This text is extracted from the educational podcast of Mr. Shabani, the chairman of the board at Arad Branding.
In the name of Allah, the Most Gracious, the Most Merciful.
Greetings and good time to all esteemed economic actors.
I hope you are well.
You often hear a proposed model in sessions, usually from developing countries.
In the context of development, a country is described as having less-than-ideal economic conditions but is in a growth phase.
There are certain parameters aiding this growth.
For developing countries, attracting investors is appealing as it injects funds into their economy, accelerating their growth rate.
In general, developing nations favor technology transfer and establishing local production lines for two main reasons:
1) Job Creation: It addresses unemployment issues by generating employment opportunities.
2) Value Addition: It brings added value to their products, reducing reliance on raw exports.
This results in increased final product output, contributing to their economic growth.
During discussions with individuals and traders from these countries, they often propose collaboration initiatives.
For instance, when discussing machinery or medical products, they might suggest local production and technology transfer, emphasizing mutual participation.
Countries such as Syria and Yemen, amid conflict, as well as various African nations, actively welcome and promote such initiatives.
You seldom hear such statements from Europeans because they are aware of their country's laws and regulations, however, Africans often express these ideas, urging you to enter their country.
A few days ago, we spoke with friends from Mali and West Africa who were government representatives, inviting us to their countries to engage in production.
I'd like to elicit your response to such proposals.
Firstly, it's essential to note that these offers aren't necessarily attractive.
The suggestion to go and produce in their country may not align with Arad's mindset and decisions, as our primary goal is to boost our own country's economy.
If we decide to invest, we prefer doing it domestically.
Secondly, there are a series of advantages in Iran that other countries do not have, so going there and producing may not be attractive for us at first glance.
Now, let's assume you want to evaluate, respond, or possibly reject the proposal logically.
If they offered to produce a specific product, start by assessing whether it makes sense to produce it there.
For instance, imagine an African country without crude oil proposing to establish a mini-refinery for bitumen production.
You would evaluate whether transporting crude oil from Iran to their country for production and converting it to bitumen is economically viable compared to producing and transporting bitumen from Iran.
The first consideration is whether this move makes economic sense.
After assessing this, an economic analysis is necessary.
What does economic analysis mean?
What are your duties and what are the duties of your counterparty?
I will give an example.
You may talk to a tax official who tells you that you will not be taxed for eight years, no matter what goods, raw materials and equipment you import for this production, there is no customs tariff.
For example, our country gives you land for free, this country gives you a series of options like these.
For example, the government of Senegal may say that I will give you a series of interest-free loans for construction.
You should definitely ask for a few things from your other side.
First of all, security: life security and financial security, these two things must be guaranteed by your other party, not by a single person, but by the government of that country, that is, if you are going to produce something in Algeria, for example, you must contact the embassy, the government and have the government of that country confirm that they will give you life and financial guarantee.
After they have guaranteed these, they should tell you what options they will give you.
That is, for example, they tell you to produce medical goods here, and we promise you that we will not import any more.
Secondly, they give you this guarantee that no one but you produces.
So after giving security, they should tell what their options are.
Do they give tax exemption?
Do they give free land?
They give you a portion of the money to build and that infrastructure?
For example, now the UAE government says that I will pay up to 90% of the cost of setting up the factory.
Why does it do this?
I said because it is a country that is developing or wants to become bigger and wants to encourage economic activists to enter their country.
So it is quite natural for them to give options, these are the options they give you.
You should check the options completely and know one thing that you are not going to make a decision within one meeting, five meetings or ten meetings.
At least, this issue should be investigated for several months and then a decision should be made.
For example, when assessing the political situation in Mali, you realize that having an interim government with the possibility of contracts being voided by subsequent administrations makes contract negotiation risky.
In contrast, a country like Senegal, with a president in office for a specified term, offers more stability for contract agreements.
When entering into agreements with countries like Russia, where the leader's tenure is relatively predictable, you have a clearer understanding of the timeframe.
However, engaging with someone in a politically volatile country like Nigeria, where daily upheavals occur, poses uncertainty.
These were the duties of your counterpart and what should be your duty?
Your primary responsibility in such negotiations is to focus on knowledge transfer rather than relying solely on financial gains.
You should emphasize sharing expertise and capabilities, fostering the best collaborative model after contributing your knowledge.
But they may also ask you, for example, for machines and production lines, and you have come to the conclusion in that this work is cost-effective, that is, for example, you can say that I will enter Kenya and cover East and Central Africa, and this is for me, It is economical.
So, in general, see the proposal of participation in this way.
With this situation, try to only discuss knowledge transfer on your side and financial discussions on the side of the other party.
If you decide to do money work and invest financial capital, be sure to check its security and then decide to cooperate or not to cooperate based on them.
This process requires expertise, consultation, and a cautious approach.
Don't rush into decisions, and if you proceed, avoid hasty implementations.
Wishing you success and divine protection.
0
0