Rather bleak
Iran from an expatriate businessman's point of view
By A. Peeroozi
March 2, 2001
The Iranian
I am an Iranian-American working for a large American firm. My company
was persuaded to pay attention to Mr. Khatami's visit to the New York and
initiate some sort of activities with Iran. My firm asked me to travel
to Iran to assess the situation independently and make a recommendation
to the company. The focus was going to be points related to Mr. Khatami's
presentation and requests for foreign investment.
I decided to take the opportunity and travel to Iran. I stayed in Iran
for four weeks. I truly enjoyed the hospitality of the people and their
kindness. I speak, read and write Persian fluently. The following is a
brief version of the report I gave my company.
Trip and Arrival
I boarded Iran Air flight from Frankfurt to Tehran. The boarding was
orderly, the crew was polite and semi-warm, the airplane interior was clean
and the meal was okay. The lavatories did not have seat covers and the
soap dispenser did not work but a hotel size bar soap was provided. The
flight departed and landed on time
I traveled to Iran on my newly obtained Iranian passport and the immigration
procedures were quick and hassle free. The arrival hall was what I remembered
25-years ago, no major improvements were made and baggage claim area had
a single belt in a small hall. Customs procedures were also easy and quick.
I stayed at old Sheraton Hotel now operated by Iran Air. It was nice
and clean; the staff was friendly and helpful. Because I flashed my Iranian
passport the rate was changed to something like $30 a night as opposed
to the rate charged to foreigners that was about $135.
Business Environment
I met with a cross section of Iranian businessmen and one businesswoman.
My overall assessment was rather bleak. The level of expertise for running
and managing companies is very low compared to many other Asian countries.
I met with attorneys regarding business laws in Iran. These meetings
were not very encouraging. I found that the laws are absolutely anti-business.
Western-educated Iranians running companies are somewhat successful but
totally discouraged by the environment they are in. The required business
infrastructure almost does not exist. The telephone system is ages behind.
Internet systems are at best 33.5 bps due to the phone line hardware limitations.
Corruption is widespread at all levels of government. The government
control over all aspects of business has created an environment that the
bureaucrats running these government-owned companies feel they own them,
and frankly they do.
As an example, every major ministry has a foreign goods buying arm as
a company. Every single one of these agencies/companies feels and acts
as a monopoly in their field. They would put every imaginable stumbling
block in your way to restrict you from conducting business. They feel that
a new company will compete with them and they do not like it at all. The
employees of these government-owned companies are invariably corrupt, from
the general managers on down.
As part of the planning for my trip we had created a realistic scenario
that involved some basic aspects of establishing and conducting business.
It was a nightmare trying to do the simplest tasks to get the most basic
things such as a permit for anything. And there are permits required for
everything. The conditions were rather stifling. Procedures that should
normally take few minutes could take days in Iran -- and without any success.
Under the scenario we tried to send some tooling items for a short period
of time to Iran. We were not even able to release them from customs in
two weeks and finally returned them to our company in the UK. Even the
procedure for returning items took a week.
Capital Investment and Security
As you are all aware, the government of Iran is pursuing foreign investments
in Iran. However, as I stated, the laws are antiquated and anti-business.
The banking system is inefficient. Insurance systems are all government
owned, same as banks. They are totally useless.
The political and social conditions are not encouraging at all for foreign
investment. There are no guaranties for your capital investment. There
is no security for your personnel, despite claims and the appearance that
there is.
As an example, Security/Intelligence Ministry employees (referred to
as Herraasat) are present in all organizations and they sometimes sit at
meetings, supposedly only as observers. They could prevent you from leaving
Iran without any warning. Any judge could easily block your company assets
based on complaints by almost anybody.
There are conflicting rules regarding almost any business situation.
These rules sometimes are so broadly written that people could interpret
them many ways. In short, the conditions for investment in Iran are not
positive.
Social/Political
The social/political conditions are rather tense. There is a level of
tolerance for limited personal freedom. However, this could be misleading.
For example, the laws for how you are supposed to be dressed in public
are not strictly enforced but they are still on the books and at any moment
anyone of the NAJA (Niroohaa-ye Entezaami-ye Jomhoori-ye Eslaami) personnel
could arrest you for whatever reason.
The NAJA personnel are corrupt and you could pay your way out of a situation
with a bribe. The size of the bribe depends on the seriousness of your
supposed crime. Any amounts from 1,000 tomans and up. It is a very sad
situation.
A situation that I became aware of included a boy and a girl in their
teens. They were caught in a compromising situation in a car and were arrested.
They were taken to the local NAJA station and were threatened that their
parents were going to be informed.
A solution that was presented to the girl was that she have sex with
the station commander. The NAJA commander's justification to the girl was
that if you were willing to have a boyfriend then having sex with me (the
commander) should not be a big deal.
Young people (25 and under) are the ones that are truly fed up with
their situation. In my mind I compared them to the baby boomers in the
U.S. I believe that they are going to be at the forefront of any changes
in Iran. They are very interesting. I saw them break dancing in the parks,
taunting the Basij forces. They have a defiant attitude.
In one instance, I saw a Basij personnel chasing a girl on t Argentine
Ave. down the middle of the street. A car driven by a young man cut between
the two and blocked the Basiji from getting the young girl.
There were many men with clean-shaved faces and I was informed that
that was a rather newer phenomenon. You even could see many gentlemen wearing
ties attending private business -- definitely not in government agencies--
during the day or out during the evening at restaurants.
The political atmosphere is tense and unstable.
Miscellaneous
It is cheap to live in Iran if you were converting foreign currency
or had foreign income. But it is very expensive for salary-earning Iranians.
Labor is extremely cheap, but "things" are expensive. The price
of real estate is very high even compared to average U.S. cities.
I traveled north of Tehran to Lavasan. I was amazed at the new construction
of villas for the rich and mostly high-ranking government officials owned
them. One of the most expansive and expensive ones belongs to Ali Akbar
Velayati, the former foreign minister.
The Supreme Leader Ayatollah Khamenei also has a complex on a hilltop
that covers several hundred acres and there are few luxury villas within
the perimeter of the complex.
I drove up to Dizin on one occasion. The ASP and Dizin Hotel had been
sold to private concerns and off limits to the public.
I was at a traditional restaurant one evening and they had a live band
singing songs. The owner of the establishment informed me that I could
not show any signs of having a good time by clapping my hands while seated.
I also could not move my upper body to the rhythm of the music. Of course,
I respected his concern since the vice police (part of NAJA) could shut
down his restaurant for 20 days.
It is prohibited to have more than three music cassettes in your car.
I was informed of this by a taxi driver who was stopped by NAJA. They confiscated
a couple of his tapes as well as charging him 2,000 tomans.
I was at a coffee shop and observed the owner covering the neon sign
that said "Coffee Shop" in Persian. I asked him the reason and
he stated the Amaaken (public places) police agency told him he could not
have the words in his sign.
However, in other places in the city it was common to see the word "Coffee
Shop" as part of the name of the restaurant. The bad part is that
these types of arbitrary regulations are common in every aspect of life
and business in Iran.
The traffic and pollution in Tehran was as bad as I had heard.
Bookstores were full of new and reprinted old books. They must be doing
okay since there are a lot of them.
There are no public restrooms in Tehran, and the ones at restaurants
are in very bad shape.
