Foreign Direct Investment in Iran - AbsoluteAstronomy.com

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

Sanctions against Iran

This article outlines economic, trade, scientific and military sanctions against Iran, which have been imposed by the U.S. government, or under U.S. pressure by the international community through the United Nations Security Council...

, although in the early 2000s the Iranian government liberalized

Liberalization

In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. In some contexts this process or concept is often, but not always, referred to as deregulation...

investment regulations. Iran ranks 62nd in the World Economic Forum

World Economic Forum

The World Economic Forum is a Swiss non-profit foundation, based in Cologny, Geneva, best known for its annual meeting in Davos, a mountain resort in Graubünden, in the eastern Alps region of Switzerland....

's 2011 analysis of the global competitiveness of 142 countries

Global Competitiveness Report

The Global Competitiveness Report is a yearly report published by the World Economic Forum. The first report was released in 1979. The 2011–2012 report covers 142 major and emerging economies....

. Iran ranked sixth globally in 2010 in attracting foreign investments.

Foreign investors have concentrated their activity in a few sectors of the economy: the oil and gas industries, vehicle manufacture, copper

Copper

Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...

mining

Mining

Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...

, petrochemicals, foods, and pharmaceuticals. Iran absorbed US$24.3 billion of foreign investment from 1993 to 2007 (& US$34.6 billion for 485 projects from 1992 to 2009).

In the 1990s and early 2000s, some indirect oilfield development agreements were made with foreign firms. Buyback contracts in the oil sector, for instance, were arranged in which the contractor funded all the investments, and then received remuneration from the National Iranian Oil Company

National Iranian Oil Company

The National Iranian Oil Company , a government-owned corporation under the direction of the Ministry of Petroleum of Iran, is an oil and natural gas producer and distributor headquartered in Tehran. It was established in 1948...

(NIOC) in the form of an allocated production share, then transferred operation of the field to NIOC after a set number of years, at which time the contract was completed.

Countries

Firms from over 50 countries have invested in Iran in the past 16 years (1992–2008), with Asia and Europe receiving the largest share, as follows:

Continent of origin	Leading countries investing in Iran (1992–2008)	Number of projects	Total amount invested
Asia	United Arab Emirates (UAE), Singapore, Indonesia and Oman	190	$11.6 billion
Europe	Germany, the Netherlands, Spain, UK, Turkey, Italy and France (20 countries in total)	253	$10.9 billion
Americas	Canada, Panama, the USA and Jamaica	7	$1.4 billion
Africa	Mauritius, Liberia and South Africa		$8 billion
Australia	Australia	1	$682 million

Sectors

As of 2007, Asian entrepreneurs made the largest investments in the Islamic state by investing in 40 out of 80 projects funded by foreigners. The largest amount of foreign investment was in the industrial sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, steel and oil derivates. The figure exceeded US$8.76 billion. Water, electricity and gas sector ranked second, attracting $874.83 million. In the third place, the real estate sector absorbed more than $406 million. Investments in service, telecommunication, transportation and mines reached $193 million, $14.3 million and $14.2 million respectively. Asian countries invested $7.666 billion in various projects followed by several multinational

Multinational corporation

A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...

consortia. Investments by these multinational companies exceeded $1.39 billion (in four projects). Although European entrepreneurs were involved in 34 projects, they invested only in the range of $1.2 billion in the Islamic Republic. American countries also committed $12.329 million in the country; while investments by African states registered close to $4 million.

Amounts

Foreign investment hit a record $10.2 billion in the Iranian year

Iranian calendar

The Iranian calendars or sometimes called Persian calendars are a succession of calendars invented or used for over two millennia in Greater Iran...

2007 from $4.2 billion in 2005 and $2 million in 1994. Net FDI inflows amounted to $901 million in 2008. Iran attracted $1.6 billion in direct investments from abroad in 2008, $3 billion in 2009 (ranking sixth worldwide in terms of annual growth) and $3.6 billion in 2010 despite a general decline in FDI in a majority of other world countries . Turning to "Vision 2025", the plan has set an investment target of $3.7 trillion within two decades of which $1.3 trillion should be in the form of foreign investment. The EIU

Economist Intelligence Unit

The Economist Intelligence Unit is part of the Economist Group.It is a research and advisory company providing country, industry and management analysis worldwide and incorporates the former Business International Corporation, a U.S. company acquired by the parent organization in 1986...

estimates that Iran's net FDI will rise by 100 per cent within the next four years.

Companies

Among developed nations, the most active investors have been Germans

Germany

Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

, Norwegian

Norway

Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...

, British

United Kingdom

The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

, French

France

The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

, Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

ese, Russia

Russia

Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...

n, South Korea

South Korea

The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...

n, Swedish

Sweden

Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....

, 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

Tata Steel

Tata Steel is a multinational steel company headquartered in Jamshedpur, India and part of Tata Group. It is the world's seventh-largest steel company, with an annual crude steel capacity of 31 million tonnes, and the largest private-sector steel company in India measured by domestic production...

of India

India

India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...

has been investing in the steel sector. The Kia

Kia Motors

Kia Motors , headquartered in Seoul, is South Korea's second-largest automobile manufacturer, following the Hyundai Motor Company, with sales of over 1.4 million vehicles in 2010...

, Nissan, Peugeot

Peugeot

Peugeot is a major French car brand, part of PSA Peugeot Citroën, the second largest carmaker based in Europe.The family business that precedes the current Peugeot company was founded in 1810, and manufactured coffee mills and bicycles. On 20 November 1858, Emile Peugeot applied for the lion...

, and Renault

Renault

Renault S.A. is a French automaker producing cars, vans, and in the past, autorail vehicles, trucks, tractors, vans and also buses/coaches. Its alliance with Nissan makes it the world's third largest automaker...

auto companies have licensing agreements with Iranian auto manufacturers. Nestlé

Nestlé

Nestlé S.A. is the world's largest food and nutrition company. Founded and headquartered in Vevey, Switzerland, Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, established in 1867 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri...

of Switzerland

Switzerland

Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

and Coca-Cola

Coca-Cola

Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke...

and Pepsi-Cola of the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

have joint ventures with Iranian companies. Total

Total S.A.

Total S.A. is a French multinational oil company and one of the six "Supermajor" oil companies in the world.Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and...

, Statoil

Statoil

Statoil ASA is a Norwegian petroleum company established in 1972. It merged with Norsk Hydro in 2007 and was known as StatoilHydro until 2009, when the name was changed back to Statoil ASA. The brand Statoil was retained as a chain of fuel stations owned by StatoilHydro...

, Shell

Shell Canada

Shell Canada Limited is the subsidiary of Dutch-based Royal Dutch Shell and one of Canada's largest integrated oil companies. Exploration and production of oil, natural gas and sulphur is a major part of its business, as well as the marketing of gasoline and related products through the company's...

, Gasprom, and Lucky Goldstar of South Korea have been active in Iran’s natural gas industry. Iran’s constitution prohibits direct concession of petroleum

Ministry of Petroleum of Iran

The Ministry of Petroleum manages the oil industry, the producer of oil and petrochemical products. MoP is in charge of all issues pertaining to exploration, extraction, exploitation, distribution and exportation of crude oil and oil products. In addition, according to the "", issuing import...

rights to foreign investors. Alcatel

Alcatel

Alcatel Mobile Phones is a brand of mobile handsets. It was established in 2004 as a joint venture between Alcatel-Lucent of France and TCL Communication of China....

of France, MTN Group of South Africa

South Africa

The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...

and Siemens

Siemens AG

Siemens AG is a German multinational conglomerate company headquartered in Munich, Germany. It is the largest Europe-based electronics and electrical engineering company....

of Germany gained major telecommunications contracts in 2004 and 2005, respectively.
Further information: Global Investment in Iran - AEI.

Economic profile

Business environment

According to United Nations Conference on Trade and Development

United Nations Conference on Trade and Development

The United Nations Conference on Trade and Development was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues....

, Iran ranked sixth globally in 2010 in attracting foreign investments. 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. Iran is a member of the World Bank's Multilateral Investment Guarantee Agency

Multilateral Investment Guarantee Agency

The Multilateral Investment Guarantee Agency is a member organization of the World Bank Group that offers political risk insurance. It was established to promote foreign direct investment into developing countries. MIGA was founded in 1988 with a capital base of $1 billion and is headquartered in...

. Iran ranks 69th out of 139 in Global Competitiveness Report

Global Competitiveness Report

The Global Competitiveness Report is a yearly report published by the World Economic Forum. The first report was released in 1979. The 2011–2012 report covers 142 major and emerging economies....

. Further information: Investment climate in Iran

Natural resources

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 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

Iran has made the development of non-oil exports a priority. The country has the advantage of a broad domestic industrial base

Industry of Iran

According to a report by the Economist, Iran has been ranked 39th for producing $23 billion of industrial products in 2008. From 2008 to 2009 Iran has leaped to 28th place from 69th place in annual industrial production growth rate. A recent report by the World Fact Book ranks Iran 3rd among...

, an educated and motivated workforce

Education in Iran

Education in Iran is highly centralized and is divided to K-12 education and higher education. K-12 education is supervised by the Ministry of Education and higher education is under supervision of Ministry of Science and Technology....

, cheap labor and energy resources and geographical location

Geography of Iran

Iran is located in southwest Asia and borders the Gulf of Oman, Persian Gulf, and Caspian Sea.Its mountains have helped to shape both the political and the economic history of the country for several centuries. The mountains enclose several broad basins, or plateaus, on which major agricultural and...

, which gives it access to an estimated population of some 300 million people in Caspian

Caspian Sea

The Caspian Sea is the largest enclosed body of water on Earth by area, variously classed as the world's largest lake or a full-fledged sea. The sea has a surface area of and a volume of...

markets, Persian Gulf

Persian Gulf

The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...

states and countries further east. Further information: Potential Export Comparative Advantages of Industry & Mine

Laws concerning foreign companies

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.

General laws and regulations regarding foreign business in Iran could be regrouped under the following categories:

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.
Direct sales - Most foreign companies are involved in direct sales to Iranian customers through letters of credit and, occasionally on the basis of Usance
Usance
Usance refers to the utilization of economic goods to satisfy needs. In manufacturing, "usance" means "inputs." It is used in "usance bills." This terminology is used in banks in India, when dealing with forex....

.
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 in the free economic zones.

Investment by natural persons of foreign nationality

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

Iranian nationality law

Iranian nationality law contains principles of both jus sanguinis and jus soli. Children acquire nationality of Iran through their fathers, but not their mothers...

and subject to the same laws which regulate the activities of Iranian companies.

Foreign investment in the framework of the Commercial Code

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

Foreign exchange market

The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...

restrictions are equally applied to Iranian and foreign investors. Such companies, however, do not enjoy the privileges set out in FIPPA.

FIPPA

Provisions of the 2002 Act entitled Foreign Investment Promotion and Protection Act (FIPPA) include:

Allowing foreign investment in all sectors opened to Iranian private companies.
A review of the definition of “Foreign Investor” to include Iranian expatriates
Iranian citizens abroad
The term Iranians abroad or Iranian diaspora refers to the Iranian people born in Iran but living outside of Iran with their children.As of 2010, there are an estimated four to five million Iranians living abroad, mostly in North America, Europe, Persian Gulf States, Turkey, Australia and the...

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 exchange rate.
Fair compensation in case of nationalization
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...

. 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.
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

Build-Operate-Transfer

Build-own-operate-transfer or build-operate-transfer is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract...

projects (only under an operator status) are specifically covered under the foreign investment law.
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 into a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

.
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.

The Organisation 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 organisation is in charge of consolidating and implementing two-way foreign investment flows.

Potential approaches to the market

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

Iran

Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

Joint ventures

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 currently actively seeking joint-venture partners both to fill their technological as well as management gaps. Others are looking for a revival of their company through foreign capital.

Should a company decide to adopt this approach to the market, it is advisable to look for products and services that have both domestic demand as well as regional export potential. If a joint-venture company can earn hard currency through export of its goods, it will not be too dependent on the Iranian banking system for the repatriation of profits and dividends.
It should be noted that some joint ventures consist purely of the transfer of technology to Iran by the foreign partner without any capital commitment. Since Iranian authorities are very keen on the introduction of modern technologies, this path can prove very constructive. In August 2010, the 25% ceiling set for joint venture companies in enjoying facilities from the foreign exchange reserve account has been eliminated. Industry and mines

Industry of Iran

, agriculture

Agriculture in Iran

Roughly one-third of Iran's total surface area is suited for farmland, but because of poor soil and lack of adequate water distribution in many areas, most of it is not under cultivation....

, transport

Transport in Iran

Transport in Iran is inexpensive because of the government's subsidization of the price of gasoline. The downside is economic inefficiency because of highly wasteful consumption patterns, contraband with neighboring countries and air pollution...

, services (such as tourism

Tourism in Iran

Tourism attracted 2.3 million people to Iran in 2009. Iran plans to have 20 million tourists annually by 2015 ....

), IT

Communications in Iran

Iran’s telecommunications industry is almost entirely state-owned, dominated by the Telecommunication Company of Iran . Fixed-line penetration in 2004 was relatively well-developed by regional standards, standing at 22 lines per 100 people, higher than Egypt with 14 and Saudi Arabia with 15,...

and the export of goods and services are the sectors authorized to enjoy the new facilities from the Foreign Exchange Reserve Account.

There are seven types of juridical entity or company which can be established under the Iranian Commercial Code. From among all these different types, Joint Stock Company

Joint stock company

A joint-stock company is a type of corporation or partnership involving two or more individuals that own shares of stock in the 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. For legal and tax purposes, opening a representative office

Representative office

A representative office is an office established by a company to conduct marketing and other non-transactional operations, generally in a foreign country where a branch office or subsidiary is not warranted. Representative offices are generally easier to establish than a branch or subsidiary, as...

in Iran, by itself, is not considered foreign direct investment

Foreign direct investment

Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...

. Further information, see the document titled "Establishing a Joint Stock Company in Iran".

Buy-back

In February 2007 the government unveiled its new buyback-contract formula, which significantly extended the length of the contracts to as long as 20 years. The buy-back scheme is a formula used by the Iranian government to attract foreign investment. Following the end of the Iran-Iraq war

Iran-Iraq War

The Iran–Iraq War was an armed conflict between the armed forces of Iraq and Iran, lasting from September 1980 to August 1988, making it the longest conventional war of the twentieth century...

in 1988, Iran faced a major problem: it needed foreign investment if it did not want to lose its vital income from the oil and gas industry, yet its revolutionary ideology and Constitution forbid granting “concession

Concession (contract)

A concession is a business operated under a contract or license associated with a degree of exclusivity in business within a certain geographical area. For example, sports arenas or public parks may have concession stands. Many department stores contain numerous concessions operated by other...

s”. A compromise solution was found in 1989 with the First Five-Year Economic, Social and Cultural Development Plan. Under Note 29 of the said plan, the Iranian government is allowed to employ “buyback

Buyback

Buyback may refer to:*Buyback, the act of rebuying something that one previously sold, as with a lemon *Share repurchase, also called stock repurchase or share buyback, the repurchase of stock by the company that issued it-See also:...

s” in its effort to meet the industrial and mineral needs in connection with exports, production and investment. Put in laymen terms, a buy-back transaction is a method of trade where plants, machinery, production equipment and technology is supplied (by a domestic or foreign private firm), in exchange for the goods that will be produced directly or indirectly by means of such facilities.

Under this scheme, the foreign partner that makes the initial investment can repatriate the return on the investment (at a pre-agreed fixed rate) through goods and services produced by the project.
While many foreign companies believe that this method is a mere financing instrument

Project finance

Project finance is the long term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the project sponsors...

for Iran, it is more accurate to say that it is a compromise formula for foreign investment in the short-run. In the medium to longterm, more appropriate laws and regulations will probably replace the buy-back scheme. In other words, once the constitutional concerns have been dealt with, the foreign partners of buy-back agreements can take over the projects that they are involved in, or they can enter into a joint venture with an Iranian partner.
Further information: Buy-backs in Iran's oil industry

Build-Operate-Transfer (BOT)

Recent regulations have introduced the Build-Operate-Transfer

Build-Operate-Transfer

(BOT) scheme for Iranian projects. This is a rather new possibility in the Iranian market. In this scheme, the foreign partner invests in one project, which is then operated for a certain period of time by the foreign investor before it is fully transferred to the Iranian government. Iranian authorities are showing some flexibility regarding the BOT, which could potentially pave the way for more foreign investment in the market.

Free trade zones and special economic zones

Advantages

Free-trade (FTZ) and special economic zones (SEZ) have been established to provide additional investment incentives such as:

15 years tax-exemption;
no entry visa requirement;
100% foreign ownership possible;
flexible employment regulations;
flexible monetary & banking services;
extended legal guarantees & protection.

Locations

As of January 2010, there were six free trade zones (FTZ) and 16 special economic zones (SEZ) in Iran. More FTZ and SEZ are planned in Iran.

Name	Authority in charge	Type	Location
Anzali		Free Trade Zone Free trade zone A free trade zone or export processing zone , also called foreign-trade zone, formerly free port is an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities...
Chabahar Chabahar Free Trade-Industrial Zone Chabahar Free Trade–Industrial Zone is an Iranian free trade zone formed according to the law on the establishment and administration of free trade–industrial zones ....		Free Trade Zone Free trade zone A free trade zone or export processing zone , also called foreign-trade zone, formerly free port is an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities...	Chabahar Chabahar Chah Bahar is a city in and capital of Chah Bahar County, Sistan and Baluchestan Province, Iran. Chah Bahar is a free port on the coast of the Gulf of Oman. At the 2006 census, its population was 71,070, in 13,837 families...
Kish		Free Trade Zone	Kish Island
Arvand Arvand Free Zone ]The Arvand Freezone is a 155 square kilometer industrial and security zone that surrounds Khorramshahr, Abadan, and Minoo Island along the Arvand waterway in Khuzestan Province, Iran....		Free Trade Zone	Khorramshahr Khorramshahr Khorramshahr is a city in and the capital of Khorramshahr County, Khuzestan Province, Iran. At the 2006 census, its population was 123,866, in 26,385 families.Khorramshahr is a port city located approximately north of Abadan...
Aras Aras Free Zone Aras Free Trade - Industrial Zone is situated in East Azarbaijan province, in the north-west of Iran, adjacent to Autonomous Republic Nakhichivan, Armenia and the Republic of Azerbaijan. The Aras Free Zone measures 97 km². It is located 137 km from Tabriz, one of the major academic and...		Free Trade Zone	East Azarbaijan
Qeshm		Free Trade Zone Free trade zone A free trade zone or export processing zone , also called foreign-trade zone, formerly free port is an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities...	Qeshm Island
Maku		Free Trade Zone Free trade zone A free trade zone or export processing zone , also called foreign-trade zone, formerly free port is an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities...	Maku Maku, Iran Maku is a city in the West Azerbaijan Province, Iran. At the 2006 census, its population was 41,865, in 10,428 families.It is situated from the Turkish border in a mountain gorge at an altitude of 1634 metres. The Zangmar River cuts through the city. The common languages in Maku are Kurdish and...
Bushehr		Special Economic Zone Special Economic Zone A Special Economic Zone is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws...	Bushehr Bushehr Bushehr Bushehr lies in a vast plain running along the coastal region on the Persian Gulf coast of southwestern Iran. It is the chief seaport of the country and the administrative centre of its province. Its location is about south of Tehran. The local climate is hot and humid.The city...
Lorestan		Special Economic Zone Special Economic Zone A Special Economic Zone is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws...
Sirjan		Special Economic Zone Special Economic Zone A Special Economic Zone is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws...
Sarakhs		Special Economic Zone Special Economic Zone A Special Economic Zone is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws...
Payam	Payam Aviation Payam Air Payam Air is a cargo airline based in Tehran, Iran. It operates cargo services for the Iranian postal, telecom and commercial services. Its main base is Mehrabad International Airport, Tehran.- History :...	Special Economic Zone Special Economic Zone A Special Economic Zone is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws...	Karaj Karaj Karaj is a city in and the capital of Karaj County, Alborz Province, Iran. At the 2006 census, its population was 1,377,450, in 385,955 families, , making it the fifth-largest city in Iran after Tehran, Mashhad, Isfahan and Tabriz.) It is situated west of Tehran, at the foothills of the Alborz...
Salafchegan	Astan Quds Razavi Astan Quds Razavi Astan Quds Razavi is a Bonyad, or autonomous charitable foundation, in Mashhad, Iran. It is the administrative organization which manage Imam Reza shrine and institutions belonging to the organization....	Special Economic Zone
Persian Gulf Mines and Metals	National Iranian Steel Company IMIDRO Iranian Mines and Mining Industries Development and Renovation Organization is a major holding company active in the mining sector in Iran...	Special Economic Zone
Persian Gulf Shipbuilding	ISOICO ISOICO Iran Shipbuilding & Offshore Industries Complex Co is an Iranian ship yard, located in the Persian Gulf, Strait of Hormuz lat/lon: 27°03' N , 57°58' E , active as shipbuilder and ship-repairer of different types of vessels and offshore structures...	Special Economic Zone
Arge-e-Jadid		Special Economic Zone
PSEEZ http://www.pseez.com	NIOC National Iranian Oil Company The National Iranian Oil Company , a government-owned corporation under the direction of the Ministry of Petroleum of Iran, is an oil and natural gas producer and distributor headquartered in Tehran. It was established in 1948...	Special Economic Zone	Bushehr Bushehr Bushehr Bushehr lies in a vast plain running along the coastal region on the Persian Gulf coast of southwestern Iran. It is the chief seaport of the country and the administrative centre of its province. Its location is about south of Tehran. The local climate is hot and humid.The city...
Petrochemical Special Economic Zone	NIPC/Petzone	Special Economic Zone	Mahshahr Mahshahr Bandar-e Mahshahr is a city in and the capital of Mahshahr County, Khuzestan Province, Iran. At the 2006 census, its population was 109,927, in 24,110 families....
Shiraz Electric and Electronics	IDRO IDRO Industrial Development and Renovation Organization of Iran was established in 1967 in Iran. IDRO Group is one of the largest companies in Iran, it's also on of the largest conglomerates in Asia. IDRO's objective is to develop Iran's industry sector and to accelerate the industrialization process...	Special Economic Zone	Shiraz Shiraz Shiraz may refer to:* Shiraz, Iran, a city in Iran* Shiraz County, an administrative subdivision of Iran* Vosketap, Armenia, formerly called ShirazPeople:* Hovhannes Shiraz, Armenian poet* Ara Shiraz, Armenian sculptor...
Yazd Textile Industries		Special Economic Zone	Yazd Yazd Yazd is the capital of Yazd Province in Iran, and a centre of Zoroastrian culture. The city is located some 175 miles southeast of Isfahan. At the 2006 census, the population was 423,006, in 114,716 families....
Bandar Amirabad Behshahr		Special Economic Zone
Bandar Bushehr		Special Economic Zone	Bushehr Bushehr Bushehr Bushehr lies in a vast plain running along the coastal region on the Persian Gulf coast of southwestern Iran. It is the chief seaport of the country and the administrative centre of its province. Its location is about south of Tehran. The local climate is hot and humid.The city...
Bandar Shahid Raja'ee		Special Economic Zone

External links

Organization For Investment, Economic and Technical Assistance of Iran Government "one-stop institution" for FDI in Iran Iran Trade Promotion Organization - Affiliated with the Ministry of Commerce (Iran)

Ministry of Commerce (Iran)

The Ministry of Commerce of Iran was the main organ of the Government in charge of the regulation and implementation of policies applicable to domestic and foreign trade...

Information on the Foreign Investment Promotion and Protection Act (FIPPA) and Taxes - Ministry of Economic Affairs and Finance (Iran)

Ministry of Economic Affairs and Finance (Iran)

The Ministry of Economic Affairs and Finances function are:*acting as the state treasury,*public finance,*economic and financial policy making,*implementing tax policies,*in charge of foreign direct investment,...

High Council of Iran Free Trade-Industrial Zone - Official site with information on Iran's Free Trade Zones laws and current projects Business consulting information - Affiliated to the Iran Chamber of Commerce Industries and Mines

Iran Chamber of Commerce Industries and Mines

The Iran Chamber of Commerce, Industries and Mines is a non-profit semi-governmental institution, established to facilitate economic growth and development in the country. ICCIM is a forum in the field of industries, mines and agriculture...

Iran Business Forecast Report - Business Monitor International (Economic sector reports updated quarterly)
Global Investment in Iran - American Enterprise Institute
American Enterprise Institute
The American Enterprise Institute for Public Policy Research is a conservative think tank founded in 1943. Its stated mission is "to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and...

(list of major international companies investing in Iran broken down by their nationality, sector of activity and amount invested)
Iran Trade Point Network UN's global trade network, including list of English translations of Iranian laws
FDI.net - Information about FDI in Iran from the World Bank.
UNCTAD Fact Sheet - United Nations Conference on Trade and Development (World Investment Report for Iran - 2007) Memorandum of the foreign trade regime of Iran - 145-page official PDF document describing all aspects of Iran's trade and economic policies that have a bearing on WTO agreements
Books on Iran's Business, Economy, Finance
- Doing Business and Investing in Iran Guide - information on business etiquette in Iran

Videos

Foreign and Domestic Investments in Iran - PressTV video.
FDI in Iran (Free PressTV documentary)

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.