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Foreign Investment In Iran

Foreign Investment In Iran

Foreign investment in Iran 

Opening Iran’s marketplace to foreign investment could be a boon to competitive multinational firms operating in a variety of manufacturing and service sectors.

Foreign Direct Investment in Iran increased by 876.90 USD Million in 2015. Foreign Direct Investment in Iran averaged 2323.56 USD Million from 1998 until 2015, reaching an all-time high of 4314.10 USD Million in 2011 and a record low of 15.60 USD Million in 1999.

According to the reports, Germany, China, Turkey, Austria, the UAE, and France were the biggest investors in Iran during the period under review.

Iran is also blessed with natural advantages. The country possesses the world’s largest natural gas and the fourth largest oil reserves. Although petrochemicals account for 80% of the country’s exports and around a third of government revenues, its economy is much more diversified than many of its regional counterparts.

Foreign investors have concentrated their activity in a few sectors of the economy. The most attractive industries for foreign investors in Iran were polymer and chemicals, steel, trade, motor vehicles, mining, plastic and medical devices. And Germany, China, Turkey, Austria, the UAE, and France were the biggest investors in Iran during the period under review.

Monopolistic and rent-seeking practices in Iran’s economy, plus corruption, weak economic indices, the government-run structure of the economy, lack of proper infrastructures for investment and lack of effective advertising, are the main challenges in the way of absorbing foreign investment.

Also, Iran has been described as the best emerging market for years to come. Despite its years of relative isolation, Iran remains the 18th largest economy whose productive capacity and consumer markets have huge potential.

Foreign investment in Iran 01

1- Foreign investment in Iran in recent years

 

At the moment Foreign direct investment in Iran (FDI) has been hindered by unfavorable or complex operating requirements and by international sanctions.

Foreign investment in Iran 02

2- Prediction of Investment Process in Iran

 

However, Iran attracted $24.95 billion in foreign investments from Sept. 23, 2013, to Sept. 22, 2017, the director general of the Ministry of Industries.

As per the Sixth Five-Year Development Plan (2017-22), the government needs to attract at least $50 billion annually in foreign investment (direct, finance or joint investment) to achieve an 8% economic growth.

Free-trade (FTZ) and special economic zones (SEZ) in Iran

Being located on the mainland, a Special Economic Zone (SEZ) is where business and trade laws differ from that of the rest of the country. To facilitate export and import in these areas, they have been exempted from country’s customs regulations. 

Advantages of Free-trade (FTZ) and special economic zones (SEZ) of Iran

  • 20 years tax-exemption
  • no entry visa requirement
  • 100% foreign ownership possible
  • flexible employment regulations
  • flexible monetary & banking services
  • Extended legal guarantees & protection

Table1- Special economic zones (SEZ)

Name

Authority in charge

Type

Location

Bushehr

 

Special economic zone

Bushehr

Lorestan

 

Special economic zone

 

Sirjan

 

Special economic zone

 

Sarakhs

 

Special economic zone

 

Payam

Payam Aviation

Special economic zone

Karaj

Salafchegan

Astan Quds Razavi

Special economic zone

 

Persian Gulf Mines and Metals

National Iranian Steel Company

Special economic zone

 

Persian Gulf Shipbuilding

ISOICO

Special economic zone

Bandar Abbas

Arge-e-Jadid

 

Special economic zone

 

PSEEZ 

NIOC

Special economic zone

Bushehr

Petrochemical Special Economic Zone

NIPC/Petzone

Special economic zone

Mahshahr

Shiraz Electric and Electronics

IDRO

Special economic zone

Shiraz

Yazd Textile Industries

 

Special economic zone

Yazd

Bandar Amirabad Behshahr

 

Special economic zone

 

Bandar Bushehr

 

Special economic zone

Bushehr

Shaheed Rajaee

Shaheed Rajaee Port Authority

Special economic zone

Bandar Abbas

 
 

Table 2- Free-trade (FTZ) zones

 

Established

Area

Location

Nearby Countries

International Borders

Kish

1989

91 sq km

Persian Gulf

GCC states

Gulf waterways

Qeshm

1990

480 sq km

Strait of Hormuz

GCC states

Gulf waterways

Chahbahar

1991

140 ha

Southeast

Pakistan, Oman, GCC

Oman Sea waterways

Aras

2003

97 sq km

Northwest

Azerbaijan, Armenia

Nakhchivan

Arvand

2004

173 sq km

Southwest

GCC states

Iraq & Kuwait

Anzali

2003

3200 ha

North (Caspian Sea)

CIS, Caucasus

 

 
Foreign investment in Iran 03
 

According to available figures, Bushehr Province and Khuzestan Province enjoy the highest volume of foreign investment which mostly goes for oil and gas sectors. In 2012, the provinces of Fars, Gilan, Tehran, Kerman, Mazandaran and West Azerbaijan ranked first to sixth place in attracting foreign investment in the country.

 

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