Country Notebook of the Islamic Republic Of Iran

The Country Notebook—a Guide for Developing Marketing Plan

The Country Notebook Outline (Click here for more information about the Country Notebook.)
• I. Cultural Analysis
• II. Economic Analysis
• III. Market Audit and Competitive Market Analysis
• IV. Preliminary Marketing Plan

I. Cultural Analysis

Guideline
I. Introduction

Iranian culture have a long, creative and glorious history, unlike many other middle east
countries Iran managed to remain independent throughout much of its history, today Iran has a
population about 7o million persons and since 1979 Iran is an Islamic republic

II. Brief discussion of the country’s relevant history

The history of Iran is long and complex its shape is determined by the rise and fall of
successive dynasties-with intervals of chaos and confusion.
In 1954 Iran allowed an international consortium of British, American,frensh ,and Dutch oil
companies to operate its oil facilities ,with profits shared equally between Iran and the
consortium ,Iran established closer relations with the west joining the Baghdad pact and
receiving large amounts of military and economic aid from the untitled states until the late 1960s
Starting 1960 and continuing into the 1970s the Iranian government at the shah initiative
undertook a broad program designed to improve economic and social conditions land reform
was a major priority.
In 1973 short of the end 1954 agreement with the international oil producing consortium the
shah established the full control over all aspects Iran's oil industry and it used this situation to
became a leader in the rising of oil prices in disregard of the tartan agreement in 1971
In 1979 the nation under the leadership of ayatollah Khomeini they made revolution and the
current republic of Iran was founded

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III. Geographical setting

Iran a middle eastern country, its west Asia and south of Caspian sea and north of the
Persian gulf is three times the size of Arizona ,it shares borders with
Iraq,turkey,Azerbaijan,Turkmenistan,Armenia,Afghanistan and Pakistan
The Elburz Mountains in the north rise to 18603ft at mount from northwest to southeast the
country is crossed by desert 800 mi (1287 km)

A. Location

Middle east ,bordering the gulf of Oman ,the Persian gulf, and the Caspian sea, between
Iraq and Pakistan ,its country neighbors’ Afghanistan and Pakistan in the east and turkey to the
west
B. Climate

Iran has a hot climate characterized by long hot dry summers and short cool winters

C. Topography

Most of the land area consists of a plateau 1200 m(4000 ft) above sea level and strewn
with mountains. Iran is geologically unstable with occasional severe earthquakes about 140000
people were killed in Iranian earthquakes during the twentieth century

IV. Social institutions

Iran is a theocratic republic as such the situation of woman is very much affected by
Islam and sharia law the constitution supports equal rights to large degree but its enforcement is
generally poor and its provision is still poor
Woman rights activates in Iran is continue to face obstacles in their attempts to improve the
conditions for women but recent studies notes that woman human rights in Iran have advanced
especially in regard to family ,religion and community

A. Family

Iranian woman still face many challenges within the family context, the average age of
marriage appears to be increasing for both men and woman but the incidence of early marriage
is still high the legal age of marriage is 13 years and fathers have the right to apply for
permission to marry their daughters as early as the age of nine 18% of girls in Iran between 15
and 19 years of age were married, divorced or widowed the parental authority rests with fathers
reflecting the sharia principle that fathers are the natural guardians of their children

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 1. The nuclear family

This is the dominant model in Iran father ,mother ,brother and sister and they are closely
bond to each other, families tend to be small, the family in Iran is the basis for social cultural
,the concept of family is more private than in many other cultures ,females relatives must be
protected from out outside influences and are taken care of all times ,it is inappropriate to ask
about Iranian wife or other female relatives

2. The extended family

Is quite close

3. Dynamics of the family

Loyalty to the family comes before other social relationship, even business

a. Parental roles

Is very important as parents is being involved in making major decisions for their child
like whom they should marry and what profession they should have, parents spends a lot of time
with their children and if they can afford to support their children all the way until they have
finished all their education and beyond, family traditionally comes before the individual

b. Marriage and courtship

It's a lot more prevalent for males to marry non –Muslim foreigners than for males due
to the fact that Muslim woman are legally barred from marrying non Muslim unless if they
convert into islam, iraninan family and inheritance lows favor males, these issues might create
serious problems at times of divorce custody rights and death, if marriage are registered with
the Islamic authorities the Iranian legislation will be applied to such marriage both in Iran and
outside the country

4. Female/male roles (changing or static?)

Static

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 B. Education

1. The role of education in society

a. Primary education (quality, levels of development, etc.)

Its mandatory under the Iranian institution its starting from 5 years old student take
exam at the end of each year on which their promotion grade is based at the end of grade 5
students take a notion wide examination those who pass the exam are qualified to proceed to the
next cycle, there is a middle guidance cycle cover grades from 6 to 8 for children from 11 to 13
years old this cycle is providing children with general education in the phases the children
interest and abilities are recognized then they applied for exam to proceed for the next cycle

b. Secondary education (quality, levels of development, etc.)

Due to increasing number of applicants admission to post secondary institutions is

through a nationwide entrance examination and only the most talented students can enter
universities ,this is a four year stage which covers grade 9 to grade 12 from age 14 to 17
secondary education is divvied in to two main branches academic/general and technical
/vocational

c. Higher education (quality, levels of development, etc.)

50000 Iranian students currently is studying abroad in general education in

(primary,secondary,and post secondary levels )is free of charge through private schools and
universities authorized by law are allowed to charge tuition fees ,there is two main ministries is
responsible for ministry of cultural and higher education and ministry of health and medical
education . Some points worth to mention English as a second language is introduced from grade
7, Iran also it runs number of schools outside Iran Persian gulf countries and some in European
countries

2. Literacy rates

Male 90.5%
Female 87%
Total adult literacy rate 89.1%

C. Political system

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 1. Political structure

The political system of Islamic republic of Iran is the result of the Islamic revolution in
1979, the first of its type in the world, therefore, Iran political system established afterward
should have been defined according to the ideals of such revolution.

2. Political parties

Iran government( legislative power, judiciary power ,executive power ),which works
according to Iranian constitution and Islam and other political entities which help the formation
of the complete political structure ,more importantly ,the supreme leader who is the highest
authority in the Islamic republic of Iran revolution ,Iran leadership is the backbone of Iran
political system
Islamic revolution gained victory as a result of ayatollah Khomeini and he took the control since
this republic revolution. And the current is Mahmud Ahmedi nejad it’s the sixth president since
Islamic republic

3. Stability of government

Stable

4. Special taxes

The taxes in Iran is indirect system and for the same reason it is not
transparent enough the only case low is stress on it ,the collection of direct tax the tax on
employees salaries and workers wages
On the whole taxes in Iran are divided in to five categories namely :
1) Taxies on companies
2) Occupation taxes
3) Consumption and sales taxes
4) Import taxes
5) Taxes on salaries

5. Role of local government

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 Local councils are elected by public vote to 4 years, those local councils with the
parliament are decision making and administrative organs of the state ,they many different
responsibilities including electing mayors ,planning and coordinating national participation in
the implementation of social ,economic ,costar active ,cultural, educational and other welfare
affairs

D. Legal system

1. Organization of the judiciary system

It headed by a scholar in Islamic law that has a sense of judgment and is capable of ruling
on legal matters through interpretation of Islamic legal sources .in local terms this scholar is
called the mujtahid , the supreme leader of Iran appoints the mujtahid as the head of the
judiciary system and he serves a term of five years .this head of the judiciary system has the
authority to nominate the ministry of justice

2. Code, common, socialist, or Islamic-law country?

Islamic law country

E. Social organizations

Little is known of Iranian social organization in the period. In general, it was based on
feudal lines that were drawn in part by economic and social functions. Traditional Indo-Iranian
society consisted of three classes: the warriors or aristocracy, the priests, and the farmers or
herdsmen. Crosscutting these divisions was a tribal structure based on patrilineal descent. The
title king of kings, used even in the 20th century by the shahs of Iran, implies that the central
authority exercised power through a pyramidal structure

1. Group behavior
* Iranian culture is Class based
* Tradition for most is rooted in religion and class and patriarchy have
been constant features of Iranian society since ancient times
* Class in its simplest form is mainly based on income and financial status
* In Iran different classes have different cultures . For example the lower
and uneducated classes may regard females as inferior or different who

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 are entitled to a lesser position in the society. On the other hand the
modern classes normally strive to guarantee the equality of sexes and
eliminate gender discrimination.
* Tradition is mostly based on religion particularly Islam and its’
prescribed codes of behavior
* There is a belief held by many Muslims that “Islam is a body of values,
ideas and beliefs that should encompass all spheres of life, including
personal and social relationships, economics and politics”. Consequently
for the traditional practicing Muslim the only accepted relationship
between the sexes may be through marriage
* In such cases what is usually classified as group behavior could also be
identified with religious behavior
* The whole iranian dress well and dress codes are very important in
distinguishing modern and traditional groups.
* Generally with the affluent, men and women are expected to dress
expensively and fashionably with expensive jewelry and accessories
(mainly watches and rings for men) and drive luxury cars.
* With the more modern, females have no problems wearing heavy make
up, exposing body parts or dress sexy while in company of males. With
the more traditional, female dress codes are modest and a lot more
conservative with darker colors and little make up. With such groups, at
mixed gatherings males and females normally end up as clusters on their
own if not segregated in the first place.
* On the whole Iranians dress up formally even for ordinary parties and
dressing up casually is reserved for very informal occasions with
immediate members of the family
* Dressing up formally and appropriately is also regarded as a sign of
respect and people may get offended if their guests arrive in casual
outfits and sneakers
* Contrary to the stereotype images of Muslim males through the media
most Iranian men do not have beards and if they do, it is not necessarily
for religious reasons
* Iranians party a lot, are great entertainers and are known for their
hospitality and generosity at such occasions
* People are anticipated to behave politely at parties, being loud is
considered inappropriate unless people know each other very well
* Respecting elderly is another ancient practice that has survived.
Traditionally the older people are respected, listened to and are treated
accordingly

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 * Gender roles are normally well defined and clear. The priority for
females is marriage and childbearing. Due to economic necessity and
with the phenomenal increase in the number of highly educated Iranian
women such culturally accepted norms are creating major problems for
working mothers and challenging the status quo.
* Iranian culture is adult oriented with parents being involved in making
major decisions for their children such as, whom they should marry and
what profession they should have.
*Mothers and recently fathers spent lots of time with their children and if
they can afford it they will financially support them all the way till they
have finished all their education and beyond
* Children born from non-Iranian fathers can not became Iranian citizens
since it is their fathers’ nationality that matters and not their mothers.
They are not able to own property in Iran, have an Iranian ID or
passport

2. Social classes
* Wealth was important, but acquiring and maintaining wealth tended to
be closely intertwined with access to political power

* Since being part of an elite family was an important prerequisite for entry
into the political elite, marital relationships tended to bind together
important elite families.

The Upper Classes

* The post revolutionary upper classes consisted of some of the same

elements as the old elite, such as large landowners, industrialists,
financiers, and large-scale merchants

* For the most part, however, such persons no longer had any political
influence, and in the future the absence of such influence could impede the
acquisition of new wealth.

* Wealth was apparently no longer an attribute of authority

* Religious expertise and piety became the major criteria for belonging to
the new political elite. Thus, key government administrators held their
positions because of their perceived commitment to Shia Islam.

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 The Middle Classes

*After the Revolution of 1979, the composition of the middle class was no
different from what it had been under the monarchy

*There were several identifiable social groups, including entrepreneurs,

bazaar merchants, professionals, and managers of private and
nationalized concerns, the higher grades of the civil service, teachers,
medium-scale landowners, military officers, and the junior ranks of the
Shia clergy

*Some middle- class groups apparently had more access to political power
than they had had before the Revolution because the new political elite
had been recruited primarily from the middle class.

*Prior to the Revolution, the middle class was divided between those
possessed of a Western education, who had a secular outlook, and those
suspicious of Western education, who valued a role for religion in both
public and private life.

*Since the Revolution, these two outlooks have been in contention. The
religious outlook has dominated politics and society, but it appears that
the secular middle class has resented laws and regulations that were
perceived as interfering with personal liberties.

*The middle class was divided by other issues as well. Before the
Revolution, an extremely high value had been placed upon obtaining a
foreign education. The new political elite, however, regarded a foreign
education with suspicion; accordingly, many members of the middle class
who were educated abroad have been required to undergo special Islamic
indoctrination courses to retain their jobs. In some cases, refusal to
conform to religiously prescribed dress and behavior codes has resulted in
the loss of government jobs. As a result of these tensions, thousands of
Western-educated Iranians have emigrated since 1979.

The Working Class

*The industrialization programs of the Pahlavi shahs provided the impetus

for the expansion of this class.

*The workers within any one occupation, rather than sharing a common
identity, were divided according to perceived skills.

*The unions played only a passive role from the viewpoint of workers.
Under both the monarchy and the Republic, union activity was strictly
controlled by the government.

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The Lower Class

* Members of the urban lower class can be distinguished by their high illiteracy rate,
performance of manual labor, and generally marginal existence.

* The lower class is divided into two groups: those with regular employment and
those without.

4. Race, ethnicity, and subcultures

Persian 51%

Azerbaijani 24%

Gilaki and Mazandarani 8%,

Kurd 7%

Arab 3%

Lur 2%

Baloch 2%

Turkmen 2%

Other1%

F. Business customs and practices

Doing Business - Meeting and Greeting

*When meeting someone in a business or official context always shake hands

Doing Business - Dress

*As a male you would be expected to be smart and conservative. A suit is standard although
wearing a tie is no necessary.

* Whether doing business in Iran or visiting, women should wear very conservative clothing that
covers arms, legs and hair.

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* However, the last decade Women can now be seen wearing make-up, jeans and scarves that
barely cover the hair However, as a foreigner it is best to err on the side of
caution.

Doing Business - Meetings

*If you plan on doing business in Iran appointments should be made in advance both via
telephone

* Business hours are Saturday to Thursday 9 a.m. - 5 p.m. Lunch is usually an hour at around 1
p.m. Friday is a holiday.

* There are a few key times to avoid in Iran. No-Rooz is the major holiday for Iranians , All
offices, businesses, shops, etc will close for 2-3 weeks .Other times to avoid doing
business are Ramadan (the month of fasting), Eid-e Fetr (festival celebrating the
end of Ramadan), Eid-e Ghurban (celebrating the end of the pilgrimage) and
Ashura (the tenth day of Muharram).

* If you are doing business with government officials in Iran be prepared to be kept waiting. The
administration and bureaucracy in Iran can be chaotic

* At the beginning of any meeting engage in niceties and ask after people's health, families, work,
etc. Wait for your counterpart to initiate the change in conversation to business
matters.

Doing Business - Negotiations

*Your success in business is defined by your aptitude to build effective personal relationships
combined with a clearly outlined and well presented proposal.

*Iranians enjoy haggling and getting concessions so be prepared for long negotiations.

* Decision making can be slow. It is most likely that you will meet and negotiate with less senior
members of a family or state department first. Once you are seen as trustworthy
you will then move on to meet more senior members.

* Implementing decisions are just as slow. Iran's red tape and layered bureaucracy means a lot of
waiting. Applying pressure in a non-confrontational way can help speed matters
up although the most effective way to do so is to use people of influence to help
you.

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V. Religion and aesthetics

A. Religion and other belief systems

*Most Iranians are Muslims. Around 89%[1] belong to Shi'a branch of Islam, the official state
religion, and about 9% belong to the Sunni branch of Islam. The remaining
2% are non-Muslim religious minorities, including Bahá'ís, Mandeans, Yarsanis,
Zoroastrians, Jews, and Christians

1. Orthodox doctrines and structures

*Christianity in Iran has had a long history, dating back to the very early years of the faith

*Christianity has always been a minority religion, overshadowed by the majority state religions—
Zoroastrianism in the past, and Shia Islam today

* While always a minority the Armenian Christians have had an autonomy of educational
institutions such as the use of their language in schools

2. Which religions are prominent?

The overwhelming majority of Iranians - at least 90 percent of the total population - are Muslims
who adhere to Shia Islam. In contrast, the majority of Muslims throughout the
world follow Sunni Islam.

3. Membership of each religion

Islamic Conquest of Iran

The Bedouin Arabs who toppled the Sassanid Empire were propelled not only by a desire for
conquest but also by a new religion, Islam. The Prophet Muhammad, a member of the
Hashimite clan of the powerful tribe of Quraysh, proclaimed his prophetic mission in Arabia in
612 and eventually won over the city of his birth, Mecca, to the new faith. Within one year of
Muhammad's death in 632, Arabia itself was secure enough to allow his secular successor, Abu
Bakr, the first caliph, to begin the campaign against the Byzantine and Sassanid empires.

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Shia Islam in Iran
Although Shias have lived in Iran since the earliest days of Islam, and there was one Shia
dynasty in part of Iran during the tenth and eleventh centuries, it is believed that most Iranians
were Sunnis until the seventeenth century. The Safavid dynasty made Shia Islam the official
state religion in the sixteenth century and aggressively proselytized on its behalf. It is also
believed that by the mid-seventeenth century most people in what is now Iran had become Shias,
an affiliation that has continued.

Sunni Islam in Iran

Sunni Muslims constitute approximately 8 percent of the Iranian population. A majority of
Kurds, virtually all Baluchis and Turkomans, and a minority of Arabs are Sunnis, as are small
communities of Persians in southern Iran and Khorasan.

Bahai
The largest non-Muslim minority in Iran is the Bahais. There were an estimated 350,000 Bahais
in Iran in 1986. The Bahais are scattered in small communities throughout Iran with a heavy
concentration in Tehran. Most Bahais are urban, but there are some Bahai villages, especially in
Fars and Mazandaran. The majority of Bahais are Persians, but there is a significant minority of
Azerbaijani Bahais, and there are even a few among the Kurds.

Christianity in Iran
Iran's indigenous Christians include an estimated 250,000 Armenians, some 32,000 Assyrians,
and a small number of Roman Catholic, Anglican, and Protestant Iranians converted by
missionaries in the nineteenth and twentieth century's. The Armenians are predominantly urban
and are concentrated in Tehran and Esfahan; smaller communities exist in Tabriz, Arak, and
other cities.

Judaism in Iran
The Constitution of 1979 recognized Jews as an official religious minority and accorded them
the right to elect a representative to the Majlis. Like the Christians, the Jews have not been
persecuted. Unlike the Christians, the Jews have been viewed with suspicion by the government,
probably because of the government's intense hostility toward Israel.

Zoroastrianism in Iran

Like the Christians and Jews, the Zoroastrians are recognized as an official religious minority
under the Constitution of 1979. They are permitted to elect one representative to the Majlis and,
like the other legally accepted minorities, may seek employment in the government. They
generally enjoy the same civil liberties as Muslims. Although Zoroastrians probably have
encountered individual instances of prejudice, they have not been persecuted because of their
religious beliefs.

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VI. Living conditions

The Islamic Republic of Iran portrays its self as the champion of Arab rights in all of the above-
mentioned countries, but the Arab population of Iran faces discrimination and violence in all
spheres of life. Every year hundreds of Arab-rights activists are imprisoned, tortured, raped and
executed in Iran just because they raise their voices about the gross living conditions of Arabs in
Iran.

The province of Khuzestan, which has an Arab majority, produces the majority of Iran’s oil, but
none of the benefits of the oil reach the people living in the region. The Islamic Republic of Iran
drains Khuzestan of its riches and systematically oppresses the Arab population, only to send its
oil profits to Arab-extremists in other parts of the region.

This kind of policy is expected from the regime in Tehran, but what strikes Arabs in Iran as
strange is that no Arab country or organization raises their plight or objects to Iran’s treatment
of their kinsmen.

E. Social security

Social Security Organization (SSO) is a social insurer organization in Iran which provides
coverage of wage-earners and salaried workers as well as voluntary coverage of self-employed
persons. In 1975, the Social Security Law was approved and the SSO was established.

Iran did not legislate in favor of a universal social protection, but in 1996, the Center of the
Statistics of Iran estimated that more than 73% of the Iranian population was covered by social
security. Membership in the social security system for all employees is compulsory. SSO is a
nongovernmental organization and it is solely financed by contributions (with participation of
insured (7%), employer (20-23%) and government (3%)).Social protection is extended to the
self-employed workers, who voluntarily contribute between 12% and 18% of income depending
on the protection sought. SSO provides the following services:

1. Retirement, disability and death;

2. Unemployment;
3. Old-age;
4. Helplessness, loss of caretaker and social vulnerabilities;
5. Accidents and injuries;
6. Physical, mental and psychic disability;
7. Health care and medical insurance;
8. Protecting mothers especially during the maternity period and child-rearing;
9. Protecting orphan children and unprotected women;
10. Planning particular insurance system for widows, old women and self-dependent women;
11. Poverty and inequity alleviation;
12. Assistance and rescue.

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 F. Health care

Health care in Iran

From Wikipedia, the free encyclopedia

Imam Khomeini hospital

Health care in Iran and medical sector's market value was almost US $24 billion in 2002
and was forecast to rise to US $31 billion by 2007. With a population of almost 70 million,
Iran is one of the most populous countries in the Middle East. The country faces the
common problem of other young demographic nations in the region, which is keeping
pace with growth of an already huge demand for various public services. The young
population will soon be old enough to start new families, which will boost the population
growth rate and subsequently the need for public health infrastructures and services.
Total healthcare spending is expected to rise from $24.3 billion in 2008, to $50 billion by
2013, reflecting the increasing demand on medical services. Total health spending was
equivalent to 4.2% of GDP in Iran in 2005. 73% of all Iranians have health care
coverage.[3]

The World Health Organization in the last report on health systems ranks Iran's
performance on health level 58th, and its overall health system performance 93rd among
the world's nations. The health status of Iranians has improved over the last two decades.
Iran has been able to extend public health preventive services through the establishment
of an extensive Primary Health Care Network. As a result child and maternal mortality
rates have fallen significantly, and life expectancy at birth has risen remarkably. Infant
(IMR) and under-five (U5MR) mortality have decreased to 28.6 and 35.6 per 1,000 live
births respectively in 2000, compared to an IMR of 122 per 1,000 and a U5MR of 191 per
1,000 in 1970. Immunization of children is accessible to most of the urban and rural
population.

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VII. Language

A. Official language(s)

The official language of Iran is Persian (the Persian term for which is Farsi). It is the
language of government and public instruction and is the mother tongue of half of the
population. Persian is spoken as a second language by a large proportion of the rest.
Many different dialects of Persian are spoken in various parts of the Central Plateau, and
people from each city can usually be identified by their speech. Some dialects, such as
Gilaki and Mazandari, are distinct enough to be virtually unintelligible to a Persian
speaker from Tehran or Shiraz.

B. Spoken versus written language(s)

The second most widely spoken Iranian language after Persian is Kurdish. Kurdish script
is based on the Perso-Arabic script and the Latin alphabet.

There are also many ‘new’ Iranian languages which have emerged over time. They are
spoken by people living across the Iranian
plateau but unfortunately many are now
diminishing due to more dominant surrounding
languages. The following two cases give an
example of the new Iranian languages:

Pashtu is a fairly new Iranian language which is

spoken by individuals living in southern
Afghanistan and northern Pakistan. As with the
Kurdish language it is primarily written in the
Perso-Arabic script, although it has additions
from Urdu as opposed to the Latin alphabet.

Baluchi is spoken primarily within south eastern

Iran and Western Pakistan. Again, it is written in
the Perso-Arabic script but there is no
established written tradition of this language.

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 C. Dialects

Central Iranian, or Central Iran, is a group of Western Iranian languages spoken in

villages and towns of central Iran, mostly in Markazi and Isfahan provinces. They are
typically considered "dialects" of Persian, and many are giving way to Persian among the
younger generations.

VIII. Executive summary writing guide

[insert text here]

IX. Sources of information

[insert text here]

X. Appendixes

[insert text here]

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II. Economic Analysis

Guideline
I. Introduction

Iran’s economy has been crippled by the 1979 Islamic revolution, the Iran–Iraq
war, economic mismanagement, and corruption. International concern about Iran’s
nuclear development and support for terrorism remains high. Mahmud Ahmadinejad,
reinstalled as president after a June 2009 election that sparked widespread political
protests, has led a violent crackdown against opposition forces. His regime, which has
greatly expanded government spending, now plans to reduce government subsidies,
particularly for food and energy, and replace them with cash payments to low-income
Iranians.

A gradual decline in oil production combined with lower world oil prices has
reduced oil export revenues, which provide about 85 percent of government finance.
Iran’s economy remains burdened by rising inflation, corruption, costly subsidies, and an
increasingly bloated and inefficient public sector. Unemployment remains high. Heavy
state interference in many aspects of private economic activity has resulted in economic
stagnation in Iran’s non-oil sector and a serious lack of overall economic dynamism. A
restrictive business and investment environment continues to hamper private-sector
development. More than 500 companies remain state-owned, and privatization has been
negligible in the past year.

II. Population

The 18th largest country in the world in terms of area at 1,648,195 km2 (636,372
sq mi), Iran has a population of around 78 million. It is a country of particular geopolitical
significance owing to its location in the Middle East and central Eurasia

A. Total

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It is a growing population it is now reaching about 77,891,220 (July 2011 est.)

1. Growth rates

Annual population growth rate 1.248% (2011 est.)

2. Birthrates

18.55 births/1,000 population (2011 est.)

B. Distribution of population

1. Age
0-14 years: 24.1% (male 9,608,342/female 9,128,427)
15-64 years: 70.9% (male 28,083,193/female 27,170,445)
65 years and over: 5% (male 1,844,967/female 2,055,846) (2011 est.)
2. Sex
At birth: 1.05 male(s)/female
Under 15 years: 1.05 male(s)/female
15-64 years: 1.02 male(s)/female

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 65 years and over: 0.91 male(s)/female
Total population: 1.02 male(s)/female (2011 est.)

3. Geographic areas (urban, suburban, and rural density and concentration)

Urban population: 71% of total population (2010)
Rate of urbanization: 1.9% annual rate of change (2010-15 est.)
4. Migration rates and patterns
-0.13 migrant(s)/1,000 population (2011 est.)
5. Ethnic groups

[Persian 51%, Azeri 24%, Gilaki and Mazandarani 8%, Kurd 7%, Arab 3%, Lur
2%, Baloch 2%, Turkmen 2%, other 1%

III. Economic statistics and activity

Iran's economy is closely tied to its natural resources since 80 percent of the
country's export revenues are derived from oil and gas. Iran contains 8.9 percent of proven
global oil reserves, and its reserves contain 20 percent of the world's total amount of natural gas.
Other important exports are carpets, pistachios, leather, and caviar. Important imports include
motor vehicles, machinery, steel, chemicals, pharmaceuticals, and food.
A. Gross national product (GNP or GDP)
Gross National Product. GNP is the total value of all final goods and services
produced within a nation in a particular year, plus income earned by its citizens (including
income of those located abroad), minus income of non-residents located in that country.
Basically, GNP measures the value of goods and services that the country's citizens produced
regardless of their location. GNP is one measure of the economic condition of a country, under
the assumption that a higher GNP leads to a higher quality of living, all other things being equal.

1. Total

$818.7 billion (2010 est.)

2. Rate of growth (real GNP or GDP)

1% (2010 est.)

B. Personal income per capita

$10,600 (2010 est.)

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 C. Distribution of wealth
A Group of people within a society who possess the same socioeconomic status.

1. Income classes

1. Capitalists: Owners of physical and financial means of economic activities, who

employ workers. Capitalists are divided into modern and traditional occupational
categories.
2. Petty bourgeoisie: Self-employed persons who do not hire any paid worker but may
rely on unpaid family labor. They, too, consist of modern and traditional categories.
3. The middle class: Employees of the state or the private sector, in administrative-
managerial and professional-technical positions. They exercise some authority and
enjoy relative autonomy. In this category are those who are employed in economic
activities and social services of the state. Those employed in the administrative or
managerial position in the political apparatus of the state are not included here.
4. The working class: Workers who do not own the means of economic activity and do
not benefit from the authority and autonomy of those in the middle class. They are
employees of the state or the private sector, excluding those in the lower ranks of the
political apparatus of the state.

D. Minerals and resources

Mining in Iran is under-developed. Yet the country is one of the most important
mineral producers in the world, ranked among 15 major mineral rich countries, holding some
68 types of minerals, 37 billion tones of proven reserves and more than 57 billion tones of
potential reservoirs. Mineral production contributes only 0.6 per cent to the country’s GDP.
Add other mining-related industries and this figure increases to just four per cent (2005). Many
factors have contributed to this, namely lack of suitable infrastructure, legal barriers,
exploration difficulties, and government control over all resources.
The most important mines in Iran include coal, metallic minerals, sand and gravel,
chemical minerals and salt. Khorana has the most operating mines in Iran. Other large deposits
which mostly remain underdeveloped are zinc (world's largest), copper (world's second largest),
iron (world's ninth largest), uranium (world's tenth largest) and lead (world's eleventh largest).
Iran with roughly 1% of the world's population holds more than 7% of the world's total mineral
reserves.

E. Surface transportation

Transport in Iran is inexpensive because of the government's subsidization of the

price of gasoline. The downside is economic inefficiency because of highly wasteful consumption

21
patterns, contraband with neighboring countries and air pollution. In 2008, more than one
million people worked in the transportation sector, accounting for 9% of GDP
1. Modes
Iran has a long paved road system linking most of its towns and all of its cities. In
2007 the country had 178,152 km (111,000 mi) of roads, of which 66% were paved. In 2008 there
were nearly 100 passenger cars for every 1,000 inhabitants.
Trains operated on 11,106 km (6,942 mi) of railroad track. The country’s major
port of entry is Bandar-Abbas on the Strait of Hormuz. After arriving in Iran, imported goods
are distributed throughout the country by trucks and freight trains. The Tehran-Bandar-Abbas
railroad, opened in 1995, connects Bandar-Abbas to the railroad system of Central Asia via
Tehran and Mashhad. Other major ports include Bandar e-Anzali and Bandar e-Torkeman on
the Caspian Sea and Khorramshahr and Bandar-e Emam Khomeyni on the Persian Gulf.
Dozens of cities have airports that serve passenger and cargo planes. Iran Air, the
national airline, was founded in 1962 and operates domestic and international flights. All large
cities have mass transit systems using buses, and several private companies provide bus service
between cities. Tehran, Mashhad, Shiraz, Tabriz, Ahwaz and Esfahan are in the process of
constructing underground mass transit rail lines.
2. Availability

Railways
 Total: 11,106 km
o Standard gauge: 8,273 km of 1,435 mm (4 ft 8 1⁄2 in) gauge (146 km electrified)
(2006)
o Broad gauge: 94 km of 1,676 mm (5 ft 6 in) gauge (connected to Pakistan
Railways)

Electrified railway is 146 km from Tabriz to Jolfa and the tender for
electrification of Tehran- Mashhad has been finished according to Railway electrification in
Iran. Note: Broad-gauge track is employed at the borders with Azerbaijan Republic and
Turkmenistan which have 1,520 mm (4 ft 11 5⁄6 in) broad gauge rail systems; 41 km of the
standard gauge, electrified track is in suburban service at Tehran (2007).

Metro
 City with underground railway system:

o Tehran Metro

Along with extension work on the Tehran Metro, six other metro projects are being built. In
total, 172 extra kilometers will be built in Tehran between now and 2012 and over 380
kilometers in the other cities. All these work sites are ongoing at present (2008).

 Other cities with plans to construct a metro:

22
 o Mashhad Light Rail
o Isfahan Metro
o Shiraz Metro
o Tabriz Metro
o Ahvaz Metro
o Karaj Metro

Roadways and automobiles

 Total: 172,927 km (2006)

o Paved: 125,908 km (includes 1,429 km of expressways)

o Unpaved: 47,019 km

Waterways
 850 km (on Karun River; additional service on Lake Uremia) (2006)

Merchant marine
 Total: 74 (2008)
 By type: bulk carrier 18, cargo 34, chemical tanker 4, container 6, liquefied gas 1,
passenger/cargo 4, petroleum tanker 2, refrigerated cargo 2, roll on/roll off 3
 Foreign-owned: 1 (UAE 1)
 Registered in other countries: 115 (Barbados 2, Bolivia 1, Cyprus 10, Hong Kong 15,
Malta 79, Panama 7, Saint Vincent and the Grenadines 1)
 Shipping freight (important for liquid natural gas (LNG) exports) will grow by an
average of 5.3 percent a year in the 2009-2013.

Over the next two decades, Iran would need 500 new ships, including 120 oil tankers, 40
liquefied natural gas (LNG) carriers and over 300 commercial vessels.

Airports and airlines

Iran’s airports are improving their international connections, and Arak Airport in Markazi
province has recently begun to operate international flights, making a total of five such airports
in the country, in addition to ten local airports. In May 2007 international flights into the
capital, Tehran, were moved to the Imam Khomeini International Airport (IKIA), just outside
the city because of capacity constraints at the existing central Mehrabad Airport.

 Airports: 316 (2009)

 There are 54 "major" airports in Iran (2008): 8 international, 21 air border, and 25
domestic.
 Number of flights from airports nationwide reached 31,088 in a month (October 20-
November 20, 2008): 10,510 domestic, 4,229 international and 15,404 transit.

23
National airline:

 Iran Air

Airports - with paved runways

Total: 129 (2007)

 over 3,047 m: 40
 2,438 to 3,047 m: 28
 1,524 to 2,437 m: 25
 914 to 1,523 m: 34
 under 914 m: 6 (2009)

Airports - with unpaved runways

Total: 183 (2007)

 over 3,047 m: 1
 1,524 to 2,437 m: 9
 914 to 1,523 m: 139
 under 914 m: 33 (2009)

Heliports

Total: 19 (2009)

3. Usage rates

The majority of transportation in Iran is road-based. The government plans to transport 3.5%
of the passenger volume and 8.5% of the freight volume by rail. Extensive electrification is
planned. The railway network expands by about 500 km per year according to the Ministry of
R&T.
Also there were more than 11 million vehicles in Iran by 2010 mostly manufactured or
assembled locally

24
 4. Ports

Ports and harbors

The capacity of container loading and unloading in the country’s ports is currently at 4.4 million
which will increase to 7 million by the end of 2015. Port capacity will increase to 200 million tons
in 2015 from 150 million tons in 2010.

 All ports: Abadan (largely destroyed in fighting during 1980-88 war), Ahvaz, Bandar
Abbas, Bandar-e Anzali (Caspian sea), Bushehr, Bandar-e Emam Khomeyni, Bandar-e
Length, Bandar-e Mahshahr, Bandar-e Torkaman (Caspian sea), Chabahar (Bandar-e
Beheshti), Kharg island, Lavan island, Sirri island, Khorramshahr (limited operation
since November 1992), Noshahr (Caspian sea), Arvand Kenar.
 Main: Assaluyeh, Bandar Abbas, Bandar-e Eman Khomeyni[6] Bandar Abbas is in
southern Iran and handles 90% of the country's container throughput.
 Major Export Terminals (loading capacity): Kharg Island 5,000,000 bbl/d (790,000
m3/d), Lavan Island 200,000 bbl/d (32,000 m3/d), Neka 50,000 bbl/d (7,900 m3/d),
Assaluyeh 250,000 bbl/d (40,000 m3/d) gas liquids, Kish Island, Abadan and Bandar
Mahshahr.
 Major Oil/Gas Ports: Kharg Island, Lavan Island, Sirri Island, Ras Bahregan.

F. Communication systems

Iran’s telecommunications industry is almost entirely state-owned, dominated by the

Telecommunication Company of Iran (TCI). Fixed-line penetration in 2004 was relatively well-
developed by regional standards, standing at 22 lines per 100 people, higher than Egypt with 14
and Saudi Arabia with 15, although behind the UAE with 27. In terms of mobile provision in
2004, however, Iran lagged all the countries mentioned above.

The government runs the broadcast media, which includes three national radio stations and two
national television networks, as well as dozens of local radio and television stations. In 2000
there were 252 radios, 158 television sets, 219 telephone lines, and 110 personal computers for
every 1,000 residents. Computers for home use became more affordable in the mid-1990s, and
since then demand for access to the Internet has increased rapidly. In 1998, the Ministry of Posts
and Telecommunications (renamed the Ministry of Information & Communication Technology)
began selling Internet accounts to the general public. In 2006, the Iranian telecom industry's
revenues were estimated at $1.2 billion. By the end of 2009, Iran's telecom market was the
fourth-largest market in the region at $9.2 billion and is expected to grow to $12.9 billion by
2014 at a CAGR of 6.9 percent.

25
The Fourth Five Year Economic Development Plan has proposed the following key benchmarks
for 2010: 36 million fixed lines; 50% penetration rate for mobile phones; establishment of
reliable rural ICT connections and 30 million internet users. Given the recent developments of
the industry, the objectives are very likely to be achieved.

More than 23 million Iranians have access to the Internet and over 45 million own mobile
phones. Tech-savvy citizens use text messages to communicate with friends and browse the
Internet — which the government controls in terms of access and speed — for a multiplicity of
purposes. Blogging is also immensely popular. Iran is among 5 countries with cyber warfare
capabilities according to the Defense Tech institute (US military and security institute).

1. Types, 2.Availability and 3.Usage rates

Press
The press in Iran is privately owned and reflects a diversity of political and social views. A
special court has authority to monitor the print media and may suspend publication or revoke
the licenses of papers or journals that a jury finds guilty of publishing antireligious material,
slander, or information detrimental to the national interest. Since the late 1990s the court has
shut down many pro-reform newspapers and other periodicals. Most Iranian newspapers are
published in Persian, but newspapers in English and other languages also exist. The most widely
circulated periodicals are based in Tehran. Popular daily and weekly newspapers include
Ettelaat, Kayhan, Resalat, Iran Daily and the Tehran Times (both are English-language papers).

Satellite
Since the 1970s, there have been a number of proposals for a state-owned communications
satellite, called Zohreh (en:Venus) from 1993 onwards. The planned satellite would have similar
capabilities to a commercially-produced Western satellite, while such capabilities are already
provided through leases owned by the Iranian telecommunications sector. Most recently, an
agreement was signed between Iran and Russia in 2005 to develop the satellite with a planned
launch date of 2007,but the launch has been postponed until at least 2009, set to follow actual
construction of the satellite.

Telephone
Inadequate but currently being modernized and expanded with the goal of not only improving
the efficiency and increasing the volume of the urban service but also bringing telephone service
to several thousand villages, not presently connected.

Domestic
As a result of heavy investing in the telephone system since 1994, thousands of mobile cellular
subscribers are being served; moreover, the technical level of the system has been raised by the
installation of thousands of digital switches.

26
Iran’s telecommunication network enjoys the highest growth rate in the Middle East. One of the
indicators that clearly illustrate this growth rate is the increase in the number of installed main
lines. In 1978 there were only about 850,000 fixed lines installed in Iran. This number rose to
about 1,767,000 by 1986 and to about 2,380,000 by 1989. One of the objectives of the first five-
year development plan (1989–1994) for the telecommunication sector was to add one million new
fixed lines to the network. However, due to the establishment and expansion of many low-
capacity and high-capacity exchanges, the actual growth rate that was achieved was
considerably higher. In fact more than 3.1 million new main lines were installed during the
period of the first five-year plan. Four million new lines were expected to be added by the end of
the second five-year plan (1994–1999), which would increase the number of installed main lines
to about 9,510,000 fixed lines.

Landlines

24.8 million (2008), with a penetration rate of 34%.

Mobile phone

 Mobile: 41 million (Nov. 2008) from 35 million (early 2008) and 4.3 million in 2004.
 Penetration rate: 60% as of January 2009. Projected: over 80% in 2012.
 Short Text Messages: Iranians send 80 million SMS per day (Nov. 2008).
 Major mobile operators as of 2008: Telecommunication Company of Iran (MCI/Hamrah
Aval) with 70% market share, MTN Irancell (28%), Taliya (1%), and Emirates
Telecommunications Corp (Etisalat) who won a license for 300 million Euros in
December 2008.[19][21][22] The two national operators, Mobile Company of Iran (MCI)
and MTN Irancell both offer GPRS-based data services.
 Abu Dhabi-based Etisalat and Tamin Telecom, the telecommunications investment arm
of Iran’s social security and pensions department, will gain exclusive rights for two years
to offer second- and third-generation services (3G) in Iran (2008). Assuming a minimum
network investment of $4 billion, Etisalat can gain about 20 percent to 25% market share
over five years of its operations (by 2013). In 2009 it was announced that Etisalat,
however, failed to secure the right to be Iran’s exclusive 3G operator for two years.
Later, Tamin Telecom announced that, IDRO and Imam Khomeini Decree Center have
replaced Etisalat because of contractual disagreements.

International

 As of 2010, international connection services are provided exclusively by Infrastructure

Company of Iran, a fully owned subsidiary of TCI.[20] Submarine fiber-optic cable to
UAE with access to Fiber-Optic Link Around the Globe (FLAG); Trans Asia Europe
(TAE) fiber-optic line runs from Azerbaijan through the northern portion of Iran to
Turkmenistan with expansion to Georgia and Azerbaijan; HF radio and microwave
radio relay to Turkey, Azerbaijan, Pakistan, Afghanistan, Turkmenistan, Syria, Kuwait,
Tajikistan, and Uzbekistan; satellite earth stations - 13 (9 Intelsat and 4 Inmarsat) .
Apart from Iran-Kuwait submarine communications cable network, Iran is launching an
optical fiber channel and a submarine communications cable in the Persian Gulf. The

27
 next program is to connect the country with global optical fiber networks from northern
and northwestern borders.

Radio
 Radio broadcast stations: AM 72, FM 5, shortwave 5 (1998)
 Number of Radios: 22 million (2005)

Television
 Television broadcast stations: 29 (plus 450 repeaters) (1997
 Number of televisions: 15 million (2007 est.)
 Although formally illegal, the use of satellite television receivers in urban areas is
widespread. Over 30 percent of Iranians watch satellite channels.

Internet
In 1993 Iran became the second country in the Middle East to be connected to the
Internet, and since then the government has made significant efforts to improve the
nation's ICT infrastructure. Iran's national Internet connectivity infrastructure is based
on two major networks: the public switched telephone network (PSTN) and the public
data network. The PSTN provides a connection for end-users to Internet service
providers (ISPs) over mostly digital lines and supports modem-based connections. The
Data Communication Company of Iran (DCI), a subsidiary of TCI, operates the public
data network. Iran's external Internet links use the basic Internet protocol of TCP/IP
(transmission control protocol/Internet protocol) via satellite exclusively. For data lines,
copper, fiber, satellite and microwave are the available media, and popular services are
high-speed Internet via digital subscriber lines (DSL), high-bandwidth lease lines and
satellite. About 33 Iranian cities are connected directly by the Trans-Asia-Europe cable
network, or "silk road", connecting China to Europe.

National internet

Since 2005, Iran has been developing a "national Internet" to improve control over its
content as well as speed. The project, which is separate from the world wide web, will be
completed by 2013. This network will be separated from the rest of the internet,
specifically for domestic use. Creating such a network, similar to one used by North
Korea, would prevent unwanted information from outside of Iran getting into the closed
system. Myanmar and Cuba also use similar systems.

ISPs

The leading Data Communication Company of Iran (DCI) which belongs to

Telecommunication Company of Iran (now privatized) and the Iranian Research
Organization for Science and Technology (IROST) are two bodies that act as ISPs. The
largest privately owned ISP is Parsnet, which serves only Tehran. The leading ISP with a

28
provincial focus is Isfahan-based Irangate.net. The Neda Rayaneh Institute (NRI) was the
first private ISP in Iran.

Domain names with the ".ir" suffix are assigned by the Institute for Studies in
Theoretical Physics and Mathematics (IPM). DCI maintains the network infrastructure,
providing Internet access via the IRANPAK X.25 packet-switching network, which
covers most major cities. DCI is the only ISP with a permit for supplying government
agencies. DCI supplies both dial-up and leased lines to its users.

By the regulations of Iran, these ISPs should rely on the Telecommunication Company of
Iran (TCI) for their bandwidth. Previously serviced by TCI’s Public Switch Telephone
Network, the ISPs have recently been provided with modern data line capacity through a
national IP-based network. With the completion of this new network, Internet services in
Iran are expected to improve dramatically.

G. Working conditions

The highly fluid nature of Iran's labor market and the large size of the informal services
sector make accurate estimates of employment levels difficult.

1. Employer-employee relations

There is a minimum national wage applicable to each sector of activity fixed by the
Supreme Labor Council which is revised annually. In 2010 the minimum wage,
determined by the Supreme Labor Council, was about US$303 per month (US$3,636 per
year). Membership in the social security system for all employees is compulsory. The
national poverty line for Tehran in the year ending March 20, 2008 was $9,612 per year
and the national average was $4,932.

2. Employee participation

Although Iranian workers have, in theory, a right to form labor unions, there is, in
actuality, no union system in the country. Workers are represented ostensibly by the
Workers' House, a state-sponsored institution that nevertheless attempts to challenge
some state policies. Guild unions operate locally in most areas but are limited largely to
issuing credentials and licenses. The right of workers to strike is generally not respected
by the state, and since 1979 strikes have often been met by police action.

The comprehensive Labor Law covers all labor relations in Iran, including hiring of local
and foreign staff. The Labor Law provides a very broad and inclusive definition of the
individuals it covers, and written, oral, temporary and indefinite employment contracts
are all recognized.

The Iranian Labor Law is very employee-friendly and makes it extremely difficult to lay
off staff. Employing personnel on consecutive six-month contracts is illegal, as is

29
dismissing staff without proof of a serious offense. Labor disputes are settled by a special
labor council, which usually rules in favor of the employee.

The Labor Law provides the minimum standards an employer must adhere to when
forming an employment relationship. The minimum age for workers in Iran is 15 years,
but large sectors of the economy (including small businesses, agricultural concerns, and
family-owned enterprises) are exempted.

H. Principal industries

petroleum, petrochemicals, fertilizers, caustic soda, textiles, cement and other

construction materials, food processing (particularly sugar refining and vegetable oil
production), ferrous and non-ferrous metal fabrication, armaments

1. What proportion of the GNP does each industry contribute?

Oil exports account for nearly 80 percent of foreign exchange earnings. In the early 21st
century the service sector constituted the largest percentage of gross domestic product
(GDP), followed by industry (mining and manufacturing) and agriculture. In 2008 GDP
was estimated at $382.3 billion, or $5,470 per capita

2. Ratio of private to publicly owned industries

The constitution mandates that all large-scale industries, including petroleum, minerals,
banking, foreign exchange, insurance, power generation, communications, aviation, and
road and rail transport, be owned publicly and administered by the state. Basic
foodstuffs and energy costs are heavily subsidized by the government.

I. Foreign investment

Firms from over 50 countries have invested in Iran in the past 16 years (1992-2008), with
Asia and Europe receiving the largest share

30
 1. Opportunities?

Potential approaches to the market

First and foremost, it is crucial to realize that Iranian authorities insist on a long-term
commitment and a transfer of technology as a requisite for getting a share in the market.
Foreign companies are therefore advised to adopt a medium- to long-term strategy for the
Iranian market. Iran will almost never honor the interests of a company that does not show
long-term commitment. Tenders are strictly required for government contracts for purchasing
or projects. These are rarely competitive. Breaking up contracts into smaller parts is a common
practice to try and incorporate at least 30% of the contract's value in local capability and also to
negotiate on specific prices.
Currently there are three main routes that a foreign company can follow to establish a long-term
presence in Iran:

Joint ventures

The Flower of the East Marina, a multi-billion dollar FDI project in the tourism sector in Iran.
One possible strategy is for the foreign company to enter into a joint-venture agreement with a
public or private Iranian partner. The existing level of technology and infrastructure makes
many Iranian companies suitable for expansion and development in conjunction with foreign
companies. Many Iranian companies, especially those in the private sector, are currently actively
seeking joint-venture partners both to fill their technological as well as management gaps.
Others are looking for a revival of their company through foreign capital.
Should a company decide to adopt this approach to the market, it is advisable to look for
products and services that have both domestic demand as well as regional export potential. If a
joint-venture company can earn hard currency through export of its goods, it will not be too
dependent on the Iranian banking system for the repatriation of profits and dividends. It should
be noted that some joint ventures consist purely of the transfer of technology to Iran by the
foreign partner without any capital commitment. Since Iranian authorities are very keen on the
introduction of modern technologies, this path can prove very constructive. In August 2010, the
25% ceiling set for joint venture companies in enjoying facilities from the foreign exchange
reserve account has been eliminated. Industry and mines, agriculture, transport, services (such
as tourism), IT and the export of goods and services are the sectors authorized to enjoy the new
facilities from the Foreign Exchange Reserve Account
There are seven types of juridical entity or company which can be established under the Iranian
Commercial Code. From among all these different types, Joint Stock Company, in which the
capital is divided by shares, is the most common and acceptable type of company which can be
recommended to foreign investors. For legal and tax purposes, opening a representative office in
Iran, by itself, is not considered foreign direct investment. Further information, see the
document titled "Establishing a Joint Stock Company in Iran".

Buy-back
In February 2007 the government unveiled its new buyback-contract formula, which
significantly extended the length of the contracts to as long as 20 years. The buy-back scheme is
a formula used by the Iranian government to attract foreign investment. Following the end of
the Iran-Iraq war in 1988, Iran faced a major problem: it needed foreign investment if it did not
want to lose its vital income from the oil and gas industry, yet its revolutionary ideology and

31
Constitution forbid granting “concessions”. A compromise solution was found in 1989 with the
First Five-Year Economic, Social and Cultural Development Plan. Under Note 29 of the said
plan, the Iranian government is allowed to employ “buybacks” in its effort to meet the industrial
and mineral needs in connection with exports, production and investment. Put in laymen terms,
a buy-back transaction is a method of trade where plants, machinery, production equipment
and technology is supplied (by a domestic or foreign private firm), in exchange for the goods that
will be produced directly or indirectly by means of such facilities.
Under this scheme, the foreign partner that makes the initial investment can repatriate the
return on the investment (at a pre-agreed fixed rate) through goods and services produced by
the project. While many foreign companies believe that this method is a mere financing
instrument for Iran, it is more accurate to say that it is a compromise formula for foreign
investment in the short-run. In the medium to long term, more appropriate laws and regulations
will probably replace the buy-back scheme. In other words, once the constitutional concerns
have been dealt with, the foreign partners of buy-back agreements can take over the projects
that they are involved in, or they can enter into a joint venture with an Iranian partner. Further
information: Buy-backs in Iran's oil industry

Build-Operate-Transfer (BOT)
Recent regulations have introduced the Build-Operate-Transfer (BOT) scheme for Iranian
projects. This is a rather new possibility in the Iranian market. In this scheme, the foreign
partner invests in one project, which is then operated for a certain period of time by the foreign
investor before it is fully transferred to the Iranian government. Iranian authorities are showing
some flexibility regarding the BOT, which could potentially pave the way for more foreign
investment in the market.

Free trade zones and special economic zones

Advantages
Free-trade (FTZ) and special economic zones (SEZ) have been established to provide additional
investment incentives such as:
15 years tax-exemption;
No entry visa requirement;
100% foreign ownership possible;
Flexible employment regulations;
Flexible monetary & banking services;
Extended legal guarantees & protection.
Locations

As of January 2010, there were six free trade zones (FTZ) and 16 special economic zones (SEZ)
in Iran.[29] More FTZ and SEZ are planned in Iran.

2. Which industries?

As of 2007, Asian entrepreneurs made the largest investments in the Islamic state by investing in 40 out
of 80 projects funded by foreigners. The largest amount of foreign investment was in the industrial
sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, steel and oil derivates.
The figure exceeded US$8.76 billion. Water, electricity and gas sector ranked second, attracting $874.83
million. In the third place, the real estate sector absorbed more than $406 million. Investments in service,
telecommunication, transportation and mines reached $193 million, $14.3 million and $14.2 million
respectively. Asian countries invested $7.666 billion in various projects followed by several multinational

32
consortia. Investments by these multinational companies exceeded $1.39 billion (in four projects).
Although European entrepreneurs were involved in 34 projects, they invested only in the range of $1.2
billion in the Islamic Republic. American countries also committed $12.329 million in the country; while
investments by African states registered close to $4 million.

J. International trade statistics

1. Major exports

Petroleum 80%, chemical and petrochemical products, fruits and nuts, carpets

a. Dollar value

$84.31 billion (2010 est.)

2. Major imports

Industrial supplies, capital goods, foodstuffs and other consumer goods, technical services

a. Dollar value

$58.97 billion (2010 est.)

33
 3. Balance-of-payments situation

a. Surplus or deficit?

Surplus

34
 4. Exchange rates

Until 2002, Iran’s exchange rate system was based on a multi-layered system, where state and Para-state
enterprises benefited from the "preferred or official rate" (1750 rial for $1) while the private sector had
to pay the "market rate" (8000 rial for $1), hence creating an unequal competition environment. The
"official rate" of the Iranian rial—1,750 per U.S. dollar—applied to oil and gas export receipts, imports
of essential goods and services, and repayment of external debt. The "export rate", fixed at 3,000 rials
per dollar since May 1995, applied to all other trade transactions, but mainly to capital goods imports of
public enterprises.

In 1998, in order to ease pressure on exporters, the central bank introduced a currency certificate system
allowing exporters to trade certificates for hard currency on the Tehran Stock Exchange, thus creating a
floating value for the rial known as the "TSE rate" or "market rate". This method finally replaced the
fixed "export rate" (IR3, 000:US$1) in March 2000, and has since held steady at some IR8,500:US$1.

In March 2002, the multi-tiered system was replaced by a unified, market-driven exchange rate. In 2002
the "official rate" a/k/a as the "preferred rate" (IR1,752:US$1) was abolished, and the TSE rate became
the basis for the new unified foreign-exchange regime.

a. Single or multiple exchange rates?

Market-driven exchange rate

b. Current rate of exchange

Iranian rials (IRR) per US dollar -

10,308.2 (2010)

9,864.3 (2009)

9,142.8 (2008)

9,407.5 (2007)

9,227.1 (2006)

35
 K. Trade restrictions

Iran’s weighted average tariff rate was 20.1 percent in 2008. Import bans and
restrictions, high tariffs, export licensing requirements, restrictive sanitary and tough
regulations, burdensome customs procedures, state trading, arbitrary changes in tariff and tax
schedules and weak enforcement of intellectual property rights add to the cost of trade. Fifteen
points were deducted from Iran’s trade freedom score to account for non-tariff barriers.

There are extensive trade and financial sanctions in place against Iran as a result of the
USA's foreign policy commitments and the imposition of European Union (EU) and United
Nations (UN) sanctions and embargoes. These include:

1. Embargoes & sanctions

 prohibitions on the sale, supply, transfer or export of key equipment and technology for
the oil and gas industry (with a limited exemption for transactions required by, or
obligations arising from, contracts that were in place before 27 October 2010)
 an arms embargo and a prohibition on the supply of equipment that could be used for
human rights abuses
 prohibitions on the provision of brokering services and technical and financial assistance
related to any goods and technology whose supply is prohibited; prohibitions on
investment in Iranian entities engaged in manufacturing those items
 Prohibitions on investment in Iranian entities or bodies engaged in the exploration or
production of crude oil and natural gas, the refining of fuels or the liquefaction of natural
gas.
 asset freezes against listed individuals and entities and a prohibition of making economic
resources available to them (including by the supply of goods and services which may be
used to obtain funds)
 restrictions on transfers of funds to and from Iran, and restrictions on Iran's access to the
insurance and bond markets
 restrictions on providing certain services on Iranian ships and cargo aircraft

3. Imports tax

Import restrictions

 Permitted items no longer require specific approval from the Ministry of Commerce.
 Authorization from one or several Ministries is required for the import of various
specified items.
 The import of luxury or non-essential products and services are restricted. Regulations
favoring local production have been enacted where possible.

36
  All foreign suppliers of equipment and machinery must have official representation in
Iran.
 Imports of cigarettes, tobacco, cigars, cigarette paper, cigarette tips and silkworm eggs
are subject to government monopoly.
 Imports to Iran valued at more than IR500,000 must undergo pre-shipment quantity and
quality inspection in their country of origin by an internationally recognized inspection
organization. Goods exported to Iran must be subject to invoices authenticated by the
Iranian Embassy and by a nominated Chamber of Commerce operating in the supplier's
country.
 Survey and certification must take place prior to consignment in the country of origin.

4. Tariffs

Customs duties and Tariffs on most imported goods:

 Capital goods and raw materials imported for foreign investments may be exempted
from normal duties; similarly medicines, wheat and other strategic goods are exempt
from duties. However, most imports are subject not only to licensing fees and tariffs, but
also to local taxes.
 Exchange control authority is vested in the Central Bank (Bank Markazi). All foreign
exchange transactions must take place through the Central Bank or authorized banks.

Following is an indicative listing of tariff rates:

 chemical products – 10 percent

 ordinary metals –10 percent
 measurement instruments –10 percent
 medical equipment – 10 percent
 food industry – 15 percent
 mining raw production – 15 percent
 leather industry – 15 percent
 paper and wood fabrics – 15 percent
 mechanical machinery – 15 percent
 agricultural raw production – 25 percent
 electric machinery – 25 percent
 automotive vehicles – 100 percent

- Wheat and other strategic goods are exempt from duties. Earnings resulting from the
transit of commodities through Iran are fully exempt from taxation provided that the
commodities in question do not undergo any modification.
- A General Guide on Iranian Customs/Tariff Information, including details of general
import licenses requiring the approval of relevant Ministries (eg. Ministry of Health for

37
 pharmaceuticals) is also available on online for reference purposes. The Iranian importer
is responsible for arranging the appropriate license approval.

L. Labor force

 Iran, like many middle-income countries, has a small formal labor force, often located
within nationalized (or formerly nationalized) industry. This section of the working
class benefits from its position as “formal” labor, meaning that these workers have been
able to extract better pay and benefits, working conditions, and legal contracts from
their employer, who is often the state.

1. Size ( in thousands)

Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Iran 15,400 17,300 18,000 21,000 22,320 23,000 23,680 24,360 28,700 24,350 25,020 25,700

Labor force by occupation:

- Agriculture: 25%
- Industry: 31%
- Services: 45% (June 2007)

Women workers in Iran suffer discrimination in the workplace. According to the official
statistics, while Iranian women make up 27% of the workforce, they bear the main brunt of
unemployment and layoffs. Many have to leave their jobs due to low wages, violence, unsuitable
job conditions (there are no legal protections for women). Recently, Mahmoud Ahmadinejad’s
administration has put forth proposals to reduce the work hours for female workers to 36 hours
per week, which will only increase their hardships.

38
 2. Unemployment rates

Unemployment rate 2011

- 11.8% 2011
- 14.6% (2010 est.)
- 10.3% (2008 est.)

11.8% according to government; unofficially: 12–22%; 30% 7% by 2015, by creating 1 million new
according to opposition. jobs each year

M.Inflation rates

 Inflation is very high, averaging 14.7 percent between 2007 and 2009. Although the
inflation rate decelerated in 2009, it had picked up by the second half of 2010.
 The government controls the prices of petroleum products, electricity, water, and wheat;
provides economic subsidies; and influences prices through regulation of Iran’s many
state-owned enterprises. Fifteen points were deducted from Iran’s monetary freedom
score to account for measures that distort domestic prices.

Inflation (2011): 16.3% (2011 est.)

- 10.1% (2010 est.)

- 13.5% (2009 est.)

IV. Developments in science and technology

- Iran is an example of a country that has made considerable advances through education
and training, despite international sanctions in almost all aspects of research during the
past 30 years. Iran's scientific community remains productive, even while economic
sanctions make it difficult for universities to buy equipment or to send people to the
United States to attend scientific meetings.

39
 - Furthermore, Iran considers scientific backwardness, as one of the root causes of political
and military bullying by developed countries over undeveloped states. After the Iranian
Revolution, there have been efforts by the religious scholars to assimilate Islam with
modern science and this is seen by some as the reason behind the recent successes of Iran
to augment its scientific output. Currently Iran aims for a national goal of self
sustainment in all scientific arenas. The Comprehensive Scientific Plan has been devised
based on about 51,000 pages of documents and includes 224 scientific projects which
must be implemented by the year 2025.

A. Current technology available (computers, machinery, tools, etc.)

Technology parks
The government of Iran has also plans for the establishment of 50-60 parks by the end of the
fifth Five-Year Socioeconomic Development Plan by 2015.

Park's name Focus area Location

Guilan Science and Technology Agro-Food, Biotechnology, Chemistry, Electronics,

Guilan
Park Environment, ICT, Tourism.[46]

Advanced Engineering (mechanics and automation),

25 km North-
Pardis Technology Park Biotechnology, Chemistry, Electronics, ICT, Nano-
East of Tehran
technology.[46]

Tehran Software and Information

ICT[48] Tehran
Technology Park (planned)[47]

Khorasan Science and Technology

Advanced Engineering, Agro-Food, Chemistry,
Park (Ministry of Science, Khorasan
Electronics, ICT, Services.[46]
Research and Technology)

Materials and Metallurgy, Information and

Sheikh Bahai Technology Park
Communications Technology, Design &
(Aka "Isfahan Science and Isfahan
Manufacturing, Automation, Biotechnology,
Technology Town")
Services.[46]

Semnan Province Technology

Semnan
Park

East Azerbaijan Province East

Technology Park Azerbaijan

40
Yazd Province Technology Park Yazd

Markazi Province Technology

Arak
Park

B. Percentage of GNP invested in research and development

- Iran's national science budget was about $900 million in 2005 and it had not been subject
to any significant increase for the previous 15 years.
- By early 2000, Iran allocated around 0.4% of its GDP to R&D, which ranked it "far
behind industrialized societies" and the world average of 1.4%.By 2009 this ratio of
research to GDP reached 0.87% and the set target is 2.5% to be reached by 2015.
- Iran's government has devoted huge amounts of funds for research on high technologies
such as nanotechnology, biotechnology, stem cell research and information technology
(2008).
- Iranian Research Organization for Science and Technology and the National Research
Institute for Science Policy are two of the main institutions, depending on the Ministry of
Science, Research and Technology, in charge of establishing research policies at the state
level.
- In 2006, Iranian government wiped out the financial debts of all universities in a bid to
relieve their budget constraints. According to UNESCO science report 2010, most of the
research in Iran is government funded with the Iranian government providing almost
75% of all research funding. The share of private businesses in total national R&D
funding according to the same report is very low being just 14% as compared with the
Turkey's 48%. The rest of approximately 11% of funding comes from higher education
sector and non-profit organizations.
- In 2009, Iranian government formulated a 15 year comprehensive national plan for
science focused on higher education and strengthening the links between academia and
industry in order to promote a knowledge based economy. As per the plan by year 2030,
Iran's research and development spending is to be increased to 4% of GDP from 0.59%
of 2006 and increasing its education spending to over 7% of GDP from the 2007 level of
5.49%

41
V. Channels of distribution (macro analysis)

To tap into the Iranian market, identifying a reliable distributor or wholesaler

with a strong business network within the country is always the best strategic move for
overseas companies. Understanding the distribution channels of Iran will help you
understand what will happen after selling your goods to Iranian distributors or
wholesalers, many of which are stationed in Dubai.

42
 A. Retailers

- With few major chain stores and only one multinational retailer the Iranian retailing
spectrum is full of independent outlets that are connected to the main bazaar of Tehran.
- In recent years, as a result of a recession in other economic sectors such as agriculture
and industry, investors have been attracted to retailing and the growth in number of
outlets has continued. This traditional distribution network is very ineffective and usually
culminates in several mark-ups on price before products reach the consumer.
Consequently, the price of a single product may vary from region to region as small
independent retailers attempt to boost their profits.
- A sudden increase in oil prices, which peaked in 2008, led to impressive growth in
disposable income. To fill this massive demand the Iranian market was flooded with
foreign goods and the total value of imports to Iran increased exponentially. Most of the
imports, especially in recent years, were consumer products – which was a reason for the
increase in number of outlets. Iran has an extremely high number of outlets for both
grocery and non-grocery retailers. This is largely because, despite the existence of
hypermarkets, Iranians are used to going to a variety of outlets to do their weekly
shopping.
- The emergence of any multinational retailers will further drive growth. On the other
hand, growth will continue to be inhibited by the government’s policies regarding foreign
investment and privatization.

1. Number of retailers

- Iran's retail industry consists largely of cooperatives (many of them government-

sponsored), and independent retailers operating in bazaars.
- The bulk of food sales occur at street markets with prices set by the Chief Statistics
Bureau. Iran has 438,478 small grocery retailers. These are especially popular in cities
other than Tehran where the number of hypermarkets and supermarkets is still very
limited.
- Apart from permanent bazaars, there are also numerous weekly bazaars, for example,
the Friday bazaar or Saturday bazaar. Operating in an open space, the weekly bazaar
offers a wide range of goods, including food, home appliances and handicrafts.

2. Typical size of retail outlets

- In the traditional Iranian retailing environment small and independent players remain
dominant. In recent years, as a result of a recession in other economic sectors such as
agriculture and industry, investors have been attracted to retailing and the growth in
number of outlets has continued.

43
- More mini-markets and supermarkets are emerging, but these are mostly one-off,
independently owned operations. The biggest chain stores are state-owned Etka, Refah,
Shahrvand and Hyper star Market

3. Role of chain stores, department stores, and specialty shops

- - The store formats with the greatest growth in terms of consumer preference were
hypermarkets and supermarkets due to the wide variety of products on offer.
- - Grocery retailing in Iran also entered a new phase of development as the multinational
giants started activities in the country. On the other hand, non-grocery retailing is highly
fragmented, largely dominated by single-outlet operations featured in the largest retailing
formats including clothing and footwear specialist retailers and leisure and personal
goods retailers. The concept of chain stores for non-grocery retailers still is not well
grasped in Iran.
- Western-style supermarkets are also becoming common. Better product quality, more
convenient shopping and a more comfortable shopping environment attract a lot of mid-
to-high income earners to buy from western-style retailers. Meanwhile, many western-
style retail shops are indeed operated by local companies or the government. Some
overseas retailers are also tempted by Iran’s growing market. For example, Carrefour,
partnering with the Makid Al Futtaim group, opened Iran’s first modern hypermarket
under the name of Hyperstar. Migros Turk, one of the biggest supermarket chains in
Turkey, also expressed interest in investing in Iran’s retail market.

B. Wholesale middlemen writing guide

 Tehran, the capital city of Iran, is the distribution hub of goods for the
country. Accounting for one-tenth of the country’s population and
almost one-third of Iran’s total consumer expenditure.
 Tehran is the most important wholesale hub and retail market in Iran.
However, the retail markets of other major cities in the country, such as
Mashhad, are emerging.
 Some importers and distributors from those cities have begun to buy
goods directly from Dubai or other overseas countries, rather than from
wholesalers within the country. In other words, goods may no longer
need to be sent to Tehran before being distributed nationwide.

44
 C. Import/export agents

 Oil and gas exports are Iran’s most important export. Other major export commodities are
petrochemicals, carpets, and fresh and dried fruits. Top destinations for Iran’s non-oil
exports are the United Arab Emirates (UAE), Iraq, China, Japan, and India.
 Major imports for Iran include gasoline and other refined petroleum products, industrial
raw materials and intermediate goods used as manufacturing inputs, capital goods, food
products, and other consumer goods.
D. Warehousing

More than 30 warehousing in Iran.

E. Penetration of urban and rural markets

- Urban population: 71% of total population (2010)

- Rate of urbanization: 1.9% annual rate of change (2010-15 est.)
- Rural population: 29 % of total population (2010)

VI. Media

- The Constitution provides for freedom of the press as long as published material accords
with Islamic principles. The publisher of every newspaper and periodical is required by
law to have a valid publishing license.
- Any publication perceived as being anti-Islamic is not granted a publication license. In
practice, the criteria for being anti-Islamic have been broadly interpreted to encompass
all materials that include an antigovernment sentiment.
- All the papers and magazines in circulation supported the basic political institutions of
the Islamic Republic.
- All radio and television broadcasting is controlled by the government. Television and
radio stations exist in Tehran and the major provincial cities. Stations in Azerbaijan,
Kurdistan and Baluchistan are permitted to broadcast some programs in Azeri Turkish,
Kurdish and Baluchi.
- Information in Iran is largely controlled by the state.

45
 A. Availability of media

- Yet Iran's media landscape, like many aspects of the theocratic regime, is riddled with
contradictions. The flow of information into and within Iran has improved over the last
decade; since 2000, Iran's leaders have oscillated between tightening and loosening
restrictions on the country's domestic news media. While Iran's reformist (or liberal)
news outlets have suffered funding cuts and closures, conservative newspapers now
frequently criticize government policies.

- In the first decade of the 21st century, Iran experienced a great surge in Internet usage,
and, with 20 million people on the Internet, currently has the second highest percentage
of its population online in the Middle East, after Israel. When initially introduced, the
Internet services provided by the government within Iran were comparatively open.
Many users saw the Internet as an easy way to get around Iran's strict press laws.

- Media blogs and social networking sites like Twitter, Face book, and YouTube became
vital sources of information inside and outside Iran during the 2009 election crisis.
Harvard's Berkman Center for Internet & Society estimates there are as many as sixty
thousand Persian-language blogs (PDF) that are regularly updated, serving up a diverse
mix of views, from conservative and religious to secular and reformist. But journalism
experts caution that so-called new media cannot replace traditional forms of reporting.
While roughly one-third of Iranians have access to the Internet, sites are often blocked by
Iranian censors and penalties for reading or posting to unapproved blogs can be severe.

- Iran was among 13 countries branded "enemies of the internet" the human rights group,
Reporters without Borders, which cited state-sanctioned blocking of websites and the
widespread intimidation and jailing of bloggers.

B. Costs

1. Television & Radio

46
- Television is very popular in Iran. Iran's constitution mandates complete control over
television and radio broadcasting, and organizational heads are appointed by the
supreme leader; there are no private or independent broadcasters inside Iran. Islamic
Republic of Iran Broadcasting (IRIB) controls all internal and external broadcasting.
State-controlled television airs nationally and internationally, and is also streamed online.

2. Print

Newspapers:

 There are as many as three hundred newspapers in Iran, but only a dozen
major national dailies. Like their weekly cousins, these papers are typically
funded by and ideologically connected to political parties or politicians
(newspapers also receive government subsidies and generate ad
revenue).The most widely circulated conservative papers include Kayhan,
which is owned by Supreme Leader Ali Khamenei; Resalat, closely
connected with Iran's Bazaar merchants; Iran, the right-wing official
government paper; Jomhouri Eslami (The Islamic Republic), whose first
license holder was Ayatollah Khamenei; and Jaam-e Jam, the nation's
largest non-sports daily (450,000), which is published by the Islamic
Republic of Iran Broadcasting organization.
 Reformist papers include E'temaad (Trust), published in Tehran and
licensed to the Majlis deputy from Rasht, Elias Hazrati; and Etemad-e-
Meli, a national daily owned by 2009 presidential candidate Mehdi
Karroubi.
 The Iranian government also publishes three English-language papers,
Tehran Times; Iran Daily; Iran News. Most Iranian newspapers are
published in Persian, but newspapers in English and other languages also
exist. The most widely circulated periodicals are based in Tehran.
 Iran Daily and Tehran Times are both English language papers.

4. Other media (cinema, outdoor, etc.)

 Advertising media normally is in a major way connected to commerce and

commerce even in a closed state is needed, and so it is the same in Iran.
 Iran is a very literate and highly educated society and with education comes
certain sophistication. The advertising media with their wares have always been
able to attract their attention.
 The restrictions on certain goods considered un-Islamic didn’t have any space on
the state owned media could easily be viewed on the overseas advertisement

47
 media. The internet and Satellite TV, which has been banned for more than a
decade has brought all forms of ware to people of Iran.

VII. Executive summary

Iran's economy is marked by an inefficient state sector, reliance on the oil sector,
which provides the majority of government revenues, and statist policies, which create
major distortions throughout the system. Private sector activity is typically limited to
small-scale workshops, farming, and services. Price controls, subsidies, and other
rigidities weigh down the economy, undermining the potential for private-sector-led
growth. Significant informal market activity flourishes.

The legislature in late 2009 passed President Mahmud AHMADI-NEJAD's bill to

reduce subsidies, particularly on food and energy. The bill would phase out subsidies -
which benefit Iran's upper and middle classes the most - over three to five years and
replace them with cash payments to Iran's lower classes. However, the start of the
program was delayed repeatedly throughout 2010 over fears of public reaction to higher
prices. This is the most extensive economic reform since the government implemented
gasoline rationing in 2007.

The recovery of world oil prices in the last year increased Iran's oil export revenue
by at least $10 billion over 2009, easing some of the financial impact of the newest round
of international sanctions. Although inflation has fallen substantially since the mid-2000s,
Iran continues to suffer from double-digit unemployment and underemployment.
Underemployment among Iran's educated youth has convinced many to seek jobs
overseas, resulting in a significant "brain drain"

VIII. Sources of information

https://www.cia.gov/library/publications/the-world-factbook/geos/ir.html
http://www.heritage.org/index/country/Iran
http://en.wikipedia.org/wiki/Economy_of_Iran#Macro-economic_trends
http://www.irvl.net/advertising-media-in-iran/
http://www.euromonitor.com/retailing-in-iran/report
http://www.hktdc.com/info/vp/a/intmk/en/1/5/1/1X07KNNG/How-Are-Goods-Distributed-In-
Iran.htm

IX. Appendixes

48
Economy of Iran

Central Bank of Iran

Rank 18th (PPP)[1]

Currency 1 toman (superunit) = 10 Iranian rial (IRR) ( ) = 1000 dinar

Fiscal year 21 March – 20 March

Trade organizations ECO, OPEC, GECF, WTO (observer) and others

Statistics

GDP $888.355 billion (2010 est.)[2] (PPP; 17th)

$407.382 billion (2010 est.)[3] (nominal; 26th)

GDP growth 3.2% (real growth; 2011 est.)[4]

GDP per capita $11,420 (2010 est.); (PPP; 94th)[5]

49
GDP by sector agriculture (11%), industry (41.7%), services (47.3%) (2010 est.)

GDP by component Private consumption (36.4%)

Government consumption (10.3%)

Gross fixed investment (23.9%)

Exports of goods/services (34.6%)

Imports of goods/services (−19.7%) (2008 est.) [6][7]

Inflation (CPI) 16.3% (2011 est.)[8]

Population 18.7% living below $11/day (2006)[9]

below poverty line 3.1% living below $2/day (2006)[10]

Gini index 0.36 (2009 est.)[11]

Labor force 25.7 million (2010 est.); note: shortage of skilled labor

Unemployment 11.5% according to the Iranian government (2011 est.)[12]

Main industries petroleum, petrochemicals, fertilizers, caustic soda, car manufacture,

pharmaceuticals, home appliances, electronics, telecom, energy,

power, textiles, construction, cement and other construction materials,

food processing (particularly sugar refining and vegetable oil

production), ferrous and non-ferrous metal fabrication, armaments

Ease of Doing 129th (2011)[13]

Business Rank

External

Exports $84.31 billion (2010 est.) f.o.b.

Export goods petroleum (80%), chemical and petrochemical products (4%), fruits

and nuts (2%), cars (2%), carpets (1%), technical services

Main export China 16.3%, India 13.1%, Japan 11.5%, South Korea 7.1%, Turkey

50
 partners 4.2% (2009)

Imports $58.97 billion (2010 est.) f.o.b.

Import goods industrial raw materials and intermediate goods (46%), capital goods

(35%), foodstuffs and other consumer goods (19%), technical services

Main import UAE 15%, China 14.5%, Germany 9.7%, South Korea 7.3%, Italy

partners 5.2%, Russia 5.1% (2009)

FDI stock Home: $16.82 billion (72nd; 2010)

Abroad: $2.075 billion (68th; 2010)

Gross external debt $14.34 billion (31 December 2010 est.)

Public finances

Public debt 16.6% of GDP (2010 est.)

Revenues $110.9 billion (2010 est.) (on exchange rate basis, not PPP)[14]

Expenses $89.98 billion (2010 est.) (on exchange rate basis)

Economic aid $121 million (2008 est.)[15]

Credit rating B for sovereign risk (June 2009)[16]

Foreign reserves $100 billion (2010 est.)[17]

Main data source: CIA World Fact Book

All values, unless otherwise stated, are in US dollars

Iran
Overall Score: 42.1 World Rank: 171

51
Ten Economic Freedoms of Iran

Embed this data

69.4 Business Freedom Avg 64.3 0.0 Investment Freedom Avg 50.2
44.8 Trade Freedom Avg. 74.8 10.0 Financial Freedom Avg 48.5
81.1 Fiscal Freedom Avg. 76.3 10.0 Property Rights Avg 43.6
76.0 Government Spending Avg. 63.9 18.0 Fdm. from Corruption Avg 40.5
60.7 Monetary Freedom Avg. 73.4 50.7 Labor Freedom Avg 61.5

III. Market Audit and Competitive Market Analysis

Guideline
I. Introduction

To open a hypermarket in a country like Iran is not an easy decision; you would be
attracted by its population which is more than 75 million (60% are under 30 years of age)
and GDP as it has the third highest GDP in the region after Saudi Arabia and the UAE,
but if you compare the GDP per capita across these countries, you will see it is much
more balanced in Iran than in Saudi Arabia but we would face main issues like
bureaucracy, cultural differences and political constraints.

Fortunately in 2005 the law had changed and the new law allowed foreigners to come into
the country and own 100% of a foreign investment.

II. The product

Wal-Mart hypermarket

A. Evaluate the product as an innovation as it is perceived by the intended market

52
Iran has an extremely high number of outlets for both grocery and non-grocery retailers
- 438,478 small grocery retailers- and these are especially popular in cities other than
Tehran where the number of hypermarkets and supermarkets is still very limited.

1. Relative advantage

 The number of hypermarkets and supermarkets is still very limited.

 The customer behavior is very demanding and they are well educated.
 An increase in oil price which had peaked in 2008 led to impressive growth in
disposable income of Iranians.
 There is no other country of this size in the Middle East.
 The population of Iran is more than 75 million.
 You can say it is a very stable country, even if there are some issues.
 Iran has the third highest GDP in the region after Saudi Arabia and the UAE, but
if you compare the GDP per capita across these countries, you will see it is much
more balanced in Iran than in Saudi Arabia.
 Iran has a very young population—more than 60% are under 30 years of age.

2. Compatibility

 The concept of chain stores for non-grocery retailers still is not well grasped in
Iran.
 The number of hypermarkets in Tehran is very limited
 Despite the existence of hypermarkets, Iranians are used to going to a variety of
outlets to do their weekly shopping.
 Political disturbance and the American war in Afghanistan and Iraq would make
it difficult to enter the Iranian market under an American name such Wal-Mart.
 The American Iranian dispute about Iranian intentions to have a nuclear weapon
would affect any new American investment in Iran.
 Wal-Mart as an American name would be banned in Iran specially after the last
incident of the Iranians trial to kill a Sudan diplomatic in America

3. Complexity

 Products itself need a strong supply chain from many different suppliers and time
is a very critical factor.
 Some products need installation and after sale services.
 There are too many rules of importing and they change very frequently.
 There are many, long procedures that a foreign investor has to undergo.

53
  We cannot find real estate of a suitable size in Iran with only one landlord to
build on.

4. Trial ability

 According to the product type sold in the hypermarket

B. Major problems and resistances to product acceptance based on the preceding

evaluation

The main issues are the governmental and social resistance to an American investment
and bureaucracy; there are many, long procedures that a foreign investor has to undergo
and cultural differences as well.

III. The market

Iranian market is a very wide market including different interests with a high purchasing
power and population.

A. Describe the market(s) in which the product is to be sold

Iranian market is a stable market even if there are some issues. There is no other country
of Iran’s size in the Middle East with a population of more than 75 million. Iran has the
third highest GDP in the region after Saudi Arabia and the UAE, but when we compare
the GDP per capita across these countries, we will see it is much more balanced in Iran
than in Saudi Arabia and it has a very young population—more than 60% are under 30
years of age.

1. Geographical region(s)

54
 Iran is the 18th largest country in the world in terms of area at 1,648,195 km2
(636,372 sq mi), It is a country of particular geopolitical significance owing to its location
in the Middle Eastand it is the second largest country in it. Iran is bordered on the north
by Armenia, Azerbaijan and Turkmenistan. As Iran is a littoral state of the Caspian Sea,
Kazakhstan and Russia are also Iran's direct neighbors to the north. Iran is bordered on
the east by Afghanistan and Pakistan, on the south by the Persian Gulf and the Gulf of
Oman, on the west by Iraq and on the northwest by Turkey. Tehran is the capital, the
country's largest city and the political, cultural, commercial and industrial center of the
nation. Iran is a regional power, and holds an important position in international energy
security and world economy as a result of its large reserves of petroleum and natural gas

2. Forms of transportation and communication available in that (those)

region(s)

Routs and railways:

Major routes and railways of

Iran
Iran has a long paved road system linking most of its towns and all of its cities. In 2007
the country had 178,152 km (111,000 mi) of roads, of which 66% were paved. In 2008
there were nearly 100 passenger cars for every 1,000 inhabitants.

Trains operated on 11,106 km (6,942 mi) of railroad track. The

country’s major port of entry is Bandar-Abbas on the Strait of
Hormuz. After arriving in Iran, imported goods are distributed
throughout the country by trucks and freight trains. The Tehran-
Bandar-Abbas railroad, opened in 1995, connects Bandar-Abbas to
the railroad system of Central Asia via Tehran and Mashhad.
Other major ports include Bandar e-Anzali and Bandar e-
Torkeman on the Caspian Sea and Khorramshahr and Bandar-
Emam Khomeyni on the Persian Gulf.

Metro:

Along with extension work on the Tehran Metro, six other metro
Railway system map of Iran projects are being built. In total, 172 extra kilometers will be built
in Tehran till 2012 and over 380 kilometers in the other cities
(Isfahan Metro, Shiraz Metro, Tabriz Metro, Ahvaz Metro and Karaj Metro)

55
Ports and harbors:

The capacity of container loading and unloading in the country’s ports is currently at 4.4
million which will increase to 7 million by the end of 2015. Port capacity will increase to
200 million tons in 2015 from 150 million tons in 2010.

All ports: Abadan, Ahvaz, Bandar Abbas, Bandar-e Anzali (Caspian sea), Bushehr,
Bandar-e Emam Khomeyni, Bandar-e Lengeh, Bandar-e Mahshahr, Bandar-e Torkaman
(Caspian sea), Chabahar (Bandar-e Beheshti), Kharg island, Lavan island, Sirri island,
Khorramshahr (limited operation since November 1992), Noshahr (Caspian sea), Arvand
Kenar.

Main: Assaluyeh, Bandar Abbas, Bandar-e Eman Khomeyni, Bandar Abbas is in

southern Iran and handles 90% of the country's container throughput.

Communications in Iran:

 Iran’s telecommunications industry: is almost entirely state-owned, dominated by

the Telecommunication Company of Iran (TCI). Fixed-line penetration in 2004
was relatively well-developed by regional standards, standing at 22 lines per 100
people, higher than Egypt with 14 and Saudi Arabia with 15, although behind the
UAE with 27. In terms of mobile provision in 2004, however, Iran lagged all the
countries mentioned above
 Press: it is privately owned and reflects a diversity of political and social views,
Most Iranian newspapers are published in Persian, but newspapers in English
and other languages also exist. The most widely circulated periodicals are based
in Tehrān. Popular daily and weekly newspapers include Ettelaat, Kayhan,
Resalat, Iran Daily and the Tehran Times (both are English-language papers).
 Internet: In 1993 Iran became the second country in the Middle East to be
connected to the Internet, high-speed Internet via digital subscriber lines (DSL),
high-bandwidth lease lines and satellite
 National internet: Since 2005, Iran has been developing a "national Internet" to
improve control over its content as well as speed. The project, which is separate
from the world wide web, will be completed by 2013. This network will be
separated from the rest of the internet, specifically for domestic use. Creating
such a network, similar to one used by North Korea, would prevent unwanted
information from outside of Iran getting into the closed system. Myanmar and
Cuba also use similar systems.

Radio& Telivision: as discussed in the previous section

3. Consumer buying habits

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  Consumers have a high disposable income, willing to purchase high quality
products and fresh foods, well-educated and involved with business and service
development

a. Product-use patterns

An interesting shopping environment with entertainment activities is highly

recommended and it depends on product and/or service sold in the hypermarket.

b. Product feature preferences

High quality of packaging and product itself with an interesting visualization and sorting.

c. Shopping habits

Iranians are used to going to a variety of outlets to do their weekly shopping.

4. Distribution of the product

It needs a very strong supply chain to provide all products needed on time
Installation and after sale services are required for some products
Fresh foods and snacks are provided inside the hyper market and according to the snacks
provider

a. Typical retail outlets

Iran has an extremely high number of outlets for both grocery and non-grocery retailers
(438,478 small grocery retailers)

5. Advertising and promotion

All types of media in Iran is censored by the Islamic regime which has been in the control
of this country since the Islamic revolution of 1979. Since then every form of media has
come under the state, and all that is seen by the Iranians is under the directive of the
state. In that context the advertisement media have to stick to self policing in whatever
they say or do

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 Advertising media usually used to reach your target market(s)

 Iranian Newspaper's
 Iran Yellow Pages
 Iranian radio& television
 Advertizing on national transportation (Super bus, taxi, metro,….)
 billboards

b. Sales promotions customarily used (sampling, coupons, etc.)

We want to develop our own brand. That means we are going to work on:
 Packaging, how to save money, and so on.
 We will work on private labeling.
 Word of mouth, Culturally, Iran is relatively high in collectivism, especially
relative to the family life style. So viral marketing will be our main concern.
 After sales services, we'll deliver for free and call people after the delivery service
to find out how it went.
 Public Relation, intensive promotions activities during special occasions and
events.

6. Pricing strategy

We are targeting to provide consumer goods by less than 10% compared with the regular
grocery retailers

a. Types of discounts available

Wal-Mart provides the very best choice of Discounts.

 Wal-Mart low cost coupons help you save money. Wal-Mart coupons can be
obtained together with hot deals about the most recent regarding electronics, food
products, clothing, or else.

 Gift cards are available in special occasions.

 Weekly offers.
B. Compare and contrast your product and the competition’s product(s)

Small retailers are not a big issue because around the world there are small retailers we
have to compete with; the more important competitors are Hyperstar (Carrefoure) beside
the chain cooperatives that belong to the state, the municipality and the army, like Refah

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and Sepah. As they are non-profit cooperatives and have subsidized prices their
competition is more important than that of small retailers

1. Competitor’s product(s)
Hyperstar prices are less than the regular grocery retailers by 10%
The chain cooperatives that belong to the state, the municipality and the army, like Refah
and Sepah are non-profit cooperatives and have subsidized prices

a. Brand name

Hyperstar (Carrefour)

b. Features

 They positioned themselves as a service provider

for the middle class
 They have a very good relations with the iranian government and municipality.

 Their suppliers understod that business very well and they had improved the
logistics of delivery

c. Package

They are focusing on quality even in packaging and also they are working on their
private labeling

2. Competitor’s prices

Consumer products are less than regular grocery retailers by 10%

C. Market size
Iranian market is a very wide market including different interests with a high purchasing
power and population.

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  The population of Iran is more than 75 millions
 Iran has a very young population—more than 60% are under 30 years of age
 Iran is the 18th largest country in the world in terms of area at 1,648,195 km2
(636,372 sq mi)
 Iran is the second large country in the middle east

1. Estimated industry sales for the planning year

Sales show healthy growth over the forecast period

 Despite the fact that retail prices are predicted to continue to increase over the
forecast period, total sales are forecast to grow at a healthier AGR (Annual
Growth Rate) in constant value terms than during the review period.
 Sales growth will be fuelled by the same factors that drove growth over the review
period, including rising purchasing power and improving standards of living and
lifestyles.
 The emergence of any multinational retailers will further drive growth. On the
other hand, growth will continue to be inhibited by the government’s policies
regarding foreign investment and privatization.

2. Estimated sales for your company for the planning year

We are planning to serve:

 15,000 customers per day.

 300.000 customers on average / month .

D. Government participation in the marketplace

The first step was to gain approval from the Iranian government as a foreign company
making a foreign investment and establishing 100% ownership

1. Agencies that can help you

 FIPPA (the Foreign Investment Promotion and Protection

Act)
 OIETAI (the Organization for Investment, Economic and
Technical Assistance of Iran)

2. Regulations you must follow

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 Iran has two types of laws concerning foreign companies.
The first are laws that address issues concerning foreign
companies directly such as the Foreign Investment
Promotion and Protection Act (FIPPA) and the second are
general laws of which certain articles or by-laws address
foreign companies, for instance the Taxation Law and the
Labor Law.

Applied law: FIPPA and its implications regulations

approved in 2002 , commercial code company law, import
and export regulations, labor law

the first step was to gain approval from the Iranian

government as a foreign company making a foreign
investment and establishing 100% ownership

IV. Executive summary

V. Sources of information

 The business year website - interview with Marc Corbion

(http://www.iran.thebusinessyear.com/page_detail.php?id=15)

 Hyperstar iran website

 Iran ecommerce – the synonem of Iran business information

(http://www.iranecommerce.net/)

 The Iran virtual library (http://www.irvl.net/)

 Iran business law and regulations (www.irxp.com)

 Wikipedia website

VI. Appendixes

[insert text here]

IV. Preliminary Marketing Plan writing guide

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Guideline
I. The marketing plan

[insert text here]

A. Marketing objectives writing guide

[insert text here]

1. Target market(s) (specific description of the market)

[insert text here]

2. Expected sales 20-

[insert text here]

3. Profit expectations 20-

[insert text here]

4. Market penetration and coverage

[insert text here]

B. Product adaptation or modification writing guide

[insert text here]

1. Core component

[insert text here]

2. Packaging component

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 [insert text here]

3. Support services component

[insert text here]

C. Promotion mix

[insert text here]

1. Advertising

[insert text here]

a. Objectives

[insert text here]

b. Media mix

[insert text here]

c. Message

[insert text here]

d. Costs

[insert text here]

2. Sales promotions

[insert text here]

a. Objectives

[insert text here]

b. Coupons

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 [insert text here]

c. Premiums

[insert text here]

d. Costs

[insert text here]

3. Personal selling

[insert text here]

4. Other promotional methods

[insert text here]

D. Distribution: From origin to destination writing guide

[insert text here]

1. Port selection

[insert text here]

a. Origin port

[insert text here]

b. Destination port

[insert text here]

2. Mode selection: Advantages/disadvantages of each mode

[insert text here]

a. Railroads

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 [insert text here]

b. Air carriers

[insert text here]

c. Ocean carriers

[insert text here]

d. Motor carriers

[insert text here]

3. Packing

[insert text here]

a. Marking and labeling regulations

[insert text here]

b. Containerization

[insert text here]

c. Costs

[insert text here]

4. Documentation required

[insert text here]

a. Bill of lading

[insert text here]

b. Dock receipt

[insert text here]

c. Air bill

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 [insert text here]

d. Commercial invoice

[insert text here]

e. Pro forma invoice

[insert text here]

f. Shipper’s export declaration

[insert text here]

g. Statement of origin

[insert text here]

h. Special documentation

[insert text here]

5. Insurance claims

[insert text here]

6. Freight forwarder writing guide

[insert text here]

E. Channels of distribution (micro analysis) writing guide

[insert text here]

1. Retailers

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[insert text here]

a. Type and number of retail stores

[insert text here]

b. Retail markups for products in each type of retail store

[insert text here]

c. Methods of operation for each type (cash/credit)

[insert text here]

d. Scale of operation for each type (small/large)

[insert text here]

2. Wholesale middlemen

[insert text here]

a. Type and number of wholesale middlemen

[insert text here]

b. Markup for class of products by each type

[insert text here]

c. Methods of operation for each type (cash/credit)

[insert text here]

d. Scale of operation (small/large)

[insert text here]

3. Import/export agents

[insert text here]

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 4. Warehousing

[insert text here]

a. Type

[insert text here]

b. Location

[insert text here]

F. Price determination writing guide

[insert text here]

1. Cost of the shipment of goods

[insert text here]

2. Transportation costs

[insert text here]

3. Handling expenses

[insert text here]

a. Pier charges

[insert text here]

b. Wharfage fees

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 [insert text here]

c. Loading and unloading charges

[insert text here]

4. Insurance costs

[insert text here]

5. Customs duties

[insert text here]

6. Import taxes and value-added tax

[insert text here]

7. Wholesale and retail markups and discounts

[insert text here]

8. Company’s gross margins

[insert text here]

9. Retail price

[insert text here]

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G. Terms of sale

[insert text here]

1. EX works, FOB, FAS, C&F, CIF

[insert text here]

2. Advantages/disadvantages of each

[insert text here]

H. Methods of payment writing guide

[insert text here]

1. Cash in advance

[insert text here]

2. Open accounts

[insert text here]

3. Consignment sales

[insert text here]

4. Sight, time, or date drafts

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 [insert text here]

5. Letters of credit

[insert text here]

II. Pro forma financial statements and budgets

[insert text here]

A. Marketing budget

[insert text here]

1. Selling expense

[insert text here]

2. Advertising/promotion expense

[insert text here]

3. Distribution expense

[insert text here]

4. Product cost

[insert text here]

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 5. Other costs

[insert text here]

B. Pro forma annual profit and loss statement (first year and fifth year)

[insert text here]

III. Resource requirements

[insert text here]

A. Finances

[insert text here]

B. Personnel

[insert text here]

C. Production capacity

[insert text here]

IV. Executive summary writing guide

[insert text here]

V. Sources of information

[insert text here]

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VI. Appendixes writing guide

[insert text here]

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