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ich 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 13 according to the government of iran iran needs up to 300 billion in foreign direct investment to meet the objectives of its five year economic development plan 2010 2015 and reach eight percent economic growth rate 19 turning to vision 2025 the plan has set an investment target of 3 7 trillion within two decades 2005 2025 of which 1 3 trillion should be in the form of foreign investment 20 companies edit see also list of companies of iran and iran international exhibitions company the organization for investment economic and technical assistance of iran oietai is responsible for receiving and processing all foreign investment applications oietai is also responsible for approving overseas iranian investments in other words the organization is in charge of consolidating and implementing two way foreign investment flows according to iranian president rouhani cooperation with iran is on the condition that foreign companies participate in joint investments technology programs and exporting from iran 21 as at 2012 400 foreign companies are directly investing in iran 22 among developed nations the most active investors have been germans norwegian british french japanese russian south korean swedish and swiss companies the swedish svedala industri has played a major role in developing iran s copper mines since the late 1990s while tata steel of india has been investing in the steel sector the kia nissan peugeot and renault of france auto companies have licensing agreements with iranian auto manufacturers danone of france nestlé of switzerland and coca cola and pepsico of the united states have joint ventures with iranian companies totalenergies equinor shell gazprom and lg of south korea have been active in iran s natural gas industry iran s constitution prohibits direct concession of petroleum rights to foreign investors alcatel of france mtn group of south africa and siemens of germany gained major telecommunications contracts in 2004 and 2005 respectively 23 24 the international companies are drawn by what could become the largest market in the middle east with nearly 80 million people a majority of whom are under 30 well educated and tech savvy and by the country s energy potential iran has the fourth largest proven oil reserves and second largest proven gas reserves in the world the wall street journal july 2014 9 front men edit see also foreign agent in 2015 the economist and the wall street journal reported that american companies incl apple inc and hewlett packard are using local iranian front men to seal deals in iran in the oil and banking business some prime contracts have already been signed while iran is still under international sanctions 25 26 boeing microsoft siemens bp chevron gazprom eni samsung renault peugeot gm are also returning to iran 27 economic profile edit see also economy of iran iranian economic reform plan demography of iran education in iran science and technology in iran and international rankings of iran business environment edit see also iranian labor law taxation in iran banking in iran iran and wto middle east economic integration and sanctions against iran us dollar iranian rial historical exchange rates 2000 2013 according to united nations conference on trade and development iran ranked sixth globally in 2010 in attracting foreign investments 3 according to the head of the organisation for investment economic and technical assistance of iran oietai in 2008 iran ranked 142 among 181 countries in terms of working conditions last year iran stands 96 in terms of business start 165 in getting permits 147 in employment 147 in registering assets 84 in getting credits 164 in legal support for investments 104 in tax payment 142 in overseas trade 56 in feasibility of contracts and 107 in bankruptcy 28 iran is a member of the world bank s multilateral investment guarantee agency 29 iran ranks 69th out of 139 in global competitiveness report 1 iran has more than 50 signed bilateral investment treaties with other countries 30 investment readiness indicators edit because foreign direct investment in iran is affected not only by market size but also by sanctions currency volatility regulation infrastructure and capital mobility constraints some analysts use composite investment readiness indicators to evaluate the operating environment the iran investability index is a monthly 0 100 investability index that combines six dimensions domestic stability external security and geopolitical risk macroeconomic stability economic and regulatory freedom infrastructure and execution capacity and trade and financial connectivity 31 natural resources edit see also industry of iran energy in iran petroleum industry in iran mining in iran and agriculture in iran iran holds 10 of the world s proven oil reserves and 15 of its gas it is opec s second largest exporter and the world s fourth oil producer iran s industry and mining map iran is opec s second largest oil producer it has approximately 9 of world oil reserves some 94 billion barrels it has the second largest reserves of natural gas in the world at some 812 trillion cubic feet iran is considered an energy superpower iran also possesses enormous mineral resources including coal copper iron zinc and gold this has spawned a number of processing industries particularly steel iran is already the third largest producer of copper in the world competitive advantages edit see also labor force in iran tax advantages exemptions in iran transport in iran and communications in iran iran has made the development of non oil exports a priority the country has the advantage of a broad domestic industrial base technology an educated and motivated workforce cheap labor and energy resources and geographical location which gives it access to an estimated population of some 300 million people in caspian markets persian gulf states and countries further east 32 iran has the consumer potential of turkey the oil reserves of saudi arabia the natural gas reserves of russia and the mineral reserves of australia 33 iran s area roughly equals that of the united kingdom france spain and germany combined 34 iran has a diverse climate which makes it suitable for a wide range of agricultural products 35 laws concerning foreign companies edit see also constitution of the islamic republic of iran taxation of foreign companies in iran intellectual property in iran and list of economic laws in iran generally speaking iran has two types of laws concerning foreign companies the first are laws that address issues concerning foreign companies directly such as the foreign investment promotion and protection act fippa and the second are general laws of which certain articles or by laws address foreign companies for instance the taxation law and the labor law iran s environment is protected by strict laws and the department of the environment is in charge of evaluating the impact of the projects and their monitoring general laws and regulations regarding foreign business in iran could be regrouped under the following categories 36 contract work a foreign company is allowed to be involved in contractual work in iran such work may be performed either directly by the foreign company or through a registered branch in iran branch offices in iran do not have the separate legal status enjoyed by llcs and the parent company is responsible for the actions of the branch office 30 for legal and tax purposes opening a representative office in iran by itself is not considered foreign direct investment establishing and setting up a legal presence in the iranian market requires a local advisor who can provide a step by step advisory service regarding incorporation office rental recruitment staff business contracts customs and the laws in general 30 cms cameron mckenna is among the first major international law firms to open office in iran 37 direct sales most foreign companies are involved in direct sales to iranian customers through letters of credit and occasionally on the basis of usance investments in accordance with the terms of the foreign investment promotion and protection act fippa foreign companies may invest in newly established factories and industries foreign companies are allowed to own 100 per cent of the businesses 38 investment by natural persons of foreign nationality edit see also iranian citizens abroad in 2006 iranian citizens abroad s net worth was 1 3 trillion 39 in 2000 the iran press service reported that iranian expatriates had invested between 200 and 400 billion in the united states europe and china but almost nothing in iran 40 in dubai iranian expatriates have invested an estimated 200 billion 2006 41 according to the civil code foreign nationals will subject to the existence of a treaty on reciprocity enjoy the same rights and privileges of iranians the companies formed by such foreign nationals will be of iranian nationality and subject to the same laws which regulate the activities of iranian companies foreign investment in the framework of the commercial code edit see also foreign branch office taxation in iran and foreign capital and privatization in iran the iranian commercial code is divided into four parts merchant and trade activities trade companies negotiable instruments contracts and bankruptcy foreign nationals can in the framework of the commercial code and subject to the observance of the relevant procedures form and register companies in iran iran s commercial code does not differentiate between iranian and foreign stock holders of iranian companies in other words there is no restriction regarding the nationality of those who want to establish companies in iran in this context foreign exchange restrictions are equally applied to iranian and foreign investors such companies however do not enjoy the privileges set out in fippa see below company types edit see also list of legal entity types by country iran there are seven types of juridical entity or company which can be established under the iranian commercial code as follows 42 joint stock company may be either a public company sherkat sahami am or a private company sherkat sahami khass limited liability company llc sherkat ba masouliyat mahdoud general partnership sherkat tazamoni limited partnership sherkat mokhtalet gheyr sahami joint stock partnership sherkat mokhtalet sahami proportional liability partnership sherkat nesbi manufacturing consumer co operative sherkat ta avoni va masraf from among all these different types joint stock company in which the capital is divided by shares is the most common and acceptable type of company which can be recommended to foreign investors 43 fippa edit see also government of iran ministry of economic affairs and finance iran and tehran stock exchange provisions of the 2002 act entitled foreign investment promotion and protection act fippa include 36 allowing foreign investment in all sectors opened to iranian private companies a review of the definition of foreign investor to include iranian expatriates provided that their investment capital originates from abroad allowing repatriation of local sales related profits in addition to export related profits in hard currency at the current official exchange rate fair compensation in case of nationalization if an act of the government disrupts the business activity the government will be under obligation to make payments for any loan installments that are due on behalf of the project company fippa allows for international arbitration in legal disputes 44 there are two major arbitral institutions in iran the tehran regional arbitration centre trac and the arbitration centre of the tehran commercial chamber the establishment of a maximum 45 day period for the processing of individual foreign investment applications for the first time project financing schemes such as buy back agreements and bot projects only under an operator status are specifically covered under the foreign investment law 45 under the fippa any foreign natural or legal person importing capital in iran will enjoy the benefits and privileges of this law as long as the investment leads to economic growth promotes technology promotes quality of products increases employment opportunities increases exports and entering the international markets the investment does not jeopardize national security and public interests or harm the environment or interrupt national economy or disrupt products of domestic investments the investment does not involve the granting of any special rights resulting in a monopoly the value ratio of goods and services produced by aggregate of foreign investments does not exceed 25 in each economic sector and in each economic branch shall not exceed 35 fippa will be applicable based on the nationality of the foreign capital as opposed to the investor as long as the capital comes from foreign sources any one importing it will be eligible for fippa protection including iranians residing in iran or abroad starting in 2014 foreign investors who establish production lines in iran and export 30 percent of their products will be entitled to tax exemptions up to 50 46 47 potential approaches to the market edit see also foreign portfolio investment in iran licensing and franchising in iran venture capital in iran and technology start ups in iran first and foremost it is crucial to realize that iranian authorities insist on a long term commitment and a transfer of technology as a requisite for getting a share in the market foreign companies are therefore advised to adopt a medium to long term strategy for the iranian market iran will almost never honor the interests of a company that does not show long term commitment tenders are strictly required for government contracts for purchasing or projects these are rarely competitive breaking up contracts into smaller parts is a common practice to try to incorporate at least 30 of the contract s value in local capability and also to negotiate on specific prices currently there are three main routes that a foreign company can follow to establish a long term presence in iran joint ventures edit see also fdi in iran s automotive industry fdi in iran s construction industry fdi in iran s tourism industry fdi in iran s ict fdi in iran s mining industry fdi in iran s agriculture fdi in iran s railways fdi in iran s power generation industry and fdi in iran s healthcare industry one possible strategy is for the foreign company to enter into a joint venture agreement with a public or private iranian partner the existing level of technology and infrastructure makes many iranian companies suitable for expansion and development in conjunction with foreign companies many iranian companies especially those in the private sector are c...
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