Country PESTEL Analysis: Iran

Despite political and economic ups and downs and uncertainties IRAN remains one of the Middle East top countries when it comes to the growth potential. With largest young population IRAN is considered one of the best export markets in the region.

POLITICAL:

• Unique factor is that it is religious and Islamic.
• The political system of Islamic republic is based on 1979 constitution. Accordingly it is duty of Islamic government to furnish all citizens with equal and appropriate opportunities.
• The white revolution which is a step taken with a view to strengthening the foundation of the despotic regime and to maintain the economic links.
• The tax environment for foreign businesses is highly risky.
• The corporate tax rate has been lowered to a flat 25% from the previous maximum of about 60.
• The fiscal year starts on March 21 and ends on March 20 of other year.

TYPES OF TAX

1. Income tax
2. Islamic taxes
3. Real estate taxes
4. Capital gain tax
5. Indirect taxes

ECONOMICAL FACTORS:

Inflation rate for IRAN is 13.50% for year 2010 while in 2009 it was 25.60%.

It is transition economy with large public sector and estimated 50% of economy centrally planned. A unique feature is the large size of religious foundations whose combined budget makes up more than 30% of central government.

Unemployment rate is 11.80%. According to official estimates some 3.5 million working age Iranians are currently unemployed. The jobless rate is high among women and youth of Islamic republic.

GDP- real growth rate is 1.50%. GDP per capita is $ 4732.

It is 18th largest economy purchasing power parity.

Iran’s non-oil exports, excluding gas condensates to the Gulf Cooperation Council [GCC] were valued at $2.281 billion during the first 9 months of the current Iranian calendar year (March-December, 2010), showing 25 percent over the same period last year.

The economic growth prospect for IRAN in 2011 is 3.2%. Prospects for both developing and high income economies of Middle East and North Africa should improve through 2011.

Oil prices are expected to remain broadly stable over the forecast period, at around $75 a barrel. Strong global activity is allowing crude oil to return positive growth. Oil prices are expected to remain stable over forecast period at $75 per barrel.

GDP growth for developing oil exporters should reach 3.1 and 3.7 percent, respectively, in 2010 and 2011.

Basic statistics and population

Physical areas:

Area of the country – 164 800 000 ha

Cultivable area – 51 000 000 ha

Annual crops – 12 106 644 ha

Permanent crops – 1 686 619 ha

Population:

Total population – 60 050 000 inhabitants

Population density – 36.4 inhab./km²

Rural population – 38.3 %

Water supply coverage:

Urban population 95 %

Rural population 86 %

EXPORTS in IRAN 

Below are the top 10 U.S. exports to Iran during the first 5 months of 2010.

Soybeans … $50.3 million, up 3.2% from 2009 (54.7% of total)

Chemical wood pulp … $11.4 million, up 87.7% (12.4%)

Other acrylic polymers … $4.5 million, down 21.1% (4.9%)

Other blood fractions … $3.6 million, down 38.4% (3.9%)

Bovine semen … $3.4 million, up 90.9% (3.7%)

Multiple vitamins … $2 million, down 33.3% (2.2%)

Patient monitoring systems … $1.5 million, up 93.5% (1.7%)

Other vitamins including natural concentrates … $1.49 million, up from nil in 2009 (1.6%)

Insulin and its salts … $1.4 million, up from nil (1.5%)

Heparin and its salts … $1.1 million, down 81.3% (1.2%).

Mostly agricultural and medical items, the top U.S. exports above represent 87.9% of all American shipments to Iran.

IMPORTS in IRAN

U.S. imports from Iran amounted to $29.6 million during the first 5 months of 2010, up 3.2% from 2009.

Hand-hooked carpets of wool or fine animal hair … U.S.$16.9 million, up 8.2% (61.7% of total)

Berry juice … $4 million, up 10,757% (13.5%)

Shelled pistachios … $1.3 million, up 148.8% (4.4%)

Ancient antiques … 1.2 million, down 72.9% (4.1%)

Untufted or unflocked man-made fiber carpets … $805,000 up 520.8% (2.7%)

Hand-knotted textile carpets … $612,000 down 67.4% (2.1%)

Hand-woven wool carpets … $402,000 down 11.2% (1.4%)

Fresh or dried figs … $300,000 up 418% (1%)

Hand-inserted pile carpets of wool or fine animal hair … $274,000 up 1,543% (0.9%)

Saffron … $270,000 up 69.4% (0.9%).

The above products represent 92.7% of all Iranian imports into the United States so far in 2010.

Iranian carpets remain among the most popular imported items from Iran.

SOCIAL FACTORS

Government and people are not working together. Chances are much that Taliban is able to strengthen the base.

 The nuclear laboratory that is functional here is also a cause of big tension.

Obama administration is making the other countries of the world to also bring their attention towards Iran and come out with the ways in which it could be subjected to rebuilding its view towards Iran. 

In Iran, the family is the basis of the social structure. 

The concept of family is more private than in many other cultures. Female relatives must be protected from outside influences and are taken care of at all times. It is inappropriate to ask questions about an Iranian’s wife or other female relatives. 

Loyalty to the family comes before other social relationship, even business.

Iranians see themselves as having two distinct identities: “zaher” (public) and “batin” (private).

 When they are in public, they must conform to accepted modes of behaviour. It is only within their homes among their inner circle that they feel free to be themselves. Family members are always part of the inner circle. 

The inner circle forms the basis of a person’s social and business network. Friendship is very important and extends into business. The people from the inner circle can be relied upon to: offer advice, help find a job, or cut through bureaucracy.

HEALTH AND WELFARE

Health conditions have been improved after World War 2. Many of the disease such as small pox, cholera have been wiped out.

Public hospitals are there which provides treatment to the poor.

All health services are supervised by ministry of health, Treatment and medical education.

TECHNOLOGICAL FACTORS

Nanotechnology in fields helping to make best quality products at lower cost.

IT companies collaborating to access the market.

Inventions and innovation rate.

Mechanization trend in the country.

Iran’s apparently clandestine efforts to build a nuclear weapons program are a major foreign policy challenge for the Obama administration.

ENVIRONMENTAL FACTORS

Vehicles emissions, refinery operations, industrial effluents which contribute to por air quality.

Most cars here use leaded gas and lack emission control equipment.

Buses and cars running on natural gas are planned to replace the existing public transportation fleet in nature.

Iran is suffering from overgrazing and deforestation. Wet land and bodies of fresh water are being destroyed as industries are increasing.

It contends that the international rush to develop oil and gas reserves in the Caspian Sea presents that region with a new set of environmental threats.

To evaluate the prevalence of overweight and obesity among Iranian adolescents and their relationship with modifiable environmental factors.

POTENTIAL SOURCES USING PORTER

IRAN first nuclear power which has born after many years. Russia is helping IRAN for launching nuclear power.

Iran is already an irritant and potential source of crisis in Turkish-American relations. Ankara has significant economic ties and energy contracts with Tehran. The total trade volume between the two countries is $10 billion and expected to double in the next three years — given Turkey’s growing need for natural gas and willingness to lessen its dependence on Russia.

With continued Israeli threats to attack Iran’s nuclear program Iran has a right to defend its skies against attackers. Iran has signed an arms deal with the Russian Roso boron export arms group to buy 250 Su-30 MKM warplanes and 20 Il-78 MKI aerial tankers.

THREATS

The US is dispatching Patriot defensive missiles to four countries – Qatar, united Arab, Bahrain and Kuwait – and keeping two ships in the Gulf capable of shooting down Iranian missiles.

ANALYSIS

IRAN is one of the few major economies that have kept positive growth despite 2009 global financial crisis and international sanctions relating to nuclear power. Distortion resulting from combination of price control and subsidies particularly on food and energy continues to weigh down the economy. There is wide spread corruption relating to private growth. High oil prices this year have enabled IRAN to amass US$100 billion in foreign exchange reserves. But there is still double digit unemployment and inflation in economy.

GDP growth for developing oil exporters reached 3.1 and 3.7 percent, respectively, in 2010 and 2011.

BIBLOGRAPHY

http://www.payvand.com/news/10/jan/1220.html

http://www.indexmundi.com/iran/gdp_real_growth_rate.html

http://www.cbsnews.com/stories/2010/07/01/world/main6639202.shtml

http://en.wikipedia.org/wiki/File:DemoIR.JPG

http://en.wikipedia.org/wiki/File:Iraneco.PNG

http://en.wikipedia.org/wiki/Iran

http://analysis.newsvine.com/

http://en.wikipedia.org/wiki/History_of_the_Islamic_Republic_of_Iran