Photo Credit: IRNIA
Iran and Saudi Arabia have recently announced that they plan to restore diplomatic ties after nearly 8 years. On the initiative of Chinese President Xi Jinping, Iranian and Saudi delegations held multiple meetings over the course of five days in Beijing to support the expansion of Tehran-Riyadh relations. This announcement has soon resulted in hopes to explore further economic opportunities between the two countries. Following the agreement, Saudi Arabia’s Finance Minister Mohammed Al-Jadaan said on Wednesday that Saudi investments in Iran could occur “very quickly.” There have been numerous optimistic statements being made on both sides of the agreement, and indication of both countries’ good faith in taking steps forward. According to Iran Customs’ statistics, Iran and Saudi Arabia’s trade in 2007 was worth USD 800 mn of which 500 mn was Iran’s share of importation from Saudi Arabia. Given the current geopolitical situation, hopes are high that restoring diplomatic ties may as well open the doors for further investments in Iran.
According to information provided by the Iranian customs spokesman on January 19, the majority of Iran’s exports to Saudi Arabia consist of iron and steel. Iran has also exported domestic products such as grapes, truck parts, and marble to Saudi Arabia. This was just before the Beijing summit, showing the interest for trade was already high before formalising any agreement.
While Saudi Arabia has shown green light for trade and collaborative investment with Iran, international statistics indicate a significant increase in this country’s investment in other countries. According to the most recent annual report of the United Nations Conference on Trade and Development, UNCTAD, Saudi Arabia invested approximately 24 billion dollars directly in foreign countries in 2021, a 380% increase from 2020. Considering Iran had no hand in attracting these investments, now, with the loosening of political ties, it can be an attractive investment destination for companies in Saudi Arabia.
Noting that Saudi Arabia is one of the only countries in the region with which Iran has not yet established a joint chamber of commerce, the chairman of the Iran Chamber of Commerce stated that the private sector has already taken steps to establish commercial relations with Saudi Arabia, and highlighte the importance of exchanging commercial delegations between the two countries.
Mollasadra Legal Institute has a long history of assisting international companies to set up and manage their businesses in Iran providing them with various legal services including corporate registration, tax advisory, civil and fiscal litigations. Reach out to us should you need an overview of Iran’s legal system, incentives for investment, risk management and tax incentives for foreign investors.
