Re-establishing Relationships
In preparation for the end of economic sanctions on Iran in the first half of next year, domestic firms are accelerating the local market invasion. This is because the country will order many projects to build massive infrastructure and plant projects when the sanctions are lifted, and its consumption market will recover.
According to KOTRA and industry sources on Oct. 19, domestic companies, mainly construction and general trading firms, are actively re-establishing their branch offices in Teheran, the capital of Iran. Some of them are also increasing the workforce in the headquarters for business in Iran.
Construction and engineering companies, which have the ability for design engineering, procurement and construction (EPC), are most enthusiastic. Once the sanctions are lifted, the Iranian government will place orders worth US$160 billion (179.76 trillion won) for the construction of gas refinery plants and power plants.
Hyundai Engineering & Construction (E&C) has started its activities to win orders after reopening its office in Teheran this month. The company, which carried out the South Pars Gas Field development project in Iran in the past, closed down its subsidiary after the imposition of sanctions against the country. However, it has recently increased the workforce related to orders in Iran. An official from Hyundai E&C said, “We are planning to send out more workers to Iran, including the regional director.” Also, Hyundai Engineering has recently established its branch office and sent its employees.
Trading firms also got busy. They are expecting to see more business opportunities not only in trading raw materials, but also project organizing.
GS Global, which closed down its local office in 2006, is currently going through the licensing procedure for branch establishment, and expecting to receive approval within the year. The company is aiming at the plant construction organizing business, along with its subsidiaries, GS Engineering & Construction and GS Entec.
SK Networks, which used to trade raw materials in Iran, has also increased the number of workers at the branch office, while Daewoo International and LG International are strengthening the monitoring systems.
Trade to Iran reached US$17.4 billion (19.55 trillion) in 2011 but it fell sharply every year after the imposition of sanctions. Accordingly the figure stood at US$8.7 billion (9.77 trillion won) last year.