Iran continues to attract foreign investors despite pressure from US

Business Materials 10 September 2019 18:00 (UTC +04:00)

Tehran, Iran, Sept.10


The US withdrawal from the nuclear deal and the re-imposition of sanctions against Iran led to many European and Asian companies withdrawing from Iran's market.

However, attraction of foreign investment to Iran has not stopped. Private sector and the government in Iran continue their efforts to attract foreign investors.

The following report shows the statements of Iranian officials on foreign investments in various sectors of Iranian industry in talks with Trend since June.

Renewable energy industry

"While the domestic investor is not inclined to invest in renewable energy industry, a foreign investor is not interested to invest either," the former head of Iran's Electricity Industry Syndicate Alireza Kolahi said referring to foreign investment in the industry.

"The increase of foreign currency rate caused the rise of costs in renewable energy projects. The equipment for energy industry is affected by foreign currency rate, be it domestic production or imports,” he said.

"The costs of projects have suddenly tripled while the Ministry of Energy purchase guarantee rate has not increased and the projects have lost their economic justification," he said.

"The delayed payment of Ministry of Energy's debts is another issue that has affected the renewable energy industry therefore no serious investment has shaped in the industry, and we are far behind the world," he indicated.

Energy exchange

"Offering gasoline, diesel fuel, kerosene, liquefied petroleum gas (LPG) has started at the energy exchange. The offering of these products was successful and was welcomed by the clients," the managing director of Iran Energy Exchange (IRENEX) Ali Hosseini said.

"Gasoline, diesel fuel, LPG are fully for exports, while kerosene is for the domestic market," he said.

"The products are purchased for exports, by either Iranian or foreign companies. However, the companies are mostly local, who are aiming to export," he said.

Araz free economic zone

Iran's East Azerbaijan Province is to expand trade with the neighboring countries, while its exports to Azerbaijan and Turkey have already increased.

"In addition to trade ties with regional countries, the Araz free zone in East Azerbaijan Province has facilitated our economic trades with neighboring countries and fortunately our needs for imports of livestock and necessary goods has been provided via free zones," East Azerbaijan Province Governor Mohammadreza Pour-Mohammadi told Trend.

"Iran has imported meat and livestock feed such as corn and soy, alongside sugar from the Commonwealth of Independent States (CIS) via East Azerbaijan Province," he said.

"We import major part of our needs from Turkey and Azerbaijan and have good amount of exports to these countries as well," he indicated.

Trade exchanges

Iran and Belarus have agreed to barter oil in exchange for goods, alongside future bilateral cooperators and joint investments, said the member of Tehran Chamber of Commerce Mohammad Reza Najafi Manesh.

“During the visit to Belarus in July, some of the companies' representatives expressed willingness to barter goods in exchange for oil, and the idea was voiced to the Iranian Embassy in Belarus so it would be done," he noted.

"The Belarusian side has expressed willingness to invest in Iran, in some fields, but this requires more talks," he added.

"Among the mentioned sectors was the auto sector. Belarus is ready to jointly invest with us," he said.

"The general result of the meeting was bartering goods in exchange of oil, joint investments of Belarusians in Iran and joint investment of Iranians in Belarus, purchase of goods from Iran," he said.

Maritime tourism

Iran is negotiating with Azerbaijan and Turkey to expand maritime tourism however the US sanctions against Iran and its vessels is one of the main obstacles in expanding tourism in the Caspian Sea.

"Expansion of maritime tourism is approachable by use of the Persian Gulf coasts and commercializing the Caspian Sea by setting up tours," Masoud Shirinkalam, the secretary of tourism commission at Iran Chamber of Commerce, told Trend.

"Considering the sanctions, we should find investors that are willing to cooperate with local officials here," he said.

"Iran has negotiated with several Turkish investors, but without any results. We've also held talks with Azerbaijan and maritime experts in Baku. We've considered the high costs of renting and buying ships, but nothing has been decided upon this far," he explained.

"We have not negotiated with Russia, Turkmenistan, Kazakhstan so far," he indicated.

"We have held talks with Turkey and Azerbaijan and they are inclined to expand the tourism ties but the sanctions against vessels have delayed the working procedures. Turkey has responded positively to Iran, however it has delayed sending investors to Iran and start the work," he said.

Chabahar port

Oman's investment in the Chabahar in Iran will bring advantages for both countries, and improve the cargo transit to other regional countries.

"Oman can use Chabahar capacities for cargo transit from Central Asia and different regions. Chabahar has the possibility to package and send out goods to Oman and is more competitive comparing to other routes," Gholamreza Panah, Deputy of Economic and Investment Affairs in Chabahar Free Zone Organization, told Trend.

"Omani investment in Chabahar would lead to proper connection between Iran and Omani businessmen and investors, the economic link creates jobs, revenues," he said.

India is another country that is in talks with Iran to use the possibilities of the Chabahar port, regarding the investments in petrochemical sector at the port.

"The Indian ambassador in Iran has visited infrastructures and facilities in Chabahar during his first trip to the region, and was interested in encouraging Indian investors to be active in this zone," Managing Director of Chabahr Free Zone Abdolrahim Kordi told Trend.

"We have introduced the incentives and advances of investment in the Chabahr Free Zone to the Indian ambassador and hopefully his presence in Iran would help move the matters forward," he indicated.

Investment in Chabahar is not exclusive to one country, and Iran is ready to expand its potential in cooperation with other countries, deputy head of economic and investment at Chabahar Free Zone Gholamreza Panah told Trend.

"Chabahar is a vital route, it can connect countries that have no connection to open waters and it has great potential in Iran's economy," he said.

"While we have a contract with India, we have also signed a memorandum of understanding with China for the establishment of a giant petrochemical park,” he noted.

“Therefore we are ready to use the potential of expanding our ties with any country including India, China or even Japan," he added.

Transit (Maku Free Zone)

Iran plans to transform its Bazargan border city into a dry port, and link it with Turkey's Mersin and Trabzon, for transit purposes.

"Connecting railroads between Iran and Turkey and further to Europe is being studied and its related work is being finalized. So, if completed, the Maku Free Zone will have a very powerful role in the International North–South Transport Corridor," Ebrahim Jalili, Deputy of Economy and Investment of Maku Free Zone Organization told Trend.

"Considering the foreign currency fluctuation and various statements by the Customs, the investors were hesitant since there was no transparent idea of how to do business. The investing was difficult. Fortunately, the the current situation, Maku has started to attract good investors via its investing advantanges," he said.

Trade and exchange

While Afghan investors and businessmen can obtain Iranian citizenship by investing $200,000 in the country's projects, but they prefer Turkey to Iran, said head of food industry in Iran Chamber of Commerce Ali Shariati.

“Foreign businessmen that are connected to us, have left when there was problem in financial transaction, so they invested in housing and business in Turkey,” he noted.

"Afghan businessmen have told me that Iran has been silenced in terms of trade, so it's not possible to work with the country,” he said.

Oil and gas

Iran seeks to launch an extraction plan from the oil fields in Ilam province with cooperation of Russian contractors, the deputy governor of Ilam Province Ahmad Karami told Trend.

"It has been expected that new oil and gas contracts will be signed by cooperation of a foreign company to extract oil, and the contractors of this plan are Russians," he said.

Persian Gulf Special Economic Industrial and Mining Zone

It has been predicted that around $70million will be invested in Persian Gulf Special Economic Industrial and Mining Zone (PGSEZ) in the current Iranian year (started March 21 , 2019), PGSEZ Managing Director Hassan Khalaj Tehrani told Trend.

"A French company has invested a total of $50 million in the Persian Gulf Special Economic Zone," said Tehrani.

"The investment volume here in 2018 included $55 million of foreign and $5.5 million of domestic investments. It has been predicted that some $70 million of foreign investment will be invested in the current year,” he said.

"In this regard, a French company has purchased a factory in the PGSEZ ($50 million worth of investment), while we are negotiating with a foreign investor and there have been good development so far", he said.