Japan Pushes Towards Iran
Understanding Iran’s Complex Operating Environment
Japanese Prime Minister Shinzō Abe has publicly announced that he intends to visit Iran in August 2016. This is a significant statement for burgeoning Japan/Iran relations and is the first trip by a Japanese leader since the late Takeo Fukuda’s visit in September 1978. This mission follows Tehran’s guarantee of up to US$10 billion of Iranian investments by Japanese companies in conjunction with a bilateral investment treaty between the two countries in February 2016. In the official press release for this agreement Japan’s Ministry of Economy, Trade and Industry emphasised the “great potential” of Iran for Japanese investment.
The Attraction of Iran
Iran is the second largest economy in the Middle East and North Africa, after Saudi Arabia, and recent World Bank forecasts predict Iran’s economy will grow at a rate of 6% a year by 2018, which is almost twice the projected annual aggregate rate of developing countries.
With a population of approximately 78 million, Iran also has the second largest proven gas reserves in the world, as well as the fourth largest oil reserves and significant other natural resources. Urbanisation, modernisation and the country’s young demographic are creating burgeoning consumer demand, especially focusing on technological products.
Japan is especially well placed to capitalise on attractive investment opportunities in Iran given the history of positive relations between the two countries, even throughout the sanctions era. In contrast to the anti-western attitudes often expressed by Iranian politicians, Japan is viewed as a partner with whom Iran can easily do business with. In February 2016, Iran’s Economic and Finance Minister Ali Tayebnia commented that there have been no ‘black points’ in Iranian-Japanese relations.