Iran nuclear deal brings hope to regional IT
Will the recently landmark deal between the six major powers and Iran be a game changer to the regional IT channel?
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After a historic nuclear deal between Iran and six major world powers, the Dubai Computer Group (DCG), has hailed the development as positive, but urged its members to wait for guidelines on when they can resume trading officially with IT companies in that country.
The deal, clinched last month, capped more than a decade of negotiations with an agreement that pundits say could transform the Middle East.
Reaching the deal did not bury the controversy of one of the most bitterly contested diplomatic issues between Iran and western powers, but the EU called it a “sign of hope for the entire world”.
Under the accord, sanctions imposed by the US, EU and UN will be lifted in return for Iran agreeing long-term curbs on a nuclear programme that the West has suspected was aimed at creating a nuclear bomb.
Over the past decade, Iran has suffered from a number of economic and political shocks, including sanctions, protests and a fall in oil prices all of which have hurt economic growth, driven up inflation and damaged the financial sector.
Iran’s approximately $400bn economy is operating well below its potential and this agreement should help to support a gradual revival in the country’s economy.
“The agreement is a major boost to the Dubai IT channel and certainly the UAE economy as a whole because Iran is an important trade partner,” said Shailendra Rughwani, president, Dubai Computer Group and MD, Experts Computer Group.
“We had been monitoring these negotiations closely and as soon as the announcement was made that a deal had been clinched, we called for a meeting with our members to urge caution, as officially, the trade embargo and financial sanctions are still in place.”
Rughwani said as IT sales in the past two months have been sluggish not just locally but at a regional level, news on a deal that would lift the ban on trading with Iran will encourage the local channel, especially those involved in the regional IT trade.
He added that the DCG is confident this development will help to improve the business climate in the months ahead.
“We are in contact with all our members and have already issued a statement advising them to wait until they receive an official announcement from the vendors on when they can start supplying IT products and solutions to Iran,” he said.
“We will confirm with all our principal IT vendors with whom we have a commitment, on when DCG members can start trading with IT companies in Iran. For now, we are urging our members to start preparing and be ready to move once the market opens.”
The Iran IT market is not likely to open for regional trade any time soon because of the need to ratify the deal and verify its implementation.
Hesham Tantawi, vice president, Asbis Middle East, and board member at Dubai Computer Group, said while the nuclear deal is a step in the right direction, Dubai-based resellers will have to wait until official guidelines are announced before resuming trade.
“Unless the ban on banks is lifted, it will be extremely difficult for anyone to do trade with IT partners based in Iran,” he said.
“We are not expecting much growth in the regional channel in the second half this year. This is because the market has been shrinking and compounded by declining PC sales.”
Tantawi explained that channel partners in the Middle East are still doing business on a seasonality basis rather than cultivating new markets and sustaining their growth based on expertise and understanding of those markets.
Dr Ali Baghdadi, president and CEO, Ingram Micro MEA, said although the permanent members of the UN Security Council plus Germany, the EU and Iran agreed on the final text of a Joint Comprehensive Plan of Action (JCPOA) that will provide Iran with phased sanctions relief in exchange for Iran implementing certain nuclear-related commitments, it is yet unclear as to which product categories will be lifted as there is a gradual removal.
Baghdadi said the Dubai IT channel will benefit, however, partners shouldn’t rush but take expert advice on what products can be sold, when they can be sold and who they can be sold to. “Certain individuals will not be removed from the restricted party lists and selling to them can result in criminal prosecution. Our compliance department can provide advice to partners,” Baghdadi added.
Meera Kaul, CEO, Optimus Technology and Telecoms, pointed out that this is a big opportunity for the regional channel. Kaul added with the sanctions being lifted, a whole $400bn plus Iranian economy could open up for regional businesses not just in IT. “This is not only a game changer, but also opens up access to educated and talented human resources from Iran,” she said. “The opportunities are immense. Iranians are a major resident population of the UAE already and traditional ties to the UAE are extremely strong. There is no reason why Dubai could be the largest benefactor of the demand of the Iranian economy.”