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Seven steps to good business

Iran

Experts on the Iranian civil engineering market gave NCE some tips for doing business there.

First Steps

For information on the Iranian civil engineering market contact the commercial department at the British Embassy in Tehran.

A good contact in the construction and oil and gas sectors is the Industrial Development & Renovation Organisation of Iran. IDRO acts as the commercial department for 180 Iranian companies and is involved in major infrastructure projects. It is regarded as a good opening port of call when trying to find local partners.

Beware unscrupulous agents

Shop around for a good agent who is familiar with Iranian laws but avoid committing to one by signing an exclusivity agreement. Unscrupulous agents can manipulate contract negotiations to their own advantage, says Iran's vice minister for taxation Aliakbar Arabmazar. 'I have seen agents give a false picture on issues such as tax. It is better to write to the Ministry of Finance care of the commercial section at the embassy to get this information.'

Take time over signing your first contracts

Take time to find a local partner and fully research its capabilities. A British contractor looking for a local contractor to build oil platforms once signed a deal with a small boat building yard. Do your homework.

Once teamed up, build a long term relationship. 'It's a very personal market and trust is vital, ' says Eric Jenkinson of the Embassy's commercial department.

'Don't promise more than you can deliver or you'll never work here again.'

Director of Tehran based consultant for UK firms Acasia International Mark Raey adds: 'Don't expect contracts to be signed overnight. See it as a long term investment. After the first contract others should follow quickly.'

Expect most deals to be struck through negotiation rather than competitive tendering.

Have a good lawyer and accountant on board from day one

'Good lawyers and accountants for due diligence and contract preparation are absolutely crucial in what is a very sophisticated environment, ' says Jenkinson. And choose an advisor who is familiar with Iranian law and regulations.

Do not be put off by negative talk that Iran is not worth it

There are horror stories about British firms who have not been paid or had difficulty with the employment laws that make it difficult to reduce staff. There will be problems but none so bad that you cannot work through them with the help of a good local partner.

The punitive tax rate for foreign investors is under reform while other hurdles can be negotiated.

'The government's rule that up to 50% of goods must be manufactured in Iran can be renegotiated if the government thinks the project is important enough, ' says a source.

Being British in Iran is an advantage

Britain is looked on favourably in the engineering sector with many British educated Iranian engineers who prefer to design to British standards. British site managers are regarded in Iran as the best in the world on complex infrastructure projects.

English is the business language of Iran and the three and half hour time difference gives the UK a big advantage over competitors such as Canada and Australia who are both trying to break into the market.

UK firms are perceived as inflexible and unwilling to change orders. But they have a reputation for reliability and fair dealing. British firms are said to work longer hours and mix well with the locals.

Are Iranian engineers good enough?

Iranian engineers are among the best trained in the world under a regime of four years for a Bsc and an extra two years for a Msc.

There are over 400 engineering consultants and 1,000 contractors operating in Iran.

Iranian civil engineering has 20 years of virtual self sufficiency on engineering projects behind it and its engineers are highly skilled and quick learners.

However, more input from Western firms is needed on project management and application of modern techniques.

Useful contacts

TNA Ltd Director: Michael Menaged London based firm that facilitates business for UK firms in Iran.tnaltd@yahoo. com Qeshm Research & Development Services maceng2000@yahoo. com Westhem Company westhemco@yahoo. com Acasia International Consultants Director Mark Raey 0098 21 2056188 British Embassy Eric Jenkinson First secretary commercial/ economic section 0098 21 670 5011 IDRO trading company Managing director F Pazirandeh 0098 21 205 6220 Cyrus Omron International Investment, trade, financial and legal advisors Managing partner Dr Rocky Ansari 0098 21 204 9615 Iran-British Chamber of Commerce Dr Amir Amini 0098 21 881 0585 NCE wishes to thank TNA Ltd, Qeshm Research & Development Services Ltd and Westhem Company, who set up the meetings and links with Iranian parties. TNA and Westhem Company coorganised London's Iran Invest conference in September 2000. TNA works actively with the Iranian authorities to assist and accelerate investment and modernisation of Iran's infrastructure and priority projects.

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