World  Business and Economic Analysis 

Invest in Iran,

  • Growing interest in Iran market: UK politician

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    ‘Richard Dalton’ President of British Iranian Chamber of Commerce expressed optimism about the future outlook for bilateral relationship between Iran and Britain and said interest in Iranian market by the British companies is growing.

    Speaking to IRNA, Dalton, who previously served as the ambassador of Britain in Iran said: 'I am optimistic about the outlook for Britain’s relationship with Iran, both politically and commercially.'

    He added: “Clearly both sides want to proceed cautiously, but the range of British companies interested in the Iranian market is growing everyday”.

    Dalton said: “We believe the expertise that we possess, from infrastructure through oil and gas industry to automotive sector to financial services and consumer goods, can be of real interest to the Iranian government and to Iranian business people and I am delighted that was the framework now been set clearly by governments.”

    Evidence shows that the British government is now taking pragmatic approach towards the Iranian market which is already been targeted by EU rivals.

    British prime minister, David Cameron rebuked Barclays Bank recently for hampering British companies trying to export to Iran as ministers prepare for a high-level trade mission.

    Also earlier last week, ‘Sajid Javid’, British business secretary used the term ‘Unlimited’ business opportunities in Iran, when speaking to the business leaders at a conference in London on Wednesday.

    He also revealed his plan to lead a delegation of British companies in May to take advantage of the recent lifting of sanctions against Tehran.

    After lifting a range of EU and US economic sanctions, trade missions has been landing in Tehran to secure businesses with the second largest economy in the region.

    However Britain has been cautious in opening up its businesses to the country, claiming that it had encountered severe penalties by the American banking regulators.

    Lord Lamont, Chairman of BICC told IRNA: Some [British banks] have deferred prosecution agreements while some are still arguing with American regulators. But I think we are beginning to see signs of some of the smaller banks coming back and I think it will be like a pebble that starts the bigger stones rolling.

    Dr. Mohammed Nahavandian, the chief of Staff to the Iranian president who made a visit to London earlier last week, also reiterated West’s commitment in facilitating trade with Iran according to JCPOA.

    Speaking at RUSI, Nahavandian said: 'There was a commitment that the US and European governments took on themselves to take adequate administrative and regulatory measures to ensure clarity and effectiveness of the removal of sanctions.'

    He stressed that “time is of essence and those who act quick get the best results

    Source:IRNA

  • Iranians to use Asian credit cards soon



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    The Central Bank of Iran (CBI) says Asian credit cards provided by the Japanese and Chinese banks will be available to the Iranians before September.

    Iran says it is preparing the grounds for its nation to use credit cards provided by Asian banks until the restrictions for using American payment operators like Visa and MasterCard are removed.

    The country’s media have quoted an official with the Central Bank of Iran (CBI) as saying that negotiations to the same effect are currently underway with Japan Credit Bureau (JBC) as well as China UnionPay (CUP).

    Davood Mohammad-Beigi, the CBI director for payment affairs, has told been quoted as saying that JCB and CUP cards will be available to the Iranians before September.

    Mohammad-Beigi has further emphasized that the CBI is determined to bring the global credit card payment systems into the country, stressing that the related technical talks on the same front have been going on with international suppliers for the past five months.

    The official added that certain steps have also been planned to prepare the infrastructure required for using international credit cards in Iran, including connecting the domestic banking payment transfer systems to overseas payment networks like the ones that Visa and MasterCard are using.     

    Mohammad-Beigi said the conditions for using Visa and MasterCard services are not prepared yet. This, he added, is because both are US enterprises and are still subject to the sanctions that the US government has put in place in dealing with Iran.

    The legal department of the CBI is nonetheless preparing to take actions to remove the obstacles that are hindering Visa and MasterCard from operating in Iran in light of the openings that have been created after the January removal of anti-Iran sanctions, Mohammad-Beigi emphasized.

  • KITA official: We can equip Iran with technology

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    by : Mohammad Ali Saki

    TEHRAN - Iran-Korea Business Forum was held in Tehran on February 29, wherein as many as 500 Korean and Iranian participants from 300 companies were present.

    One of the main organizers of the event was Korea International Trade Association (KITA), whose Executive Vice President Chairman Junggwan KIM delivered the opening speech.



    According to the association’s website, KITA serves a diverse range of roles, including providing hands-on support to trade companies, drawing trade cooperation from the private sector, formulating new trade strategies, nurturing trade professionals, and building trade infrastructure.



    In a short exclusive interview with the Tehran Times, Junggwan KIM has answered three questions. Here is the text of the interview.



    TT: One of the main challenges the Iranian economy faces is to join the Word Trade Organization (WTO). How can KITA smooth the path given that Iranian companies need modern technology to compete with global rivals if the country joins the WTO?



    A: Joining the WTO has its own regulations and conditions. But I think we can equip Iran with technology and then, this is up to the Iranian partners to build upon the technology, promote it and re-apply it in their own products or develop it.



    TT: Given that Korean companies left Iran during the sanctions era, now they are a bit doubtful about partnership with Koreans. For this reason Iran is now looking for long-term contracts. What do you think about it?



    A: We had no other choice but to leave Iran’s market, as Korean companies themselves have bilateral relations with their American counterparts and if we violate the game, the U.S. imposes sanctions against us. So, that was our reservation. However, we are now pursuing long-term cooperation with Iran because we have a common goal.



    TT: Have you developed your own development model or does it come from other countries’ schemes?

    A: At early stages, Korea gained experience by learning from foreign countries, similar to what Iran is doing now. At later stages, advanced educational system in Korea and the determination of Korean people helped develop our domestic model of economy.

  • Certain Iranian Law Tips for the Foreign Traders/Investors...

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    • Iran is a party to New York Convention[2] ("Convention"). Therefore for dispute resolutions, in addition to the Convention, it is recommended to use Iranian arbitration such as Tehran Regional Arbitration Centre (TRAC) and Arbitration Center of Iran Chamber (ACIC), which are applying UNCITRAL Rules. There has not been any history of encountered special difficulties in enforcing the enforcement of Convention awards under the Iranian Code of Civil Practice.
    • With the JCPOA, transfer of funds among EU persons, entities or bodies, including EU financial and credit institutions, and non-listed Iranian persons, entities or bodies, including Iranian financial and credit institutions, are permitted. The authorization or notification requirements for fund transfers are no longer applicable. On the other hand, there are still certain authorization procedures to be accomplished in case of transfer of the profits of a foreign investment company in Iran under the Foreign Investment Promotion and Protection Act ("Foreign Investment Act")[3].
    • Investing via Foreign Investment Act is recommended to the foreign investors. Foreign investors in Iran are subject to the same amount of taxes with the Iranians and tax exemption of 80% by the Direct Taxation Law is ensured for 4 years in respect to all the industrial investments. Foreign legal entities residing abroad are subject to taxes at the flat rate of 25% in respect of the aggregate taxable income derived from the operation of their investment in Iran or from the commercial activities performed by them, directly or through their agencies in Iran.

    At the Davos in early 2014, President Rouhani declared that Iran is open for business and said that over the next three decades, Iran could become a top-10 global economy. Many dismissed this claim as a pipe-dream, but today, with the recent developments, it is likely to become a reality.

    Keywords:Iran,Investment

  • Health Companies Ready for Iran

     

     

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    By Allison Williams

    Iran needs investments in drugs, equipment and hospitals and German health care companies are keen to move forward but waiting to see when sanctions will be lifted.
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    HT Health Tec, a German health care company, is all set to start building a hospital in Iran.

    It follows a surprise request made by Iran’s vice health minister Iraj Harirchi during a visit by Bavarian company representatives last fall.

    “When it’s agreed, it could take 24 months to build a hospital with 400 beds,“ Alexander Vonscheidt, a senior sales manager at the company, told Handelsblatt Global Edition. “We’d be part of a bigger consortium working with architects and construction firms. Siemens, Trumpf and Heilbron are other Bavaria-based health companies that could be part of a turnkey project.”

    HT Health Tec builds hospitals, including operating theaters and safety labs, but wound down its business with Iran over the past few years because of sanctions imposed by world powers. Those sanctions were lifted in January following last year’s deal to curb Iran’s nuclear ambitions.

    “Now we want to start again,” Mr. Vonscheidt said.

    After a decade cut off from Western markets, Iran needs everything: trucks, cars, machines, power stations, medical technology and consumer goods, for a population of 80 million. The need for drugs and medical equipment is particularly pressing.

    However, companies from all industries are in limbo as sanctions on Iran remain largely in place, hampering banks’ ability to engage in the country. United Nation sanctions concerning Iran’s nuclear program have been lifted but many imposed by the U.S. government still stand concerning terrorism and human rights, for example, and financial sanctions affect countries beyond the United States.

    “A lot of companies thought that after the nuclear deal, the risk of doing business with Iran was minimal,” said Mark Hibbs, senior associate in Carnegie’s Nuclear Policy Program. “Many of the sanctions remain in place, however.”

     
    Child, hospital, Iran AP
    Businesses from abroad are ready to move and the sector needs investment. Source: AP

     

    Blocked Hermes credits are another complicating factor, due to unpaid bills. These are export credit guarantees given by the German government. Under the guarantees, if exporters’ partners don’t pay, their business will be covered.

    Currently, Iran owes €500 million in unpaid Hermes bills, Mr. Hibbs said, adding he expects the governments to resolve this issue but that it is an additional hurdle to business until the credits are available again. “That’s a separate issue but a direct, real-time issue, it’s more immediate for companies that are interested in doing business in Iran,” he said.

    Companies have also found that a much larger share of the economy is run by the IRGC, Iran’s military security organization, than previously thought, Mr. Hibbs noted. Some have claimed that as much as 80 percent of the economy is run by IRGC-related enterprises.

    Another factor is reporting requirements. German companies doing business in Iran and in the United States have disclosure obligations that some of the companies can’t meet. They have to provide details of financial transactions for transparency but many exporting companies found it “extremely difficult to get solid information about creditworthiness and the risks of doing business,” Mr. Hibbs said.

    He noted that at a meeting of smaller and mid-sized companies from Germany, many said they feared negative publicity and the possible effects on their business. “If Iran is portrayed as a rogue state, that could hurt their reputations,” he said.

    “As a German company, we’re under no illusions: Regular business will only start after U.S. banks begin dealing with Iran again,” Martin Herrenknecht, chief executive of a tunnel drilling company of the same name, told Handelsblatt. “Then the German banks follow suit.”

    Drugs made in Iran are cheap but seen as poor quality, according to Djavad Salehi-Isfahani, an economics professor at Virginia Polytechnic Institute and State University who comes from Iran. Sanctions, he noted, add a 30 percent premium on anything imported.

    “People do pay this as there’s a lot of suspicion that Iranian drugs are substandard and ineffective,” he said in an interview.

    Although medicines were exempt from sanctions, Iran’s pharmaceutical sector has faced severe difficulties for years. Sanctions on the country’s banking system meant few pharmaceutical raw materials could be imported and there are shortages, particularly of more advanced medicines, according to Business Monitor International.

        For hospitals and health care institutions, buying a cat scan from the United States was a huge headache because they couldn’t sell them for fear they’d be hunted down by the U.S. Treasury.

    Local manufacturers struggled to make up for the shortages. Looking ahead, Mr. Salehi-Isfahani said he expected local drug companies would try to find partner companies abroad. “This would help convince buyers that the drugs are of high quality,” he said. “If they can convince people the drugs are made abroad and that they are raising the quality standard through cooperation, that’s very important.”

    Health companies from Germany are monitoring the situation. Günther Forneck, a communications manager at drugmaker Bayer, told Handelsblatt Global Edition that the pharma company’s revenues in Iran are only a very small proportion of its overall sales. “We believe our products, particularly our health care and agrarian products, are also needed in Iran and see further business potential as sanctions are lifted,” he said, adding that the company’s planning depended on the concrete way that sanctions were lifted and that Bayer was watching developments.

    Iran’s hospitals also need equipment, which they may find easier to buy in the future than in the past. “For hospitals and health care institutions, buying a cat scan from the United States was a huge headache because (American companies) couldn’t sell them for fear they’d be hunted down by the U.S. Treasury,” Mr. Salehi-Isfahani said.

    Siemens is also looking forward to the Iranian market opening again. “Siemens’ history in Iran dates back to 1868 and we’ll now be stepping up our efforts toward continuing this long tradition,” a Siemens spokesperson told Handelsblatt Global Edition. “We want to support Iran in the future development of its infrastructure such as the energy sector, rail transportation and healthcare.”

    Siegfried Russwurm, a management board member of Siemens who visited Tehran last fall in the same business delegation as Mr. Vonscheidt, said there was a need for a digital link between highly technical university hospitals and satellite hospitals that could be connected through telemedicine and digital methods. “That’s exactly what this country needs and that’s where we want to build up our collaboration,” Mr. Russwurm said in an interview at the time.

    Fresenius, a German health care company that makes medical technology, was also careful to note that health care was not covered by sanctions and that the company maintained relations with Iran supplying medicines.

     

    Iran-economy

     

    “Fresenius Medical Care and Fresenius Kabi do not have any plants or offices in Iran, (but) the pharmaceutical company has supplied Iran with drugs and products exempt from international sanctions for humanitarian reasons,” Matthias Link, a spokesman for Fresenius, told Handelsblatt Global Edition. “There’s significant pent-up demand for health care. While the development of international economic ties may lead to increased demand for our products over time, it is still too early to make a detailed forecast.”

    “Iran is becoming more and more important to our business,” said Gangolf Schrimpf, a media relations manager at German health care specialist Merck, which is the second-largest international pharma company in Iran after Sanofi. Merck presently employs 40 people in Iran and helps patients with products to treat diabetes, multiple sclerosis, cancer, infertility and cardiovascular diseases. “We have been working with Actoverco, a local company, to produce diabetes drug Glucophage and may extend this deal to other drugs given the positive experience in this partnership.”

    In the coming months, the situation for companies exporting to Iran is likely to normalize and become straightforward, Mr. Hibbs said but added that for those considering investments over a period of 10 to 15 years, the risks were much more difficult to assess.

     

     
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    Patients in Iran waiting for treatment. Source: Getty images

     

    German companies, mindful of the large fines imposed on banks for ignoring trade restrictions with Iran, are now waiting for U.S. banks to begin doing business again there. They are also calling on German banks to set up business operations in the country.

    How successfully German companies will compete with U.S. rivals when the market opens up remains to be seen, but Mr. Hibbs sees German companies having an advantage, given the historical context. Because the United States, “led the world in sanctioning Iran for many decades,”  it meant the biggest economy in the world “was not a competitor” for Germany up until the E.U. restrictions.

    “Iran has a lot of good, well-qualified doctors in all areas of medicine and the standard of their training is very high; my elderly relatives have good experiences of the healthcare system, one of my parents had surgery,” said one Iranian living in Germany, who talks to relatives there. But “they (also) say if you go to hospital, the technology isn’t so good.” Looking ahead, the question now is how far Iran will invest in the sector.

     

    German Trade with Iran-01

     

     

     

  • Iran FDI booming,Investor flop into Iran

     

     Based on International reports Iran's FDI Increased in 2016.
    The Norwegian investors said in a meeting with Governor General of Gilan Province Mohammad Ali Najafi that Gilan has high potential in fisheries and they are hopeful of partnership in the fisheries and aquaculture industry.
    They said they are ready to invest 10,000 billion Rials investment in production of trawlers, small fishing boats and cages for fish culture through sophisticated technology.
    Najafi for his part said Gilan province is willing to benefit from experience of Norway in fish culture and seafood products.

     

  • Iran to inaugurate 15 new petrochemical projects by 2017

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    Iran will inaugurate 15 new petrochemical  projects by March 2017.


    Marzieh Shahdaee, Director of the National Iranian Petrochemical Company’s plans, said this will boost the country’s petrochemical capacity by ۸.۵ million metric tons.

    “There are 60 petrochemical plans underway in the country, " she said, adding that plans which are over 60 percent complete are main priority. She said the mentioned plans require $33.4 billion worth of investment to come on stream.

    Seven petrochemical units, with a total capacity of 2.7 million tons, will come on stream by March 2016, she added.

    The country has exported some 12 million metric tons of petrochemicals so far.
    Iran plans to increase the number of its petrochemical units to 100 and the value of petrochemical exports to $70 billion over the course of 10 years, he said.

    Iran’s petrochemical output has exceeded 40 million metric tons since the beginning of 2014.

  • Iran welcomes boosting trade with EU




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    Iran welcomes boosting trade ties with the European Union in a way that European investors could take advantage of unique opportunities in Iran and Iran’s economy could accelerate the process of its growth and development, according to Central Bank of Iran (CBI) Governor Valiollah Seif.



    Seif made the remarks in “The 2nd Business and Banking Forum Iran Europe” which kicked off in Tehran on Saturday and will run until Monday.

     

    In January world powers led by the United States and the European Union lifted sanctions on Iran which had been imposed over its nuclear program. The subsequent leap in Tehran’s stock market in late January and early February gave a hint of the country’s investment potential.



    The lifting of sanctions opens a new chapter of economic development and put the country’s potentialities into practice, Seif added.



    The ground is laid for more security of foreign investment in the country and also for more economic sustainability, he maintained.



    Iranian economy enjoys great advantages such as educated and expert manpower, huge natural resources, cheap price of energy, big market inside the country and also access to the regional markets, the official highlighted.



    “I hereby invite all European investors, service institutes and also banks to take the advantage of unique opportunities created in Iran in the post-sanctions time”, the CBI’s governor stated.



    He also said that all Iranian banks are now connected to the SWIFT international payment system.



    ---- 2016 economic growth above 5 percent



    Elsewhere in his remarks, Seif said that Iran’s economy is expected to witness an economic growth of more than five percent in 2016.



    “Economic growth slowed down in 2015 but domestic and international predictions both indicate that growth in 2016 would be beyond 5 percent,” he added.



    *** European banks should avoid conservatism



    Addressing the same forum, Mohammad Khazaei, the Iranian deputy economy minister and also the president of the Organization for Investment, Economic, and Technical Assistance of Iran, said: “Let me be honest with you, I see some conservative approaches from European banks to work with Iranian banks. I would like to make it clear here that conservatism is the big enemy of taking advantages in Iran’s market.”



    Banks are the routes of collaboration, transferring money, so any problem in this area of course is a big obstacle in the way of cooperation, the official stated.



    He went on to say: ”Because Iranian banking system and Iranian businessmen have been away from their traditional counterparts [during the sanctions times]; therefore we need to get together again and know how the banks can get together and there are many issues that we should solve and then we can also move.”



    Elsewhere in his remarks, Khazaei said Iranian government has adopted policies to support foreign investment especially in the fields which bring value added, such as transfer of technology and increase of exports.



    He mentioned facilitation of investment making through cutting some administrative and trade barriers as one of the mentioned policies.



    Iran will take the same approach toward the foreign investors as that towards the Iranian ones; the official stated, adding: “Based on the law, your investment in banking sector in Iran is protected and guaranteed by the laws, so there is no impediment or problem to work in this area.”



    The foreign banks and investors will be granted tax exemption of 20 percent in the mainland and 100 percent in the FTZs of Iran, he announced.



    *** ‘New, big opportunities in Iran by sanctions removal’



    Matthias Machnig, the state secretary at Germany’s Federal Ministry for Economic Affairs and Energy, was the other speaker in the forum.



    He said: “Now by lifting of sanctions there are new and big opportunities. It is very crucial that in these conferences we talk together to build up trust. I hope this conference will build up new relations and we will be able to define projects where we can work together and can build new basis for our economic and political relations.”



    “We want your country being a constructive partner, not only in this region, but also in the international level and hopefully we are able to take this opportunity and find new ground for a common work together”, he added.



    European and Iranian companies now want to take advantage of the resulting opportunity as quickly as possible, Machnig said; adding there are a lot of opportunities for long-term partnership which can benefit both sides.



    *** Views of some foreign participants



    One of the participants in the forum, Sonke Reimers, the managing director of Germany’s dfv media group, told the Tehran Times: “I think it is a very important forum, to bring together the experts from banking industry.”



    Referring to the sanctions removal, he said: “I think it’s the time to come back to the table.”



    “The world has changed since the sanctions were put in place, so there are a lot of technical and other issues we should understand. We should understand what’s going on in Iran and I think you should understand what’s going on in Europe”, he stated.



    “We had a huge financial crisis in Europe and since then regulations came in place which are even worse than sanctions, so the world of banking and finance is very different if you come to Europe now, from before the sanctions”, he added.



    “There are many opportunities and now it’s the time to take the opportunities. There are regulations in Iran that the German companies should know”, said Michael R. Fausel from Beiten Burkhardt, a commercial law practice founded in Germany and active worldwide.



    “The conference shows that Iran is open for business, is keen to reconnect to the global banking and financial system. I think this conference is very positive for Iran and also more importantly very positive for Europe and the rest of world”, said William Breeze, an energy finance expert in Britain’s Herbert Smith Freehills, one of the world’s leading law firms.



    “The reason for taking a conservative approach toward cooperating with Iranian banks is that European banks are concern about what America would think. I Think and hope that European banks can seek quite what a large opportunity Iran offers and realize that it’s an opportunity that we take and European banks should reengage as quickly as possible”, he noted.



    “The forum is important for passing information, for being able to bring together the global institutions and Iranian institutions, so we understand how we can work closely together”, said Charles Blackmore , the CEO of Britain’s Audere International Ltd.



    He said: “European banks are conservative because the primary sanctions are still in place. They have been fined many times by the Americans and they are nervous, they want to know, make sure that who they are working with. When they know who they are working with, then they can upset the American sanctions and they will be more relax about releasing money. But also you got to remember that Iran is one country of the whole world and there are many opportunities for finance, so we must evaluate the risks.”







    CAP: Central Bank of Iran Governor Valiollah Seif speaking in “The 2nd Business and Banking Forum Iran Europe” in Tehran on Saturday

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  • Iran’s re-entry into the global economy: An interview with Chris Parker


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    by Iain MacGillivray

    Chris Parker, MBE, is the CEO of Iran Business Hub, a London-registered, international, British and Iranian partnership that specializes in large corporate entry into Iran. The Iran Business Hub provides confidential advisory, strategic planning and operational services. Mr. Parker sat down with GRI to discuss Iran’s re-entry into the global economy and the future of economic investment in Iran.
    “Not a question of how economic engagement will happen but when”

    GRI: With Iran’s re-entry into the global economy and the possibility of economic opportunities for trade and foreign capital, what do you see is the future for Iran regarding economic investment? What does Iran offer for future investors?

    Chris Parker: I was just talking to former deputy governor of the Central Bank of Iran (CBI) – Kamal Seyed Ali, who aptly pointed out that “Iran is in a period of transformation.” What this statement means is that there is a sense that there is great momentum building up and an enormous appetite from western businesses and their Iranian counterparts to engage with each other. Essentially, both the private sector and the Iranian government are so to speak ‘moving out onto the dance floor’ regarding economic engagement. They are unsure of how to ‘dance with each other’, but the motivation is there.

    However, there is a significant gap in information on how to facilitate this. Despite the appetite from international credit organizations, national banks and sovereign wealth funds, there needs to be patience and clarity before real economic engagement occurs. Notwithstanding this gap in information, there is support from all sides in making sure that this change and tempo continues. The necessary international frameworks and regulations are being established as we speak to facilitate these processes, but EU and US financial institutions need to help promote this further.

    However, we must remember the significance of how big the potential market is in Iran. It is a consumer-driven market, which has been short of branded and luxury goods for some time and this presents an opportunity for importing and rebuilding consumer confidence in these areas. Of course external influences such as the continuing OFAC sanctions and regional instability will drive uncertainty in these relations, but the unstoppable momentum and interest that is there between the private sector and the Iranian government can only bring round positive outcomes. It is not so much a question of how this economic engagement will happen but when.
    The potential of ‘soft infrastructure’

    GRI: What future investment do you see for the Iranian oil and aviation industry? What other industries do you see substantial growth in and the potential for foreign capital investment?

    Chris Parker:  The Iranian oil industry is in need of substantial investment. Some International Oil Companies (IOC’s), as well as their shareholders, will want to help Iran back onto its feet in re-entering the hydrocarbon market. Iran has the potential to dominate the oil sector and it is a growth economy. Regarding the aviation industry, growth is moving at a rapid pace and is fastest in terms of domestic aviation.

    Besides this let’s not forget that it is far easier in Iran to invest large amounts of capital compared with other Middle Eastern countries. Iran is a signatory to The New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. This allows transparency and significantly reduces political risk, as there is a final court of arbitration and court-enforced decisions if anything does go wrong. However, all such legal frameworks, of course, remain recently untested. Iran presents a safe place to invest large amounts of capital investment, therefore the drive for international investment in these primary industries.

    In terms of other sectors as I mentioned previously, consumer goods will be one of the most major areas for investment and economic opportunities in Iran. However, what is also needed (and I can see exponential growth in), is ‘soft infrastructure’ such as in traffic control operation procedures, railway systems, and integrated logistics. Iran has a very well-educated population and the drive for innovation and design in population’s centres will see the potential for technological investment as well.

    Don’t forget that visas into Iran are easier to obtain now, and it will become a very attractive international tourist destination especially in the north of Iran. There is no significant resort-based tourism yet but with ski-fields and scenery that is second to none, International tourism is on the up and up and will no longer be exclusively for adventure travellers. However, despite international investment, it must be made clear that Iran will dictate its own growth with the help of these international and regional companies.
    “Iran can and will become a new trading hub”

    GRI: What possibilities does Iran’s re-emergence in the global economy present for regional economic prospects?

    Chris Parker: Iran is an island of stability in an ever uncertain and unstable region. It has the required institutional processes and security needed to provide a stable political and economic environment. This is why there is this thirst to invest because there is the potential as well as a secure environment for business.

    Concerning regional integration, the political rapprochement and lifting of sanctions has also seen Iran play a potentially larger role in the region. The economies in the GCC are in trouble due to the drop in the price of oil and the social tensions that are caused by this. Iran, however, has opened its doors to investment from regional players and vice-versa. It is easy to obtain a visa for business purposes as Iran seeks to play a wider part in the economic integration of the region. Despite the political situation in the Middle East, there is an excellent opportunity for economic integration with other Gulf States as is demonstrated by Iran’s relationship with Oman. Iran can and will become a new trading hub just like Dubai.  
    The need for a robust regulation model

    GRI: Which countries are most interested in investing in Iran? Do you see potential investment from international economic players such as the United States and other developing powers?

    Chris Parker:  In terms of investment and finance, there are still many primary sanctions holding back companies from investing in all sectors such as banking. Leading the way however is Turkey, who sees the opening up of the Iranian economy as an enormous opportunity. Turkey will dominate in terms of hard infrastructure, such as in construction industry due to its regional proximity and expertise. On the other hand, the EU and the UK will lead the way in ‘soft infrastructure,’ which I mentioned previously. Most of these investments will take the form of Joint Ventures that will develop not only these industries but also provide essential expertise.

    Iran, however, needs to work out a robust regulation model – whether it follows the path of Dubai in terms of high standards or follows the quick build model with a lesser standard. However, this decision will be crucial if Iran wishes to attract and establish solid business investment.

    Iran has now attained an unstoppable momentum. It is this rate of change that we need to observe and watch. For us in the business world, this tempo and rate of change must also come hand in hand with quality, safe infrastructure, and regulatory development. It must also be linked to political assistance from the international community and international business sector. The possibilities for the future are endless, but Iran cannot do this on its own.

    Chris Parker, MBE, is the CEO of Iran Business Hub. He is also Chairman of Charmogen Group, an international consultancy network, and he was previously Chief Operating Officer for a major oil & gas exploration company. He has also been an Operations Director with Hyder plc in London, and was Project Director for the successful $1.3B Burj Dubai infrastructure mega-project in the UAE. Chris has served on UK and NL Government Trade Missions to the MENA region and frequently speaks at international trade conferences and comments live on Sky News and international media. Chris has a Master’s Degree in Technology and is a Chartered Manager and Fellow of the CMI.

    keywords:Iran,Investment

    Source:Global Risk Insights

  • Post sanctions, this is a country with much going for it

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    Fifty years ago, he had just attended a conference in Tehran. He loved it — as did his fellow delegates. In a note afterwards, he wrote of their “surprise with the striking contrasts” all over the city, noting the “watermelon stalls on one side of the road” with “new factories for assembling Leyland lorries and Mercedes ‘buses’ on the other”.

    He was impressed by Iran’s firm sense of nation, its pride in its ancient civilisation, and the “the stability and continuity provided by the personality of the Shah”. He noted Iran’s steadily improving relationship with the Soviet Union and eastern Europe and the growing ease with which companies — and car companies in particular — could do business in Iran.

    Tehran, he reported, was a “Mercedes museum” in that “almost every model ever produced was on the streets”. Leyland had “established a strong and flourishing bridge head”; British double-deckers looked “surprisingly at home under the blue skies of Tehran”; and a new factory was being set up to produce 7,000 Rootes Group saloons a year (Rootes was a UK car manufacturer that had disappeared into Chrysler by the end of the 1960s).

    Anyone who thought that Iran was “ripe for revolution” was just wrong, said Mr Bruce-Gardyne. He even dared to hope that “the example of Persia’s prosperity through stability might even prove infectious” in the region.

    Forecasts made about the Middle East tend to be even riskier than those made about regions elsewhere. And Mr Bruce-Gardyne was of course wrong on every single point.

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    Since the country approved its theocratic-republican constitution in 1979 there has been less “prosperity through stability” than anyone at the 1966 convention might have expected. But could it now return? The end of the sanctions against Iran (at least by the EU and the UN) and the results of recent elections show the reformers have made gains.

    Interest in the country has soared: there are conferences aplenty both here and there — including one hosted by the Financial Times in London this week — and the talk is all of prosperity and stability once more.

    I listened to Michael Axworthy of Exeter University speaking at an event held by Scottish-based fund manager MacInroy & Wood last week. His positive case for Iran is hugely compelling. Iran has a young and highly literate population, 60 per cent of which is aged under 35 (no pension problems there) with a wealthy, entrepreneurial and still interested diaspora.

    Rouhani brings hope that this time it might be different in Iran
    The snow capped peaks of the Alborz mountain range stand beyond buildings and rooftops on the city skyline in Tehran, Iran, on Wednesday, Nov. 25, 2015. Iran will encourage foreign partners and investment as sanctions are lifted and the country seeks to boost its economy after July's nuclear agreement with the world powers, President Hassan Rouhani said. Photographer: Simon Dawson/Bloomberg

    The coalition should be better placed to enact the economic reforms the country desperately needs

    The literacy rate is over 85 per cent, with 68 per cent of university entrants being women and some 234,000 new engineers graduating every year. The young are also very “IT savvy”, says Mr Axworthy. Think of an interesting IT firm in the west and you can be sure it is already replicated in Iran.

    A chat with Iran specialist Dominic Bokor-Ingram of Charlemagne Capital cemented the image. He reckons that Iran can grow its GDP at 6-8 per cent for the foreseeable future. It has all the things it needs to do so. Certainly, sanctions have left plenty of spare capacity — Iran currently uses only 42 per cent of its generating capacity. It has the right sort of population. It has very low debt: net government debt to GDP is a mere 4 per cent (this is the kind of figure that George Osborne fantasises about) and its companies and consumers are all but debt free too.

    It has a good starting point — Iran’s economy is already bigger than Australia’s and it is also surprisingly diverse. You might think Iranian prosperity is likely to be based on the fact that it has some of the largest oil and gas reserves in the world (fourth-largest oil reserves and the largest gas reserves of all). You’re wrong, says Mr Bokor-Ingram. Despite all this underground sun, the oil and gas industry made up only 10 per cent of GDP in 2014.

    There around 30 other sectors listed on the stock exchange: there may be no Rootes left, but the car industry remains Iran’s second-biggest contributor to GDP (look up Iran Khodro — I wouldn’t mind one of their four wheel drives). You might also think that much GDP is devoted to military spending. Again, wrong. It’s 2.7 per cent.

    Sounds good doesn’t it? There are risks. Lots of them. There is the risk that the reformers’ progress is shortlived — that religious hardliners take back control. And that the result of that is the thing investors in Iran most fear — “snapback,” or the automatic reimposition of sanctions.
    "There are risks. Lots of them. There is the risk that the reformers’ progress is shortlived — that religious hardliners take back control. And that the result of that is the thing investors in Iran most fear — “snapback,” or the automatic reimposition of sanctions"

    There are many geopolitical tensions: Iran is fighting a good few proxy wars. Mr Axworthy also points to nasty signs of family breakdown, gender discrimination and drug addiction (Iran takes a hard line on drugs but is also home to 2.4m heroin addicts) and high levels of corruption. Then there is oil. It might be only 10 per cent of GDP but revenues from it make up some 30 per cent of government income. So oil at $20 rather than $60 does matter.

    Still, I’m prepared to overlook most of these risks. Why? Price. The Iranian stock market has risen 20 per cent since the end of sanctions but that still puts it on a 2016 price/earnings ratio of 5.5 times with a dividend yield of 13 per cent (Mr Bokor-Ingram’s numbers). The Mobile Telecommunications Company of Iran has 6.5m subscribers and trades on a price/earnings ratio of 3.5 times. Buy it today and you’ll get a 12 per cent dividend. All this discounts the kind of political and economic disasters that look increasingly unlikely (note that Russia, which I am also prepared to hold on the basis of cheapness is on over seven times) — and makes very little allowance for the improvements that look increasingly likely.

    At this price, Iran has to be one of the best opportunities in the investment world right now — even if the “E” in the PE equation isn’t 100 per cent accurate. The bad news is that I’m not the only one to have noticed. Charlemagne Capital held a conference that included Iran this week: it was packed and I was getting texts from excitable rich friends in the audience by coffee time.
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    And it isn’t easy for ordinary investors to get in: there are technical problems (with foreign exchange and with custodians) and the US sanctions make it hard for US banks to do much. And of course the whole idea is rather new — foreign buying is a mere 1 per cent of the market.

    Charlemagne has the only fund I know (with its Iranian partners) — the Turquoise Variable Capital Investment Fund. Unfortunately, to get in you need to invest $125,000, pay high fees, and not mind there being no liquidity if everyone piles in and then tries to get out again (almost inevitable with newish markets like this). But if you can cope with all of that, Iran is definitely worth a look.

  • Renault Iran Sales Up 161% in Q1

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    French automaker Renault has registered a rather unprecedented increase in sales in Iran in the first quarter of 2017

    Renault Group said sales in Iran rose by 161.5% in the first quarter of this year.

    The group now has hold over 9% of the Iranian market, up 4.9 points, thanks to the success of its new models being sold at low prices compared to several other brands competing in Tehran and all major cities. This is up 0.6% since the 2016 figures were released.

    Renault, in a press release, reclaimed its position as a major player in the saturated market last year, with increasing imports of fully built vehicles and also through partnership deals with the Industrial Development and Renovation Organization. The Paris-based firm also benefitted from the production of its latest Sandero and Sandero Stepway models in conjunction with Iran Khodro Group, the biggest carmaker in the country.

    Renault’s proposal for the local market includes imports of fully built vehicles for bigger spenders, including the latest models available in all big markets. These include the upgraded Koleos large SUV, large Talisman models and range of Megane models (dubbed Scalia) in Iran.

    Meanwhile the company plans, as part of its joint venture with IDRO, to produce three new models for the domestic market by the end of 2017 or early 2018.

    These include the low-cost Kwid crossover and new models of Symbol and Duster.

    A prelude to Kwid sales in Iran is in the Indian market, where the car was originally released. In the first quarter of that market Kwid registered 27,000 sales up 9.9%

    The joint venture is due to produce 150,000 cars per year.

    It was previously reported that Saveh, a city in Markazi Province (southwest of Tehran), would be the production center for the joint project.

    Renault used to sell 10,000 cars in Iran market every month till 2013 before the international sanctions were tightened in 2011 and 2012.

     Global Sales

    Groupe Renault (including Lada) worldwide registrations increased by 15.8% in the global market y/y.The group’s share of the world market now stands at 3.8%, up 0.4 points on 2016.

    The Renault and Dacia brands set new sales records for the first quarter. Renault Samsung Motors (South Korean Joint Venture) sales increased by 56.3% and those of Lada by 7%.

    In Europe, the group’s share of the PC + LCV market increased 0.2 points to 10.1%. Sales grew 10% to 478,706 vehicles.

    Renault’s own-brand continued to progress, with a 10.1% rise in registrations.

    The market share for this brand reached 7.7%, up 0.1 points. Sales of ZOE electric car rose 57% and reinforced the group’s leadership with a 28% share of the electric vehicle market.

    Source:Financial Tribune

  • Turkish $4.2-billion deal to build Iran power plants’

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    Turkish energy company Unit International has reached a deal worth $4.2 billion with Iran’s Energy Ministry to build seven natural gas power plants, in what it said was the biggest investment in Iran since the lifting of sanctions.

    A total of seven power stations, to be built in seven separate regions of Iran, would have a combined installed capacity of 6,020 megawatts, said the company in a statement, as reported by Reuters.

    “Unit International has reached a deal with the Iranian Energy Ministry worth some $4.2 billion to build natural gas combined cycle power plants,” Unit said, adding that the agreement was signed at a ceremony in Tehran on June 1.

    Unit International is owned by Ünal Aysal, the former chairman of major Turkish soccer club Galatasaray.

    Aysal said to reporters that when completed, the power plants would meet 10 percent of Iran’s energy needs. Construction of the seven plants was planned to begin in the first quarter of 2017.

    The company signed a 20-year agreement with Iranian officials to build the power plants on a build-operate-transfer (BOT) model.

    “Over this period, Iran will provide natural gas to us. Iran will also purchase the power that will be generated by us on a pre-defined price for a six-year period. After this, the electricity will be exported by Iran or sold in the country’s free market,” Aysal said, adding that such investments had only been made by Iranian companies up to now.

    “This agreement represents a first in terms of the opening of Iran to foreign direct investment,” he added.


    1,000 hours of negotiations 

    Mohsen Tarztalab, the head of Thermal Power Plant Holding, which is responsible for the deal on behalf of the Iranian Energy Ministry, said the sides negotiated for the deal over more than 1,000 hours in the last 12 months.

    “As the gas-fired power plants have outmoded technologies, their efficiency levels are low. The power plants that will be built by Aysal’s company will be two times more efficient than the existing ones,” he said.

    Iran’s deputy energy minister, Husheng Felahetiyan, told daily Hürriyet last week that the country would soon sign a deal worth around $3 billion with Turkish companies to build power plants with an installed power of 5,000 MW.

    Felahetiyan also noted that the power trade between Iran and Turkey would increase, adding that Iran now sells around 350 MW of electricity to Turkey.

    The United States, the European Union and the United Nations lifted most sanctions on Iran in January under a deal with world powers whereby Tehran agreed to curbs on its nuclear program.

    Turkish companies  have seen Iran as best Investment hub andmove as a major trade and investment opportunity, with the car, clothing, textiles, machinery and chemicals sectors seen as offering particular potential.

     

    Investment Process
     


    Conclusion and call for consultation
    Niroo Research Institute to facilitate investment in the development of CHP generators provides all services to small-scale plants investors with the aim of increasing penetration of combined heat and power generators, increasing efficiency and peak shaving of the Network.
        Issuance Agreement, construction and operation permit, obtaining permits and certificates, contract of guaranteed electric power purchasing.
        Coordinate the activity of attract participation units in regional electric companies and electrical distribution companies.
        Condition assessment tests, performance testing and Maintenance Planning.
    Free consultation services to investors in great Tehran:
        Feasibility consultation, technical-economic evaluation of projects, investment consulting.
        Finding the optimal place for generator installation and heat recovery.
        Introduction of qualified consultants and contractors to design and implementation of CHP units.

  • What Iran’s Special Economic Zones offers incentives to investors?

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    The future of Iran  is intertwined with its new economic zones. These, in turn, benefit from the country’s political stability that raises investor confidence
    Traditionally, Iran has virtually bled natural resources; its main exports have been in the form of raw, unprocessed materials with minimal value addition.
    President Hassan Rouhani dictates increasing the role of private sector in economic development  , which will in turn generate thousands of jobs, attract the transfer of new technologies, and greater wealth in the form of higher export earnings and increased foreign direct investment.

    Invest in Iran


    The objective of the Special Economic Zones (SPZ) is to attract and promote investment for export-led industrialization and the processing of local raw materials, including leather, textiles and garments, lapidary, wood, and fish.


    There are several advantages and incentives for members of these schemes. Investors enjoy exemption from corporate tax and withholding tax on rent, dividends and interest; remission of all taxes on raw materials and capital goods; exemption from taxes and levies imposed by local government authorities on products produced in SPZs; and exemption from VAT on utility and wharfage charges.

    Beyond fiscal incentives, another benefit of exporting from Iran  lies in the country’s  that goods manufactured in special economic zones, as well as raw materials and imported CKD parts into the country is not subject to price regulation due to unutilized resources and allocated currency.

    If the processing of imported goods i changes the tariff of goods, the rate commercial benefit of the goods would be calculated equal the commercial benefit of raw materials and spare parts of the country.
    If you need Investment consultancy on investing in Iran Special Economic Zones please send your enquires to :This email address is being protected from spambots. You need JavaScript enabled to view it.  

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