23.6 billionattheendofthehorizon

Non-oilexportsworthUS$31.5 billionattheendofhorizon

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LIFTING OF SANCTIONS

October 17th, 2016

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On the Economic

Front

GDP Imports Exports

Manufacturing Market

Automotive Market

Expenditures on R&D

Consumer Expenditures

On the Production

Front

oil & gas Market

Transaction CostsOn the

Spending Front

Expected to increase at a CAGR of 5-7% from 2015 to

2020

Expected to grow at 5% to reach USD 117 billion by 2016

Expected to decrease by

15% with Iran post-sanctions

To increase by 50% by 2020 for a value of USD

115 billion (from 2015)

Growing at 12% to reach USD 62 billion by 2016

To reach USD 170 billion by

2017 (from 2015)

To increase for a value of USD10 billion by 2017 (from

2015)

To grow at 11% to reach USD 52 billion by 2016

Iran’s 2025 Vision wishes to attract USD

1.3 trillion in foreign

investment

Sanctions on Iran Mean?

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IRAN POST SANCTIONS

October 17th, 2016

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IRAN GDP GROWTH RATE PROJECTIONS

October 17th, 2016

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-4-202468

10

2013 2014 2015 2016 2017 2018

World BankInternational Monetary FundIranian Bill submited in February 2016 by the Government for Parimentary approval (2016-2021)The Economist Intelligence Unit

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WHY IRAN: MARKET POTENTIAL

October 17th, 2016

• Vast domestic market with population of 80 million

• A young educated population, credit based society with huge unsatisfied demand for everything from Refineries and Chemical Plants to Housing and Basic Infrastructure, the opportunities are huge!

• Foreign companies would hope to supply much of the shortfall- in the form of Factories, Machinery, Buildings and Infrastructure.

• Cheap Labor, Energy Resources and Geographical Location, gives Iran access to an additional Estimated 300 million people in the Caspian Market, Persian Gulf and ECO countries.

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WHY IRAN: ABUNDANT NATURAL RESOURCES

October 17th, 2016

•Largest Proven Gas Reserves (~ 18 % of the World’s Gas Reserves)

•4th in Oil Reserves (~ 9% of Global Oil Reserves)

•Abundant Strategic Minerals (~ 7% of World Mineral Reserves)

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PROVEN RESERVES OIL AND GAS

October 17th, 2016

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Russia17%

Saudi Arabia4%

Asia Pacific8%

Europe & Euroasia14%

Africa8%USA

5%

Rest of the world9%

South America4%

Qatar13%

Iran18%

Natural Gas

Russia6%

Asia Pacific3%

Venezuela19%

Kuwait6%

Saudi Arabia16%UAE

6%

Africa8%

North America14%

Rest of the world1%

Iraq9%

Kazakhstan2%

Iran10%

Oil

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MINING INDUSTRY

October 17th, 2016

Mining in Iran is underdeveloped yet the country is one of the most important mineral producers in the world.

• Iran ranks among 15 major mineral-rich countries.

• Iran holds ~ 68 types of minerals.

•~ 37 billion tons of proven reserves and more than ~ 57 billion tons of potential reserves worth ~ $770 billion in 2014.

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MINING INDUSTRY

October 17th, 2016

Large deposits which mostly remain underdeveloped:

•Zinc (world's largest)

•Copper (world's Top 10 reserves in 2011)

• Iron (world's Top 15 largest in 2013)

•Uranium (world's Top 10 largest)

•Lead (world's Top 15 largest)

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24October 17th, 2016

“ONE PERCENT OF THE WORLD'S POPULATION HOLDS MORE THAN 7% OF THE WORLD'S TOTAL MINERAL RESERVES.”

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WHY IRAN?

October 17th, 2016

•According to the Petroleum Ministry, Iran plans to invest $500 Billion in its oil sector by 2025.

• Iran has its sights at regaining its second position in OPEC producing an additional 1 million barrels per day.

• Iran is Ranked Top 14 Steel Producer in the world.

• Iran is ranked as the largest Producer of MENA (Middle East & North Africa).

•Government intends double steel production by 2025.

•Government will invest $2.2 billion in near future.

•7 new facilities planned across the country.

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AUTO MANUFACTURING

October 17th, 2016

•Automotive Industry is the 2nd most active Industry in the Country after Oil & Gas

• Iran is the largest car manufacturer in the Middle East

• Iran is the Top 20 largest Motor Vehicle Producer in the World

• Iran produces approximately 1.5 million cars annually

• It has established joint ventures with foreign partners on 4 continents

•There currently 13 public and privately owned Auto Makers within Iran

•The most important are Iran Khodro and Saipa

•Passenger Cars, Vans, Mini Trucks, Medium-size Trucks, Heavy Trucks, Mini Busses, Large Busses are produced in Iran

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AUTO MANUFACTURING: SHARES IN AUTOMOBILE PRODUCTION

October 17th, 2016

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SAIPA43.0%

IKCO47.9%

Others9.1%

2012

SAIPA36.4%

IKCO53.7%

Others9.9%

2014

SAIPA42.7%

IKCO49.9%

Others7.4%

2013

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AUTO MANUFACTURING

October 17th, 2016

•The Automotive industry is crucial for Iran’s economy, which is expected to be the biggest market for new car sales (1.5 million) in the MENA region by 2020.

• Iran’s automotive industry is the largest non-oil sector, employing ~4% of the working population and is expected to be the fastest growing industry in Iran once sanctions are relaxed.

•The market is expected to see ~13% sales growth between 2015 and 2020 as sanctions relief allow foreign players to increase automotive supply to Iran via imports, assembly or manufacturing operations.

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AGRICULTURE

October 17th, 2016

•Agriculture’s share of GDP has been decreasing over the years, due to low share of investment in the agricultural sector in comparison with other sectors. However, since Iran has the geographical potential as well as wide climatic variety, it has been noted that the agricultural sector can play a significant role in the country’s economic development.

•Population’s growth, need of various economic sectors for the products of the agricultural sector, variety of climatic conditions, access to sea, fertile lands, pastures, forests and the work force ready for activity makes it attractive to invest in the agricultural sector in Iran.

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AGRICULTURE

October 17th, 2016

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Item Rank Share

Berries

Pistachios

Sa ron

Cucumbers

Apricots

Almonds

Cherries

Dates

Walnuts

Wat ermelons

Figs

Onions

Sour Cherries

Pumpkins

Iranian Agriculture Production Rank in the World

Source: FAO; Solidiance’s research and analysis

1 90%

38%

35%

20%

11%

11%

3%

13%

6%

4%

12%

4%

3%

9%

3%

1

1

1

2

2

3

3

3

3

3

4

5

5

5

Stone-fruit (fresh)

(and Gherkins)

1 2

i i i i

Competitive Advantage of Iran in the Agriculture Industry

According to FAO, Iran ranks 4th among the top 10 countries in agriculture product diversity

for producing 15 types of the total 66 world agriculture products. Iran is also

the #1 producer of berries, claiming 90% global market share. Iran is better known for its dominance in the global

pistachio market, where it holds the #1 position at 38% global market share.

The temperature fluctuation in different regions of Iran and the

different climatic zones make it possible to cultivate a diverse variety of crops,

including cereals, fruits, vegetables, cotton, sugar, pistachios, nuts, tobacco, etc. The land covered by Iran’s natural

flora is four times that of Europe.

The agriculture industry in Iran may boost international trade and turn the country into a major food exporter post-sanctions

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WHY IRAN: INFRASTRUCTURE

October 17th, 2016

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Free trade zone

Draft meter less than & equal 10 meters

Draft meter more than 10 meters

Noshahr

Anzali

Bushehr

Assaluyeh

Lavan Island

Sirri Island

Bandar Chabahar Qeshm FTZ

Chabahar FTZ

Kish FTZ

Arvand FTZ

Aras FTZ

Overview of Major Ports and FTZs in Iran

• Draft: 11-12.5 M • Up to 80,000 tonnes DWT• Handle mostly oil products

Khorramshahr

Bandar Imam Khomeini• Draft 9 to 12 M during high and low tides• Vessel size : 100,000 tonnes can pass this

channel• Handle general cargo / dry bulk and

container

Bandar Abbas

• Main port in Iran, handling more than 80% of the container cargo

• Dedicated as SEZ area with lack of tariff and custom procedures

• Up to 14 M draft• Vessel size : Up to 100,000 tonnes

DWT• Handle general Cargo , Container,

Tanker

Strong infrastructure is in place in Iran, making the country ready from day-one for significant economic activities

In fact, Iran already has major plans to capitalize on international flows of goods after the lifting of sanctions due to its strategic geographical location, while offering alternatives to conventional shipping routes between Asia and Eastern Europe.

Iran’s logistics has the potential to become a major international hub for the global trading community


“PUT TOGETHER THE CONSUMER POTENTIAL OF TURKEY, THE OIL RESERVES OF SAUDI ARABIA, THE NATIONAL GAS RESERVES OF

RUSSIA AND THE MINERAL RESERVES OF AUSTRALIA, IRAN HAS IT ALL IN ONE COUNTRY.”

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FDI IN IRAN

October 17th, 2016

• "Vision 2025", the plan has set an investment target of $3.7 trillion within two decades (2005-2025) of which $1.3 trillion should be in the form of foreign investment.

• Iran has taken various steps to attract foreign investors. This briefing gives a brief overview of some legal measures Iran has taken for the promotion and protection of foreign investment.

•The government of the Islamic Republic of Iran guarantees foreign investments in the country and intends to protect investments despite existing problems, particularly in the banking system, by offering investment initiatives. Moreover, the implementation of the Joint Comprehensive Plan of Action (JCPOA) will further encourage investments in Iran.

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FDI IN IRAN: GAUARANTEES BY THE IRANINAN GOVERNMENT

October 17th, 2016

The security and protection of foreign investments in Iran are guaranteed by the state government.

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A business formed and approved under the FIPPA shall not be nationalized within the term of the contract or the extended term

The Iranian government is committed to facilitate the free flow of capital repatriation, and full and fair compensation for acts of expropriation by the government

FIPPA recognizes the rights of foreign investors of guaranteed payments in cases of enactment of a law and/or a decision by the government seizing or interrupting the project

Nationalization protection

Protection and Security of

investors’ interestsRights of foreign

Investors

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FDI IN IRAN

October 17th, 2016

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Three Available Options for Foreign Investors to Enter the Iranian Market

Source: Iranian Lawyers Office; Solidiance’s research and analysis

LIMITED LIABILITY JOINT - STOCK FOREIGN BRANCH

Formation is based upon

Company Law Iranian Attraction and Protection of Foreign Investment Act, Originally enacted in 1995Iranian Commercial Law

Founder 2 or more 3 or more Mother Company

Initial Capital Investment 1 Million Rials 3 Million Rials Not Required

Incorporation Statues and Registration Articles of Incorporationsand Registrations Registration

Formalities &Process Low Moderate Low

Procedures Sale a c tivities Sale activities Post-sale services & future investments planning

1 2 3

Foreign company establishing a branch in Iran to conduct business activities

Direct contributions of the partners in subscription shares form, available for secondary market trading

Direct contributions of the partners to the partnership, but not by share subscription

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FDI IN IRAN: FOREIGN INVESTMENT PROMOTION AND PROTECTION ACT (FIPPA)

October 17th, 2016

•The main Iranian foreign investment law is the Foreign Investment Promotion and Protection Act (FIPPA). The FIPPA grants foreign investors the same rights, protections and facilities available to domestic investors. This includes permission for investment in all fields where private sector activity is allowed and permission to hold up to 100% of shares in Iranian legal entities.

•FIPPA includes provisions to ensure free transfer of foreign capital and profits of foreign investment abroad. Foreign investors may claim through the Act to acquire necessary foreign currency for such transfer. Furthermore, residence and work permits for foreign personnel are facilitated under the FIPPA.

•Any disputes between the Iranian government and foreign investors related to investments subject of the FIPPA are subject to the jurisdiction of the Iranian courts, unless another dispute resolution mechanism has been agreed upon by a bilateral investment agreement with the relevant government of the jurisdiction of the foreign investor.

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FDI IN IRAN: BILATERAL TREATIES

October 17th, 2016

• Iran has entered into more than 50 bilateral investment treaties with other countries, such as Germany, France, Italy and Spain, providing for the promotion, admission and protection of investments by investors of such contracting parties. This includes assurances that the foreign investments will be treated no less favorably than its own investors.

•Additionally, Iran has concluded a number of double tax treaties, such as with Germany, France and SPAIN to avoid double payments on income and other taxes.

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FDI IN IRAN: COMPANY ESTABLISHMENT /FOREIGN PARTICIPATION

October 17th, 2016

•The company structures most frequently used by foreign investors in Iran are the private joint stock company (sherkate sahamie khas) and the limited liability company (sherkat ba masouliate mahdoud).

•They require a minimum of three and two shareholders respectively. The shareholders can be affiliated companies.

•The directors and managers can be foreign nationals. The setup and registration process has become, thanks to the introduction of an electronic registration procedure (amongst other reforms), swift and straightforward.

• It is permissible for foreign investors to hold 100% of shares in an Iranian company, irrespective of the applicability of the FIPPA and obtaining an investment license. However, public tenders may provide for a (majority) participation of an Iranian.

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FDI IN IRAN: FREE TRADE ZONES

October 17th, 2016

• In order to attract and promote foreign investments, a number of free trade zones have been established. Economic activities in such free trade zones are exempted from payment of income tax for a duration of up to 20 years from the date of commencement of operation.

•Moreover, imported goods in the zones are exempted from customs and import duties. The same applies to the import of goods from free trade zones to the mainland, if the raw materials have been supplied domestically.

•The regulations of the free trade zones provide, similar to the FIPPA, for repatriation of the foreign capital and net profits, and for protection against expropriation and nationalization.

•Visa free entry for all countries except for 9

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FDI IN IRAN

October 17th, 2016

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Free Trade Zones (FTZ) have their own legal framework independent of the regulations from the rest of Iran, while Special Economic Zones (SEZ) provide tax incentives

Free Trade Zones

• Easy registration of foreign companies• Investors can own up to 100% of an

investment without special formalities• Free repatriation of profits and capital• Exemptions from income and capital tax

for 15 years• Foreign investors can lease and own land,

buildings and other installations• All goods imported are exempt from

custom duties and commercial benefit tax

• Exemption from customs and other commercial duties for the goods transferred to SEZ

• Customs exemptions for products manufactured in SEZ equal to their added value

• Option to transit goods and re-export them• Full guarantee for foreign capital and profit

resulting from investments• Full freedom for foreign capital to be

moved in and out of SEZ

Special Economic Zones

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TAX EXEMPTIONS

October 17th, 2016

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AcVvity LevelofExempVon DuraVonofExempVon

Agriculture 100% NoTimeLimit

IndustryandMining 80% 4Years

IndustryandMininginLess-DevelopedAreas 100% 10Years

Tourism 50% NoTimeLimit

Exports 100% NoTimeLimit

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MINDSET

October 17th, 2016

• Iran aims to develop a knowledge-based economy and as such is looking for the two important elements of skill and technology transfer in its partnership with foreign entities.

• Iran is in need of large industrial investment over the next 10 years. It should also be added that the country is moving away from an import-based mentality to one based on the development of its manufacturing base and export potential.

•As such entities that opt for the establishment of either independent or joint production units will be preferred over those seeing Iran as just an export destination.

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MINDSET

October 17th, 2016

Iran is keen on concluding business negotiations and witnessing actual investment and physical presence as soon as possible.

•Without visible action and commitment, no foreign entity is likely to be taken seriously.

•Experience shows that those foreign entities that entered the Iranian market during relatively risky and unstable periods, have benefitted from their first mover advantage. In contrast, those business partners that left the Iranian market as a result of the imposition of sanctions now find themselves in unfavorable situations in their attempt to re-enter the Iranian market.

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MINDSET

October 17th, 2016

Most important of all Get the right advisors!

• In devising strategies and implementation plans for Iran, it is highly recommended to make use of reputable local consultants who can bring significant value to the table though their local knowledge and deliver huge time and cost savings through lessons learnt from past relevant experiences.

•Arhax Consulting firm is a specialist professional services firm providing consulting, financial advisory, transactions support and investment services to multinational corporations and diversified conglomerates with respect to their entry strategy into Iran.

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GUIDE TO DO BUSINESS IN IRAN

ARHAX CONSULTING, SARMAD AFARINESH & HABIB ALLAHDAD

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WE KNOW IRAN

October 17th, 2016

•We are familiar with the Culture, the Language and the Mindset of Iranians.•We recognize the true Needs.•We address the real Targets & Opportunities.

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WE DO BUSINESS OURSELVES

October 17th, 2016

•We are on the ground.

•Years of global experience, even during sanctions.

•We have faced challenges and rewards.

•We have discovered solutions and refined methods.

•We constantly face issues and opportunities.

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CATEGORIZING BUSINESS WITH IRAN

October 17th, 2016

•TradingHandicraft, carpets, foodstuffs, medication, natural resources, tech goods, consumer products, software and IT, management and quality control, energy saving etc

•Small, Medium & Large BusinessFranchising, Pharmaceuticals & Medical, OEM Manufacturers, Raw Material Users, Commodity Trading, Agricultural Technology, Upgrades and Renovations

•PartnershipEPC Companies, Banks, Industrial Giants, Public Services, International Projects Long Term Project Partners in: Energy, Oil & Gas, Mining, Automotive, Infrastructures, Construction, Tourism, Research & Development

•Financing & InvestmentJoint ventures, Buy-back, Project finance, Finance, Usance, Build, operate, and transfer (BOT), Loans, Leasing, Installment sale, Profit sharing & Line of financing.

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FINANCING & INVESTMENT

October 17th, 2016

Joint ventures, Buy-back, Project finance, Finance, Usance, BOT, Loans, Leasing etc.

Surprising Issues appear in:•Communications (Methods) •Market Study (Sources and Channels)•Transactions (Banking) •Guaranty and Contracts (Legal)

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STEPS OF THE BUSINESS

1. Get yourself informed; Market Research, Entry Options & Industry Scan

2. Communicate: Meetings, Negotiations & Events

3. Get a Road Map: Finalize Projects, Budgets & Legal Consulting

4. Set Up: Registrations, HR, Marketing Activities & Management

5. Execute & Operate: Follow Up, Consulting & Troubleshooting

6. Make Profit

October 17th, 2016

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➔

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RETURN ON INVESTMENT

October 17th, 2016

➔ Financial Return

➔ Innovation

➔ Growth

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FAQ

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?56

FAQ

October 17th, 2016

Can EU persons provide goods and services in connection with Iran’s energy sector?Yes. It is no longer sanctionable for non-U.S. persons to provide goods, services (including financial services), or technology used in connection with Iran’s energy sector, the development of Iran’s petroleum resources, including the domestic production of refined petroleum products and petrochemical products, or associated services.

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FAQ

October 17th, 2016

Can EU persons invest in Iran’s oil, gas, and petrochemical sectors?

Yes. The sanctions on investments by non-U.S. persons in the oil, gas, or petrochemical sectors of Iran are lifted. As a result, EU persons are no longer subject to sanctions for investing in Iran’s oil, gas, or petrochemical related sectors (including through participation in joint ventures).

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?58

FAQ

October 17th, 2016

Are EU persons able to purchase Iranian natural resources and related products?

The United States is no longer pursuing efforts to reduce Iran’s sales of crude oil and minerals. The restriction on use of proceeds of sales of Iranian petroleum and petroleum products for bilateral trade with Iran no longer apply. In addition, the restrictions on Iranian oil revenues held abroad have been lifted.

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FAQ

October 17th, 2016

Can EU persons purchase, acquire, sell, transport, or market petroleum, petrochemical products, and natural gas from Iran?

Yes. The United States lifted secondary sanctions on the purchase, acquisition, sale, transport, or marketing of petroleum, petroleum products (including refined petroleum products), petrochemical products, and natural gas (including liquefied natural gas) from Iran, and the provision of associated services. EU persons are no longer subject to sanctions for engaging in such activities.

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FAQ

October 17th, 2016

Can EU persons export, sell, or provide refined petroleum products and petrochemical products to Iran?

the United States lifted secondary sanctions on the export, sale, or provision of refined petroleum products and petrochemical products to Iran. As a result, beginning on Implementation Day, non-U.S. persons are no longer subject to sanctions for engaging in these activities .

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FAQ

October 17th, 2016

Which financial and banking sanctions are relieved?

•Transactions and other activity related to the Iranian rial;

•Provision of U.S. bank notes to the Government of Iran, including the provision of material support for such transactions;

•The purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt, including governmental bonds; and

•The provision of financial messaging services to the CBI and other Iranian financial institutions.

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FAQ

October 17th, 2016

Will financial institutions be subject to sanctions for opening or maintaining correspondent accounts for Iranian financial institutions?

No. EU financial institutions will not be not subject to secondary sanctions for opening or maintaining correspondent accounts for Iranian financial institutions.

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FAQ

October 17th, 2016

How does the lifting of sanctions affect the provision of insurance for transactions involving Iran?

The provision of underwriting services, insurance, or reinsurance by non- U.S. persons for activity that is consistent with the JCPOA is not sanctionable as of October 18th 2016.

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!" 64October 17th, 2016

WHAT YOU SEE ON THE MEDIA TODAYBESIDE THE VIOLENCE AND IDIOTIC PRESIDENTIAL CAMPAIGNS

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RECENT STORIES

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RECENT STORIES

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ISSUES

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EASE OF DOING BUSINESS

October 17th, 2016

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#companies, it will be a challenging place to do business in

Family and friends may interfere in the

decision-process within the business.

It is crucial to understand this cultural

behavior and learn how to manage it.

Un-drawn Borders between Personal and Professional RelationshipsBasic request requires complex forms,

administrative processes and stamps of

approval. One can expect serious delays

when dealing with construction permits

and property registration.

Risk of Bureaucratic Delays This caused the country to rank 123rd

out of 189 other nations on paying taxes

in the ease of doing business index.

Complex Tax Structure

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BUSINESS INVIRONMENT

October 17th, 2016

•We help you analyze

•Find Financial Alternatives

•Act with knowledge

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#

Political stability

FDI policy

Foreign trade and exchange controls

Ease of financing

Infrastructure

Private enterprise & competition

policy

Labour market

Tax regime

Business environment for

foreign firms

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ISSUES

October 17th, 2016

Implementation of the sanction-relief delayed

UNODC & US Department of Treasury still continue to negotiate about implementation of the JCPOA.SWIFT was officially connected last year, BUT realistically the international services of Iranian banks are not functional and big international players are yet to enter the market. Some exceptions exist, however progress has been, and will be slow.

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ISSUES

October 17th, 2016

Banks refuse to cooperate

•Some banks or banking groups have been fined before JCPOA, those may still be suspended or are acting with caution.

•Some bank owners are part of political parties that disagree with JCPOA.

•Some banks simply have no interest.

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ISSUES

October 17th, 2016

Different Banking System Compatibility and Standards

Through out years of sanctions, Irans banking system has become more of a localized system which did not require to be compatible with the global network.

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ISSUES

October 17th, 2016

Multi-layered Exchange Rate System

Currently there are two exchange rates in Banking operation •The official exchange rate (Set artificially by the CBI) •The TSE/Parallel exchange rate (Set by the market)

The effect of the two different rates is to provide preferential access to Dollars - which due to sanctions are in short supply - to basic necessities. This allows goods to be imported at a more favorable exchange rate, reducing the cost to domestic consumers. The official exchange rate is typically applied to goods including food and medicines as these are mostly consumed by the poorer consumers in Iran. The TSE/Parallel is applied to almost all other imports and exports and should be viewed by the international community as the key rate of exchange.

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ISSUES

October 17th, 2016

Travel Difficulties for Iranian Citizens

There is a complicated bureaucratic procedures for issuing Schengen visas to Iranians. Long waiting times and a lot of paperworks make it complicated for travelers to engage in European business activities.

However EU citizens can obtain visa on arrival at Iranian Border Control Office for a small fee.

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FACT

October 17th, 2016

Iran is not a member of the World Trade Organization (WTO)

The EU supports the goal of Iranian accession to the WTO, a necessary step for Iran to trade globally as an effective and reliable actor.

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THANK YOU!

[email protected] +1 (646) 233 -1145

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