Local firms can start preparing to seize business opportunities in Iran, set to arise should nuclear-related sanctions be lifted, said a senior IE Singapore official.
The lifting of sanctions would unleash relatively strong demand from Iran for everyday goods ranging from food products to industrial paints and pharmaceuticals, said Mr G. Jayakrishnan, director of IE Singapore's Middle East and Africa group. These are goods any rapidly-growing, large economy would need, especially one shut off from the global community for so long, he said.
Already, several Singapore firms including Hyflux, Surbana Jurong and Rotary Engineering, have told The Straits Times that they are considering opportunities in Iran should sanctions lift.
Nuclear-related sanctions have been in place for close to a decade but may be lifted soon.
Iran, with 81 million people, is the Middle East's second largest country, and its economy is larger than Thailand's even under heavy sanctions, Mr Jayakrishnan told The Straits Times. "Imagine if it normalises. The market size is there; it's a young population with a median age of 27 to 28. I think there will be consumption."
Engineering, architectural and city-planning services will also be in demand as Iran refurbishes old buildings and develops its cities amid a pick-up in economic activity as foreign investments flow in.
There will also be opportunities to engage Iran's oil and gas sector.
Iran, with 10 per cent of the world's proven oil reserves and 20 per cent of its proven gas reserves, will expand production after years of under-investment should sanctions lift, he noted.
Companies that can provide products, such as oil rig equipment, and services, such as vessel operation, to this industry will also see opportunities arise.
Iranian businesses now able to deal with only a restricted range of partners will also seek other companies that can provide them goods and services at even more favourable rates, he said.
In mid-July, Iran and a group of six countries led by the United States reached an agreement to significantly restrict Iran's nuclear ability for more than a decade in return for removing nuclear-related sanctions.
If the US Congress, which has till about mid-September to review the deal does not block it, and Iran complies with the deal's key terms, major oil and financial sanctions could lift by the first half of next year.
Local firms can act now and introduce their capabilities to potential Iran business partners or customers, said Mr Jayakrishnan. This way, should sanctions eventually be lifted, they will obtain business opportunities more quickly.
Singapore firms engaging Iran should also first adopt asset-light strategies in the early stages following the lifting of sanctions. Such strategies involve distributing goods and offering services to Iran, as opposed to investing directly in it, Mr Jayakrishnan said.
Some difficulties firms may initially encounter include obtaining financing for Iranian projects. Banks have been reluctant to fund such activities because of the sanctions, he said.
The removal of sanctions may also create opportunities in Singapore as Iranian companies seek to re-engage the global economy.
Iranian firms may seek the use of Singapore's port, logistics and finance services to transport Iran's sizeable mineral deposits to other markets, for instance, he said.