October 28, 2015
Balkanalysis.com editor’s note: while the French Intelligence Online recently reported that Britain has “leapt ahead of other Western countries” in the race for business opportunities in post-sanctions Iran, other European nations are also stepping forward and forging new partnerships. A leader among them is Greece.
Following our recent analysis on prospective developments in post-sanctions Greek-Iranian relations by Ioannis Michaletos in Athens, we thus continue to explore this topic here, in the following exclusive interview with Patroklos Koudounis, President of the Business Initiative for the Hellenic-Iranian Chamber of Commerce. The only entity of its kind in the EU that was created during the sanctions period, this group is concentrating on developing bilateral economic relations between the two countries.
Mr Koudounis, who is also CEO of the Athens-based consulting firm Adequate Consulting, has 16 years of managerial and corporate experience in key positions with major organizations, such as the Athens International Airport, Alco Group and G4S International. He has also been an elected member of the Board of Directors of the Athens Chamber of Commerce and Industry since 2011.
Ioannis Michaletos: Thank you very much for this interview. First of all, I would like to pose the question as to how you view in general terms the current state of affairs of bilateral economic relations between Greece and Iran. What are the pros and cons, and what things should any prospective investor or trader look out for?
Patroklos Koudounis: Mr. Michaletos, first of all I would like to thank you for your kind invitation and for the opportunity that you are giving me in order to present briefly the reasons for which Iran is a critical destination for Greek exporters.
The level of bilateral trade between the two countries is currently very low, and does not exceed $18m. This number – although it seems frustrating – clearly shows the upside potential of the business opportunities that both countries have to exploit.
The advantages of the Iranian market are plenty. With a population that exceeds 80 million people, Iran is in the geographical center of a world that pivots to the East. Hence, any local office can be used as the export base that would serve the needs of all neighboring countries, such as Turkmenistan, Tajikistan, Azerbaijan, Oman, etc.
While Iran holds the biggest oil and gas reserves globally, half of its population is under 34 years old. If you consider that Iran also enjoys the highest concentration of persons with PhDs, you might easily realize the dynamics of a country with cheap energy and millions of well educated young people who are ready to create and produce. In addition to that, keep in mind the rare element of political stability that makes Iran unique, in a part of the globe where multiple conflicts and political instability are always present.
On the other hand, a thorough risk analysis would definitely take into consideration the volatility of the local currency – i.e. the Iranian Rial- which might discourage any conservative investor.
Additionally, there are obvious cultural and religious differences, which may demand an extra dose of patience and tolerance in order to enter successfully the local market.
IM: How do you assess the short and mid term developments regarding business opportunities in Iran?
PK: At this juncture, the European Union process regulations implement the gradual de-escalation of sanctions against Iran, a process that will probably be completed and enter into force in the first quarter of 2016. Until then, the sanctions are theoretically valid, but nevertheless the period is considered to be favorable for the exploration of product placement perspectives, in the promising Iranian market.
According to the – rather optimistic – Iranian side, the Implementation Day of the lifting of the sanctions is placed in late November this year, while the International Atomic Energy Agency places it in early 2016. Due to the complexity of the provisions and schedules, the External Service of the European Union has committed to issue explanatory draft guidelines, with relevant questions and answers for entrepreneurs. This will be published in due course.
IM: Are there any specific corporate sectors which would be of particular relevance and interest for Greek businesses dealing with Iran? What are the basic products that would be in most demand on the Iranian market?
PK: According to our experience and analysis, Greek companies are in a position to penetrate the Iranian market by selling quality and know-how. We cannot easily export olive oil. Our product is good, but the marketing expertise of the Italian and Spanish competitors muscles us out.
On the contrary, there are other fields where we enjoy competitive advantages, mainly due to our know-how, i.e. Construction, Tourism, Education, Food , Animal Feed, Pharmaceuticals and Cosmetics, Restaurants, Apparel, Services (marketing, advertising, etc), as well as Software and building materials.
Needless to say, Shipping and Transportation services have always been our strong points.
IM: It would be very interesting to note any cultural differences or peculiarities that the Iranian market poses for a foreign investor. How different it is doing business there actually, in practical terms?
PK: The government offers multiple subsidies and tax relief, depending on the kind of investment. The bureaucracy is relatively limited in a way that the commencement of any business is very simple. Just imagine that in order to start running a new shop, there is no need to create a company first! The shop has a unique tax number – as an entity – and you are taxed according to the performance of the shop! A sufficient analysis of the tax system in Iran can be found on Wikipedia here.
Given the cultural differences – as you correctly mentioned – there are certain “rules” that must be followed by those who are targeting the Iranian market.
First, a physical presence is of great importance. I really have to discourage those who are under the impression that they can sell in Iran without a local partner or an established office with local employees.
Secondly, patience is a necessary skill for all newcomers. Third, a thorough study of the local business and negotiating habits is of the essence. It will save time and money.
IM: Could Greece become a hub for other Balkan corporations wishing to invest and develop ties with Iran? Is Athens up for this effort? In short, do other Balkan countries also have ambitions to enter the Iranian market?
PK: Starting from the last part of your question, I am pretty confident that all the Balkan countries have ambitions to penetrate the Iranian market. I am aware, though, that all our neighboring countries are preparing delegations in order to officially visit Iran.
During my recent trip to Tehran, I detected a vivid interest for a full exploitation of the European market by many Iranian companies. This is why we – as Adequate Consulting – decided to create a representation office in Tehran, in order to be able to facilitate Iranian companies which are trying to enhance their exports in Europe.