Abu Dhabi: Business between the UAE and Iran is yet to pick up despite lifting of sanctions on the Islamic republic earlier this year, experts and Iranian Business Council in Dubai said.
“Things have not changed much as primary sanctions still remain and banks in the UAE are reluctant to deal with the Iranians or companies which have Iranian partners for fear of being penalised for violating sanctions related regulations,” said Hussain Asrar Haghighi, executive vice president of the Iranian Business Council in Dubai, told Gulf News.
In January this year, world powers removed sanctions on Iran in return for the country’s cooperation in curbing its nuclear ambitions.
The country could increase its oil exports post sanctions and placed orders to buy news aeroplanes but could not attract big investment in the country to boost its economy because of the banking restrictions.
US Secretary of State John Kerry has reiterated Washington’s commitment to its sanctions relief obligations to Iran under last year’s nuclear agreement and urged banks to do business with the Islamic republic in a meeting with Iranian Foreign Minister Mohammad Javad Zarif last week.
“It takes time because financial organisations needed time to recover from the hefty penalties they got earlier and many sanctions still remain in place specially doing trade in dollars,” added Haghighi.
Waheed Rathore, Chief Compliance Officer at Abu Dhabi Commercial Bank, said the market has not progressed as fast as expected to really go aggressive and grab the opportunity in Iran after lifting of sanctions.
“Some business has started happening post sanctions specially small value transactions which are doable without a risk. The real change will happen when the primary sanctions go away which means the US origin goods, US person engagement and the dollar transactions become permissible, you will really see lot more business happening.”
Meanwhile, companies in the UAE are waiting for banking procedures to be more clearer before investing in Iran. Indian Business and Professional Council (IBPC) in Dubai said there is a lot of interest among business community to invest in Iran.
“It may take some time before investment moves into Iran. People are very positive about developments in the country,” said Kulwant Singh, President of IBPC.
Lulu Group, which is rapidly expanding in the Middle East, Far East and India, said they don’t have any plans to open stores in Iran.
“Our main priority at the moment is Saudi Arabia, far east and India. Iran is not our priority,” said a spokesperson for Lulu Group.
Apparel Group, the Dubai-based retail conglomerate has plans to enter Iran but would wait till the market opens up, Nilesh Ved, Chairman of the Group told Gulf News in February.
According to Raid Madiyeh, Senior Sales Trader at Saxo Bank, banks fear the possibility that US sanctions could snap back if Iran violates the nuclear deal.
“The US has suspended sanctions under the terms of the nuclear agreement that Washington and other world powers negotiated with Iran last year. However, the US still considers Iran a state sponsor of terrorism and says it routinely violates the rights of its citizens,” said Madiyeh.
“So there are still some US economic sanctions in place over these issues, which are separate from the nuclear deal.”
Rotana to expand in Iran
Rotana, on the other hand announced that they are set to open new hotels in Iran in the coming years. According to the company, it was the first hotel management company to announce its expansion plans in the Iranian market, after signing the management agreement in March 2013 for four properties currently under development, all of which will be opened under the company’s alcohol-free brand Rayhaan Hotels & Resorts by Rotana.
The first two hotels are set to open in the city of Mashhad — a 362 room hotel in 2017 followed by a 275 room hotel in 2018. In Tehran, Rotana will launch two further Rayhaan properties by 2018 — a 5-star hotel will house 194 rooms and a 4-star hotel will include 210 rooms.
“With the lifting of sanctions, we are sure that all developers and operators will be racing to secure their position in one of the world’s largest untapped markets,” said Omer Kaddouri, President & CEO of Rotana in a statement to Gulf News.