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Why should I invest in Iran
Iran qualifies from many respects to be a good location for investment and doing business. it has huge potential for investing after the termination of economic sanctions, Some of the features are highlighted below:
1. Vast domestic market with a population of 80 million growing steadily
2. Young, educated and cheap labor force
3. Excellent strategic geographical position
4. The quick and easy access to neighboring markets with a population of 350 to 400 million
5. Developed and ready infrastructure
6. Cheap and abundant raw materials, energy and transportation
7. The four-season climate and climate variability in the country
8. Fiscal incentives
9. Security and political stability
10. Untapped and consumer market ..
Managing Director of Ports and Maritime Organization said that the capacity of Chabahar port will increase from 2 million tons to 8 million tons after Indian firms’ $235-million investment.
Mohammad Saeed Nejad told IRNA on Tuesday that Indian firms are to invest $85m in build–operate–transfer type (BOT) and $150m in finance type to supply required equipment for Chabahar port.
Based on the BOT contract, Indian firms will have to deliver all the equipment to Iran after 10 years, he said.
By making $150-million finance investment to buy and install port equipment, Indian firms will invest $235m during 18 months to supply required equipment.
Saeed Nejad said that supplying needed equipment for Iran’s ports is Ports and Maritime Organization’s main priority, adding that the first line of credit (LC) valued $170 million was opened and four other LCs are to be opened for a European company.
Deputy governor for currency affairs at the Bank Melli of Iran (BMI) announced that sanctions on BMI Hong Kong Branch have been lifted since June 24 and the branch will soon resume its activities there.
Hong Kong Monetary Authority lifted restrictions on BMI in Honk Kong, Gholam Reza Panahi made the announcement here Tuesday.
Resumption of BMI Hong Kong Branch’s activities needs systematic changes that are being made, said the official.
Since 2008, the European Union (EU) imposed sanctions on different foreign branches of BMI on the pretext of Iran’s peaceful nuclear program.
Under the July agreement known as the Joint Comprehensive Plan of Action (JCPOA), anti-Iran sanctions were lifted on January 16, 2016.
Latest figures by Iran’s customs office show that foreign trade income stood at over $10,472 billion in the first quarter of the Iranian calendar year (started March 20).
The Iran’s customs office data released on Tuesday put the volume of foreign trade at 27,780 million tons.
The figure also indicated an increase of 9,660 million tons, worth $3,610 billion, compared to the first two months of current year.
China, UAE, Iraq, South Korea and India are among the top export destinations of Iran.
South Korea’s Doosan Heavy Industries & Construction Co. won a 220 billion won ($185.9 million) worth order from Iran-based Sazeh Sazan Co., to build a seawater reverse osmosis desalination (SWRO) plant in the Middle East country.
The company said Monday that the deal marks the first SWRO procurement a foreign company clinched from Iran since international sanctions were lifted early this year.
The plant – dubbed SAKO SWRO plant – will be built at Bandar Abbas, the capital of Hormozgan Province in Iran. It will desalinate around 200,000 tons of water a day, which would be supplied to mines in the region in annual capacity enough for 670,000 people after its construction is completed in October 2018. Doosan will be in charge of engineering, procurement, construction and test operation of the facility and also provide operation and maintenance (O&M) services until October 2030.
Yoon Seok-won, the executive vice president and CEO of Doosan’s Water BG, said that the latest deal was product of persistent and all-around endeavors. The company signed a Memorandum of Understanding (MOU) agreement with Iranian National Water and Wastewater Engineering Company (NWWEC) in April. President Park Geun Hye’s state visit to Iran in May served as an impetus. He added that the company will keep up its efforts to cement its foothold in the Iranian reverse osmosis desalination market, which is expected to reach $2 billion by 2018.
To reach an average 8 percent economic growth during the next five-year period, according to decree of the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei, and following withdrawal of the financial embargo in January, the Iranian administration is shifting from a bank-based financial system into a more market-based one (i.e. switching the trend of financing away from banks towards securities market). This would create great plenty of opportunities and special incentives to entice overseas investments into the country in a bid to finance economic projects.
To capture a comprehensive view over the current conditions of the Iranian capital market, the Tehran Times conducted an interview with Amir Hamooni, CEO of Iran Fara Bourse (IFB), Iran’s secondary securities exchange. Following is the full text of interview with him.
How do you evaluate the general trend of IFB market after implementation of the nuclear deal, known as Joint Comprehensive Plan of Action (JCPOA), with world powers in January?
After the execution of the JCPOA and in the last three months of previous Iranian calendar year of 1394 (December 21, 2015- March 19, 2016), IFB could manage to attract up to 2 trillion rials (above $57.6 billion, at free market exchange rate) of foreign investments and has been successful to absorb the same amount during the first three months of the current Iranian calendar year (March 20-June 20, 2016), i.e., around 4 trillion rials (above $115 billion) of foreign investments has been absorbed by IFB as of the sanctions’ removal.
Overseas investors sought to enter IFB market by investing in Structured Financial Products and via purchasing securities and principals, interest payments of which are fully guaranteed by the Iranian government (including different types of sukuk and Islamic Treasury Bills (ITBs)). They also pursue their investment goals through forging partnership with Iranian companies in IFB that need to apply modern technology to accelerate their renovation procedure, among we can name Pakvash. The recent Henkel-Pakvash agreement (Germany’s Henkel – one of the largest household and personal care manufacturing companies in the world – purchased 30 percent of Pakvash for a total value of around €51 million through IFB). It is worth mentioning that some other similar contracts with foreign investors are to be finalized within the next few weeks and consequently, the total volume of attracted foreign investments to IFB would surplus 10 trillion rials (above $288 billion) over the past six months following the JCPOA implementation.
How do you analyze risk-return relations in domestic capital market at the present time?
Iran’s primary and secondary capital market indices (TEDPIX and IFX respectively), have always reflected the country’s economic situation, clearly. During the past six months, despite some specific occasions when some emotional responses have influenced the market’s behavior, the general trend of the market has been rational.
How do you consider the impact of Iran’s current political situation as well as its relations with international financial bodies on domestic capital market?
We cannot deny the challenges that we still face in our relations with some international banks or some other global entities according to some political issues; however, it is worth noting that the said 4 trillion rials (above $288 billion) of foreign investments, as an available example, has been attracted under such trying circumstances and the related financial transactions have been carried out through Society for Worldwide Interbank Financial Telecommunication (SWIFT). Our near future transactions will also be done under the same conditions, since it would take some time both for us and our foreign partners to remove obstacles on the way to increase and ease our mutual transactions.
Some experts voice concern that Iran’s bureaucracy and opaque ownership structures may hinder attraction of foreign investments. How do you think?
The money which is presently moving towards the Iranian capital market is smart, i.e. it is invested by those foreigners experienced, well-informed, in-the-know or all three. Overseas investors have a comprehensive overview of their Iranian partners as well as the country’s regulations. They will pave their way to Iran’s lucrative market as they did under the sanctions, when the conditions were much tougher. There are some power plants in Iran, technology and equipment of which were imported in sanctions era. They were established and put into operation under the same conditions and now they are taking preparatory steps to offer their stakes through a block sale on IFB. Smart money knows where to go and who to do business with. Now it is time for us to offer various investment opportunities. Of course, well-organized Iranian investment funds and banks as well as investment advisors and brokers are highly active in luring foreign investments in sectors which are in Iran’s economy’s favor and accord our own economic strategies and targets.
Iran’s Sixth Five-Year Development Plan (2016- 2021), which outlines government strategies in its budget planning for the next five years and is going to be finalized by the parliament, pays a specific attention to improving the performance of securities markets with the participation of domestic and foreign investors in a bid to finance economic projects across the country via attracted investments rather than through banking resources. Will this plan be a practical and efficient one regarding Iran’s conditions? Can it hit the set targets?
The situation is set to apply market-based financing system in Iran. By the JCPOA execution, the country has reached a historical turning point and in comparison with the past years, holds enormous potentials, including well-educated human resources in financial engineering, financial economics, accounting and etc., who can improve financial knowledge of the country in the future, as they did so during the recent years. As the available evidence proves, the IFB’s stake of financing the country’s projects has reached 30 percent at the present time, from the previous two percent when it started operation. This proves that seizing the current opportunities, IFB and of course Tehran Stock Exchange (TSE) can remarkably expand their share of financing in the near future.
Securities and Exchange Organization (SEO) membership status in International Organization of Securities Commissions (IOSCO) became final recently, what about IFB membership in the international body?
IOSCO is currently studying our membership request as an affiliate member. Our next step would definitely be to apply for World Federation of Exchanges (WFE) membership.
Iran has been inundated with the rush of foreign investors who want to find a foothold to Iran’s untapped market. What is your message to them?
Islamic Treasury Bills and Sukuk offer one of the best investment opportunities for foreigners. Iranian sukuk offer very high yields compared to European bond yields, providing a lucrative opportunity for foreign investors. We are trying to rate our debt securities to ease their investment.
Managing director of the Iranian Offshore Engineering and Construction Company Abolqasem Rahmani said on Sunday that negotiations are underway with international companies, especially European companies on the energy projects.
Gas or oil rigs such as Foruzan rig, weighing 7,000 tons, used to be built in South Korea but the Islamic Republic of Iran is now capable to do it on its own.
He said that five rigs of different South Pars phases have been completed and are loaded as C19 rig, that was already carried to the sea, is now ready to be put into operation.
He added that A19 rig was loaded last week and SP Phase 21 platform was loaded on Saturday. It is going to be fixed and installed in seven days.
Once five rigs are installed in South Pars this year, more than 100 million cubic meters of gas will be added to the national gas extraction capacity, according to the official.
Meanwhile, he said that about eight million man/hour work was done on South Pars phase 19 and about seven million man/hour work on platforms 20 and 21.
Director General for Mazandaran provincial Organization of Industry, Mine and Trade Mohammad Mohammad Pour Omran said on Sunday that Iran and Kazakhstan planned to build a joint venture oil refinery in Amirabad Port.
He made the remarks in a joint economic meeting between Kazakhstan delegation and Mazandaran trade delegation in Sari Chamber of Commerce.
Pour Omran said that the permission for construction works has been issued by responsible bodies in Amirabad Port.
Pour Omran said that the refinery is to refine Kazakhstan oil and then export to other countries.
He said that oil swap is another proposal for bilateral cooperation.
Pour Omran, who is secretary of Mazandaran export council, said that north oil terminal in Neka city is ready for doing oil swap with Central Asian countries, Russia and Kazakhstan.
He encouraged Kazakhstan officials to do oil swap with Iran and said that the Islamic Republic of Iran is ready to purchase crude oil from Kazakhstan to develop cooperation between Mazandaran province and Kazakhstan on oil trade.
Trade stood around one billion dollars last year from which 900 million dollars were import from Kazakhstan and 100 million dollars export to Kazakhstan.
Iran’s Charged Affairs in London Mohammad Hassan Habibzadeh said Iran is seeking to absorb investments for its energy sectors.
Addressing “The Growing Economies Energy Forum” here on Thursday, he said Iran will be offering appropriate conditions to the investors interested in the area.
Noting that the Islamic Republic is planning to raise its economic growth rate to 6 percent in the next five years, he said that 115 major power plants with 660 units are active in the country in providing the power needed by industrial, household, business and agricultural sectors.
This means the country needs to increase its power generation capacity by 40 percent, he added.
The diplomat further noted that based on the six development plan visions, Iran is to increase its present installed power generation capacity of 75,000 MW to 1050 MW.
He said to achieve the goal; Iran is determined to make an investment of 50 billion dollars in the next seven years.
Habibzadeh further highlighted the great opportunities available in Iran’s renewable energy sectors and said that Iran, enjoying 300 sunny days in a year, is one of the best places for investments in such projects.
He said that at the present juncture, Iran is offering investment opportunities which could exist only once in a century.
The two-day conference opened in Wednesday with participation of representatives from Iran, Pakistan, Chile, Peru, Colombia and Mexico.
A senior Iranian official said here on Wednesday that the construction of the gas platform of the 17th phase of South Pars gas field has been finished thanks to the nonstop endeavors of the domestic experts.
Managing Director of Mobin-Sazehgostar Company, Babak Abbaspour said the platform will be installed in South Pars gas field on Thursday.
He added construction of the platform saved the country 85 million dollars.
Once the 17th gas platform comes on stream, it will produce 500 million cubic meters of gas per day in South Pars gas field.
Abbaspour added Mobin-Sazehgostar Company has so far constructed several gas platforms in 15th and 16th phase of South Pars gas field.
Export Development Bank of Iran says, following the implementation of the JCPOA, it has reestablished brokerage relationships with 120 foreign banks.
Prior to the imposition of western-imposed sanctions, Export Development Bank of Iran used to maintain brokerage relationships with around 400 foreign banks across the world.
During sanctions, however, these financial ties were severed.
Now there is the possibility to directly or indirectly send bills of exchange, drafts and open letters of credit with 54 banks as well, the bank said in a report on Tuesday.
Efforts are underway for 13 other foreign banks to reestablish brokerage relationships, Following the implementation of the Joint Comprehensive Plan of Action, the report added.
Banks in Italy, Spain, Germany, Belgium, Austria, Russia, Turkey, China, Japan and Oman are among foreign banks reestablishing financial ties with Iran.
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