Current business situation
On 16 January 2016, the United Nations sanctions on Iran were lifted, as were many of the sanctions imposed by the European Union and the United States. As a result, the Australian Government has also lifted most of Australia’s autonomous sanctions, opening up new opportunities for Australian business.
Key sectors in Iran that Austrade considers offer real potential for Australian firms are agribusiness, food, health, education, mining, oil and gas, and water. Opportunities to invest in oil and gas and in mining will interest some Australian firms but the need to understand how new oil contracts will work, how the mining sector will be managed and new investment laws means that investors will need to take a medium-to-long term approach.
Certain sanctions and business risks remain and Australian firms will continue to face a range of market-specific barriers, so the need for due diligence will continue. Australian companies seeking further information about business opportunities in the Iranian market are encouraged to contact Austrade.
Businesses should also obtain independent legal advice before making commercial decisions with respect to Iran and consult their financial services provider before entering into commitments.
Information on remaining Australian sanctions in relation to Iran is available on the Department of Foreign Affairs and Trade (DFAT) website. Businesses considering trade with Iran are encouraged to visit this website.
Detailed information on the export of defence and dual-use goods can be accessed from the Department of Defence’s Defence Export Control Office.
The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Iran. This is regularly updated and should be checked before planned travel.
Although visitors usually have no problem travelling just with English, a few words of Farsi (Persian) can be immensely useful. The most common greeting in Iran is ‘salaam’ (peace), the correct reply is ‘salaam’ (peace), which is an abbreviation from Arabic greeting in ‘salaam alaykom’ (peace upon you).
Iranians prefer to do business with those they know and respect, therefore they expect to spend time cultivating a personal relationship before business is conducted.
Appointments are necessary and should be made four to six weeks in advance and confirmed by telephone and in writing. A few days before the meeting or prior to arriving in Iran it is important to telephone again to confirm the time and place for the appointment.
It is a good idea to avoid scheduling meetings during Ramazan (Ramadan) as the need to fast would preclude your business colleagues from offering you hospitality.
Arrive at meetings on time, since punctuality is seen as a virtue.
The first meeting with an Iranian company is generally not business-focused. Expect your colleagues to spend time getting to know you as a person over tea and snacks.
Written materials should be available in both Farsi and English.
Companies are hierarchical. Decisions are made at the top of the company, either by one person or a small council.
Business attire is formal and conservative. Men should wear dark coloured conservative business suits. Ties are not worn by Iranians but it would not be seen as negative if you did so. Dress well to make a good impression. Women should always dress modestly and cover their hair.
Address your Iranian business associates by their title and their surname.
Wait to be invited before moving to first names. Only close friends and family use this informal form of address.
Business cards are only exchanged by senior-level people. Since rank and position are very important, make sure your business card includes your title. Have one side of your card translated into Farsi. Present your card so the Farsi side faces the recipient.
When meeting someone in a business context make sure to always shake hands, it is a sign of courtesy and respect. For male visitors, before shaking a woman’s hand wait to see if they extend their hand, if they do not, simply nod your head and smile. When doing business in Iran stick to formalities and once a relationship has been established, addressing them by their first name can begin.
Men should be smart and conservatively dressed, a suit is standard and often expected although wearing a tie is not necessary. Whether conducting business or just visiting, women should wear very conservative clothing that covers arms, legs and hair. When in public most women cover their hair with a scarf. In recent years the government has become more relaxed in what clothing they are willing to tolerate. Many women will now be seen wearing makeup, jeans and scarves that barely cover the hair. However, as a foreigner it is best to dress extremely conservative, particularly when doing business.
Business hours are from Saturday to Thursday, 9.00am to 5.00pm, with lunch usually taken for an hour at around 1pm. Friday is a holiday and no business will take place on this day. There are a few key periods to avoid when trying to conduct business in Iran. ‘No-Rooz’ is the major holiday for Iranians and is a New Year celebration falling around the 21st of March. During this time all offices, businesses and most shops will close for two to three weeks. Ramadan, the month of fasting, is another time to avoid business in Iran.
Find out more about Iranian customs and etiquette.
Setting up in Market
Before setting up in market, business should familiarise themselves with Australia’s remaining sanctions in relation to Iran, and seek independent legal and financial advice before making commercial decisions or entering into commitments.
For more information about Australia’s remaining sanctions to Iran, visit the Department of Foreign Affairs and Trade (DFAT).
Banking and finance
The government has been moving towards liberalising the banking sector, although progress has been extremely slow. Foreign banks have been operating in Iran’s free-trade zones since 1998, however the banking sector is dominated by state-owned banks.
Following the gradual lifting of international sanctions on Iran, there has been increased interest amongstst banks and financial institutions in exploring the potential opportunities in the Iranian market.
At present, there are no fully licensed foreign banks in Iran. Many banks are Iranian government owned, while the rest are private Iranian banks. The Monetary and Banking Law of Iran issued on 9 July 1972 provides that the Central Bank of Iran is responsible for the formulation and implementation of monetary and credit policies with due regard to the general economic policy of the country. Amongst other things, the Central Bank is responsible for the supervision of banks and credit institutions in accordance with the Monetary and Banking Law.
The Law for Usury (Interest) Free Banking, as approved by the Council of Protectors in September 1983, includes a number of objectives and duties applicable to the banking system in Iran, including adherence to Islamic jurisprudence and interest-free lending. This applies to all forms of lending, regardless of the currency in which the loan is made. The Regulations on Monetary and Banking Operations in Free Trade – Industrial Zone of the Islamic Republic of Iran, contain an exception to this prohibition on interest, whereby foreign currency transactions conducted from within a free zone are exempt from implementing the Islamic banking system. It remains unclear, however, whether this exemption is consistently applied in practice.
The Banking and Monetary Act provides that: “Engagement in banking operations is prohibited, except with the permission of the Currency and Credit Council. The articles of association of banks also must be approved by the Currency and Credit Council...”. The banking legislation in Iran is silent about what constitutes ‘banking operations’, which can make it difficult to identify its scope and reach.
The legislation makes it clear that, at the time of applying for a licence, an applicant foreign bank must formally include the proposed activities for its entity in Iran, which shall be assessed and decided on a case-by-case basis by the Council in line with the provisions of the Banking and Monetary Act. For the purposes of the Banking and Monetary Act, a bank shall be considered a ‘foreign bank’ if more than 40 per cent of its capital is owned by non-Iranian individuals or entities.
All financial institutions in Iran, including foreign banks established in Iran, branches, and representative offices, may not engage in any banking activities or ancillary services (including marketing and cross-border marketing activities) without express approval and licences from the Council and the Central Bank, respectively.
In terms of the different forms of on ground presence available in Iran, the Monetary and Banking Law provides that domestic and foreign banks (as defined above) may only take the form of public joint stock companies.
Iranian banking legislation is silent with regard to cross-border lending, i.e. lending to Iranian companies from outside Iran. It is also silent on the permissibility of a bank taking security in Iran without establishing a presence in Iran.
It is too early to assess the degree or speed at which Iran will reform its banking and finance-related legislation and framework following years of isolation. Issues of sanctions and limitations on US dollar transactions will also continue to be inhibiting factors to some financial institutions. However, progress has started with the recent reconnection of Iranian banks to SWIFT.
Find out more about the Iranian banking system.
Links and resources
Government, business and trade
Iran Chamber of Commerce, Industries and Mines
IRI Customs Administration
Ministry of Foreign Affairs
News and media
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.