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By: Hassan Hosseini

Phd in Finance

Investment& Finance Advisor 

An investment consulting firm plays a key role in the investment process, which requires participants to make accurate and well-calculated decisions.

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Investment consulting is important in making the right financial decisions, optimizing portfolios, and safeguarding the well-being of clients by offering expert guidance in a complex and dynamic investment landscape.

In this article we explore the world of modern investment consulting firms, shedding light on their role in investment process, strategies, and client-centric approaches.

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Understanding an investment consulting firm
Investing in modern financial landscape requires a deep understanding of market dynamics, risk management, and a well-thought-out strategy.

Many individuals and businesses turn to investment consulting firms to navigate this terrain. Professional advisors play an increasingly important role in investment process, offering a wide range of services that cater to the unique needs of their clients.

The investment process involves several key participants, each playing a distinct role. This circle includes brokers, banks, regulators, rating agencies and so on At the core are the investors, who seek to grow their wealth or achieve another goals. Investment consulting firms occupy a prominent place in this process as trusted advisors, providing expert guidance and tailored strategies.

A consulting firm in the context of investment process is a specialized advisory organization that offers expert guidance and strategic counsel to individuals, businesses, and institutions looking to make informed and optimized investment decisions.

The term "investment consulting firm" emerged in the 20th century as the investment landscape grew increasingly complex. The origin of investment consulting can be traced back to the need for institutional investors, such as pension funds and endowments, to navigate the intricacies of managing their assets. These organizations required specialized advice to make investment decisions, manage risks, and meet their financial obligations.

The industry began to formalize in the mid-20th century with entities like A.G. Becker and Callan Associates. These pioneering firms provided a range of consulting services to institutional investors, offering assistance in creating investment policies, conducting manager searches, and crafting diversified portfolios to increase the efficiency of the investment process.

The role of consulting firms has evolved in tandem with changes in global investment landscape. Early investment consultants primarily provided advice on asset allocation and manager selection.

However, their role has expanded significantly over the time:

• Broadened service offerings: Investment consulting firms have diversified their services to include risk management, performance monitoring, and compliance. They now offer holistic solutions that encompass the entire investment process.

• Advanced client demographics: Initially serving institutional clients, consulting firms now cater to a broader client base, including individuals, family offices, and smaller institutions. This expansion has necessitated more personalized and flexible approaches.

• Technology integration: The adoption of sophisticated technologies, such as data analytics and portfolio optimization tools, has transformed the way consulting firms operate. They can now provide more data-driven and efficient solutions.

Three huge milestones have marked the development of the investment consulting industry:

1. 1950s-1960s. Pioneering firms were founded, offering investment consulting services to institutional clients. These firms played a vital role in shaping the industry.

2. 1970s-1990s. Investment consulting services across the world continued to expand its influence as pension funds and endowments increasingly relied on consultants to guide their investment decisions. Technical and methodological innovations like the introduction of the Morningstar Style Box (1992) helped in the manager selection process.

3. 2000s and beyond. The 21st century saw investment consulting firms adapting to a rapidly changing financial landscape. They began offering specialized advice on emerging areas like environmental, social, and governance investing (ESG) and alternative investments.

Investment consulting firms have experienced significant growth over the decades.

Today, they serve a broad clientele, including pension funds, foundations, high-net-worth individuals, and more. Currently, the list of largest consultants includes numerous prominent brands worldwide, such as BlackRock, Vanguard Group, Morgan Stanley, Fidelity and JPMorgan Chase.

Investment consultants exert significant influence on the strategies and choices of large institutional investors. Their professional recommendations drive decisions about asset allocation, investment manager selection, and risk management, impacting the financial health of pension funds and endowments. Many of these firms have expanded their services to include not only traditional investment consulting but also advice on environmental, social and governance investing, risk management, and alternative investments.

Investment consulting firms are currently operating at the intersection of financial theory and practical application, providing clients with advice and strategies that are theoretically sound and tailored to their unique financial goals and circumstances.

The role of consulting firms in the investment process includes, but is not limited to:

• Investment strategy development
• Risk assessment and management
• Due diligence and investment selection
• Performance monitoring and reporting
• Adaptation to market changes
• Education and empowerment

Generally, consulting firms offer the flexibility to adapt to changing market environment and empower clients with the knowledge they need to make informed financial decisions. In a world where financial markets are ever-evolving and full of uncertainties, consulting firms play a pivotal role in helping investors achieve their financial goals and secure their financial future.
Key financial theories guiding investment consulting
Investment consulting is actually based on several fundamental financial theories and concepts.

They provide the analytical framework and principles upon which investment consultants base their new recommendations. Understanding these theories is essential to appreciate the foundation of investment consulting and how they guide decision-making.
Modern Portfolio Theory (MPT)
Modern portfolio theory, developed by Harry Markowitz in 1950s, is a cornerstone of investment consulting. It posits that investors seek to maximize returns for a given level of risk or, conversely, minimize risk for a given level of return.

Investment consultants use MPT to construct diversified portfolios that combine assets with different risk-return profiles. This diversification is based on the principle that risk can be reduced by spreading investments across different asset classes. Consultants aim to identify the optimal mix of assets that will provide the highest expected return for a specified level of risk.
Efficient Market Hypothesis (EMH)
EMH, formulated by Eugene Fama in 1960s, asserts that financial markets are informationally efficient. In other words, asset prices reflect all available information, making it nearly impossible for investors to outperform the market.

Investment consultants consider EMH when advising clients on the choice between active and passive investment strategies. Efficient market hypothesis suggests that, in an efficient market, it is challenging to beat the market through active stock picking or market-timing. Consultants may recommend low-cost, passive investment strategies, such as index funds or exchange-traded funds (ETFs), that seek to match market returns.
Risk management concepts
Risk is an inherent aspect of investing, and investment consultants must effectively manage it. Consultants consider various types of risk, including market risk, credit risk, liquidity risk, and operational risk. This is directly related to the success of the investment process.

Theoretical models and risk management concepts inform the strategies employed by investment consultants to assess and mitigate risk.

For instance, consultants use available operational historical data, volatility measures, and Monte Carlo simulations to estimate potential portfolio losses and ensure they align with clients' risk tolerance. Consultants also design risk management strategies, such as diversification, asset allocation, and hedging, to protect portfolios.
Behavioral finance concepts
Behavioral finance is a wide field that explores how psychological biases and emotions influence investment decisions. It challenges the assumption of rationality in traditional finance theory and recognizes that investors often act irrationally.

Investment consulting firms draw from insights in behavioral finance to guide clients in making rational, long-term investment decisions. They help clients identify and avoid common behavioral pitfalls, such as emotional reactions to market volatility or overconfidence in investment choices. Consultants use these insights to promote discipline and adherence to a well-thought-out strategy.

These theoretical frameworks shape the core strategies and advice offered by consulting firms:

• Asset allocation: MPT guides the selection of assets in a portfolio, aiming to create a mix that balances risk and return, aligning with the client's risk tolerance and objectives.

• Investment strategy: EMH informs the choice between active and passive investment strategies, and it influences whether a consultant recommends actively managed funds or passive index-based funds.

• Risk management: The principles of risk management derived from theoretical models help investment consultants assess and mitigate various risks in client portfolios, ensuring they remain in line with the client's risk appetite.

• Behavioral coaching: Insights from behavioral finance assist consultants in guiding clients to make rational, long-term investment decisions, avoiding behavioral biases and pitfalls.

In essence, these financial theories provide the theoretical underpinning that supports the strategies and advice given by consulting firms during the investment process. By integrating these concepts, consultants aim to optimize investment portfolios, manage risk, and help clients achieve their goals.

Main tasks of modern investment consulting firms
Main tasks of modern investment consulting firms
Investment consulting firms are primarily engaged in the business of providing expert guidance and support to individuals and organizations seeking to navigate the world of international finance and investment.

Their core responsibilities revolve around designing and managing investment strategies that are tailored to clients' financial objectives. These companies employ a range of financial instruments and models to perform these tasks effectively.

The list of maim tasks of consulting firms in the investment process includes the following.
Client assessment and goal setting
Professional investment consultants start by comprehensively understanding the client's financial situation, objectives, risk tolerance, and investment time horizon. This step is crucial for tailoring investment strategies to meet the client's needs. A survey by CFA Institute found that 55% of clients cited goal-based planning as a significant value-added service offered by investment firms.
Asset allocation and strategy development
Investment consulting firms use the client's financial information to determine the best possible mix of asset classes, such as stocks, bonds, real estate, and cash, to achieve specific financial goals. This strategy outlines the framework for the client's investment portfolio. According to a study by Vanguard, proper asset allocation can account for 88% of the variation in a portfolio's returns.
Market research and due diligence
Investment consultants and consulting companies perform thorough market research to identify promising investment opportunities. They conduct due diligence to assess the potential risks and returns associated with each investment option. Professional consultants often have access to proprietary research and insights, giving clients a competitive edge.
Risk assessment and management
Investment consulting firms evaluate various types of risk, including market risk, credit risk, and liquidity risk. They develop various risk management strategies to mitigate these risks, aligning the portfolio with the particular client's risk tolerance. A study published in the Financial Analysts Journal showed that professional risk management can lead to improved risk-adjusted returns.
Investment selection
Consultants use their financial knowledge and expertise to choose specific investment vehicles, such as mutual funds, exchange-traded funds (ETF), individual stocks, or alternative investments, that best fit the client's strategy and risk profile. Well-known consulting firms with wide business networks often provide access to a wide range of investment vehicles, including alternative investments, that may not be readily available to individual investors.
Performance monitoring and reporting
Investment consulting firms continuously track the performance of the client's portfolio, comparing it to predetermined benchmarks. Regular reports are generated to provide the client with insight into portfolio performance. A report by PwC found that 93% of institutional investors rely on performance reporting to make investment decisions.
Effective cost management
Cost management refers to the process of evaluating, minimizing, and optimizing the various costs associated with investments in a client's portfolio. This includes explicit and implicit costs, such as management fees, trading commissions, taxes, and transaction costs. Consulting companies assess the fees and costs associated with various investment options and recommend strategies to minimize expenses. Reducing costs can improve overall investment returns.
Advising on tax efficiency
Consultants recommend strategies that optimize after-tax returns. This includes tax-efficient investment vehicles, asset location strategies, and tax-loss harvesting. Tax-efficient investing potentially adds 1-2% to annual returns, according to the research by Envestnet PMC.
Behavioral coaching
Consulting firms offer guidance to help clients make rational, long-term investment decisions. They help clients avoid common behavioral pitfalls, such as panic selling during sharp market downturns. Another interesting study found that poor investor behavior led to an average annual underperformance of 4.35% over 30 years.
Adaptation to market changes
Investment consulting companies provide timely recommendations for adapting the investment strategy to changing market conditions. This may involve rebalancing portfolios, altering asset allocations, or seizing emerging opportunities. During the 2008 financial crisis, consulting firms played a critical role in helping their clients navigate turbulent markets.
Regulatory compliance
Professional consulting teams ensure that investment strategies and decisions adhere to relevant regulations, maintaining legal and / or ethical compliance. Regulatory compliance is crucial in the financial industry, with potential legal and financial consequences for non-compliance.
Education and empowerment
Finally, consulting companies educate and empower clients with the knowledge and resources to make informed financial decisions. This includes explaining investment concepts, strategies, and the rationale behind recommendations. According to another survey by Fidelity, 92% of financial advisors believe that investor education is important for successful investment process.

Investment consulting firms bring these main theoretical tasks to life by leveraging their expertise, experience, and industry knowledge. The specifics of each task may vary depending on the client's circumstances and financial goals, but collectively, they contribute to successful investment outcomes and the client's financial well-being.
Client-centric approach in action
Consulting firms distinguish themselves by their ability to customize their services. In the highly competitive world of financial services, this approach is fundamental to providing effective advice.

The term "client-centric approach" refers to a business strategy that prioritizes the needs, preferences, and well-being of the client above all else. In practice, it means that consulting firms take more time to understand the unique circumstances, goals, and preferences of each client. They then design a tailored strategy that reflects these individual needs. This personalized service is what sets investment consulting companies apart and enables clients to achieve their financial objectives.

By Sadeq Dehqan and Hamideh Hosseini

Renowned Japanese pianist Etsuko Hirose, who is in Iran to perform some concerts during Japan Cultural Week (January 22 to 28) has said that she has found commonalities and closeness with Iranian people and is content over such closeness.

The Japanese pianist, who currently resides in Paris, learned to play piano when she was three years old. She could play Mozart's Piano Concerto No. 26, K537 along with an orchestra.

Hirose won the first prize for young pianist at the International Competition Frédéric François Chopin in Moscow and third prize in ARD International Music Competition in Munich as well as the first prize in Martha Argerich International Piano Competition in Buenos Aires in 1999.

She experienced her first orchestra performance with NHK Symphony Orchestra conducted by Charles Dutoit in 2001. She also worked with several world symphonies, namely Bavarian Radio Symphony Orchestra, Argentine National Symphony Orchestra, Basel Symphony Orchestra, Moscow Philharmonic Orchestra, Tokyo Philharmonic Orchestra and Warsaw National Philharmonic Orchestra.



Excerpts of the interview follow:

 

 How well do you know Iran and its music?

ETSUKO HIROSE: I am here in Iran for the first time. Although I do not know Persian language and your musical preference, I could have a very close relationship with Iranian people. In addition, music is an international language and is able to link people of different countries and languages. I am content over such closeness with the Iranian people.

 

How many performances have been arranged for you in Iran? How satisfied are you with your performances?

Actually, I had two performances for Japan Cultural Week in Tehran and one in Isfahan. In my opinion, the performances were successful and I could communicate with the audience which was clear from their applause and concentration on my works. As you know, performing concert is a mutual program between the performer and audience. Of course, before the concert, I had visited Iran for a short time which helped me a lot in communicating well with the Iranian people.

 

What are your favorite musical pieces? What is your style in playing piano?

I have worked on romantic pieces. Two issues are of high significance in my performances: The first is the purpose of the program's producer and the second is the kind of message they can convey. I do my best in playing piano and try to put all my feelings into the performance.

 

How are the works of Eastern and Western pianists different?

Many years ago, the difference between Japanese and Western pianists was very palpable. The difference was due to several issues. At present, all musical boundaries are unclear and one might even find a lot of similarities in the music of two cultures.

As I have learned playing piano in France, my style is inevitably like French pianists.

 

Please tell us briefly about your performance. On the stage, while you were playing, you breathed deeply at intervals and you also used head and hand movements. Does it have a dramatic aspect or is there any other reason?

I believe that a music player is like a lecturer with rising and falling tones which are very important for his or her words. Although piano is an instrument, I maintain that the very basis of music is voice. While playing the piano, I try to be like a singer who sings a piece.

 

How did you select the pieces that you performed in Iran?

In fact, I intended to show the high capabilities of the piano in performing the pieces using several themes and subjects. Accordingly, I used Beethoven's 'Moonlight' which is about nature and environment. I believe that music is not just to convey human feelings but rather the nature's feeling. I used Mily Balakirev's 'Islamey' out of respect for Islam.

 

Are you satisfied with your current position in playing the piano?

I don't think I've achieved the pinnacle of my ability yet. Usually, pianists reach that point in their 40s or 50s. I do my best to develop my performances.

 

What are your programs after the performance in Iran?

I will return to France after the concerts in Iran. I will have five concerts in a music festival in France and after that I will go for programs in the US and Japan.

Do you know what trade-Industrial free zones offers incentive to foreigner  in Iran?
Please download attached files to know more:

Turkey aims to triple trade with Iran to $30 billion as quickly as possible after the lifting of economic sanctions made banking transactions with the country easier, Turkish Customs and Trade Minister Bulent Tufenkci said in an interview.
The United States and Europe lifted sanctions on Tehran in January under the deal that limited Iran’s nuclear program. But some restrictions remain, slowing Iranian hopes to reintegrate with world markets.
“Banking and financial transactions have become easier (for Turkey) after the sanctions on Iran were softened, already boosting our business with Iran,” Tufenkci told Reuters in an interview in Ankara.
Trade volume between Iran and Turkey rose to $21.9 billion in 2012, then fell below $10 billion in 2015 with the effects of the sanctions.
The Turkish and Iranian central banks have reopened their connection on the SWIFT global transaction network, an Iranian economy official said earlier this month, in a sign of normalizing banking ties.
Tufenkci also said Turkey’s targets of increasing its exports to $155.5 billion this year, from $144 billion in 2015, and of reaching 4.5% economic growth were achievable.
“It was targeting growth of above 5% in 2017,” he said.
Tufenkci voiced optimism that relations with Russia, which has taken retaliatory economic measures against Turkey after the Turkish military shot down a Russian warplane near the Syrian border last year, would get back on track soon.
The creation of a “green corridor” between Russia and Iran for exporting Iranian agricultural products to the neighboring country is primarily aimed at substituting sanctioned Turkish products, Russian Deputy Agriculture Minister Sergei Levin said in April.
“After the adoption by the government of Russia of sanctions on the import of agricultural products from the Republic of Turkey, the country’s [Russia’s] Ministry of Agriculture is actively working on the replacement of these products, first of all, by goods from Iran. It is this, in the first place, that the order to create a ‘green corridor’ is linked to,” Levin was quoted as saying by the press service of Russia’s North Caucasus Republic of Dagestan.
The corridor will become operational “at full strength” by the end of 2016, he added.

 Turkey to Establish Industrial Park in Iran
Tehran and Ankara signed a memorandum of understanding late Monday, based on which Turkey is to build an industrial park featuring 140 production units in Iran.
“The initial capital required for the project is estimated at $10 billion. About 85% of the workforce in this industrial park will be Iranian,” said Mohsen Jalalpour, the head of Iran Chamber of Commerce, Industries, Mining and Agriculture, in a meeting with Erdal Bahcivan, chairman of Istanbul Chamber of Industries in Tehran.
Deputy minister of industries, mining and trade, Ali Yazdani, who was also present at the meeting, said a Turkish delegation comprising representatives of industrial units will pay a visit to Iran in September to decide on the location of this industrial park, IRNA reported.
Earlier in April, Yazdani, who also chairs state-run Iran Small Industries and Industrial Parks Organization, visited Bashkent Industrial Town in Ankara at the head of a delegation of the ministry officials and heads of Iranian industrial parks. He met with Turkish deputy minister of science, industry and technology, Ramazan Yildirim.
The two sides discussed two locations for the joint investment: one in East Azarbaijan Province’s capital city of Tabriz and the other in Urmia, the provincial capital of West Azarbaijan Province.
According to Yazdani, Turkey is planning to select two of its industrial towns for joint investment with Iran.
As discussed by the Turkish and Iranian officials, the industrial parks will be used for the production of apparel, leather, gold and jewelry, auto parts and decorative stones.
Meanwhile, Iran is also in talks with China to establish another industrial park in Bam Special Economic Zone in Kerman Province for the production of auto parts.
Industrial towns or parks may contain oil refineries, ports, warehouses, distribution centers, chemical plants, plastic manufacturers, airports, food and beverage producers and steel manufacturers, to name a few.
Some industrial parks offer incentives for businesses to locate there, such as tax exemptions.

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
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    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.
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Free consultation services to investors in great Tehran:
    Feasibility consultation, technical-economic evaluation of projects, investment consulting.
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Investors from Turkey will build at least 10 hotels in Iran, as part of an agreement signed during Turkish Culture and Tourism Minister Mahir Unal’s official visit to Tehran on Thursday.
The number of flights between the two countries is also set to increase for attracting more Iranian tourists to Turkey, Turkish newspaper Daily Sabah reported on its website.
Unal met with the head of Iran’s Cultural Heritage, Handicrafts and Tourism Organization, Masoud Soltanifar, while representatives from the Turkish tourism sector met with Iranian counterparts in Tehran to discuss investment and cooperation opportunities.
The Turkish delegation included representatives from the Association of Turkish Travel Agencies, Turkish Tourism Investors Association, Hotel Association of Turkey and Turkish Hoteliers Federation.
The hotels are to be built in Tehran, Isfahan, Shiraz, Tabriz and Mashhad.
“We will transfer our knowhow on training, planning, marketing and advertising to raise tourism standards in Iran,” a Turkish tourism ministry official told Reuters, declining to be identified because he was not authorized to speak to the media.
Turkey and Iran will also organize joint tours for the Asian market that will include visiting cities in southeast Turkey and Iran, the official said.
Tourism industry officials expect more than 2 million Iranians to visit Turkey this year, up from 1.7 million last year. In the first four months of 2016, there has been a 7% increase on last year.
That’s a rare bit of good news for Turkey’s tourism industry, which has seen revenues tumble nearly 17% in the first quarter, hit by a series of militant bombings and worsening of ties with Russia following Turkey’s downing of a Russian fighter jet in November 2015.

  Tehran Confab to Boost Exports to Turkey
More than 500 Iranian small- and medium-sized enterprises will attend a conference at Tarbiat Modarres University of Tehran on May 26 to discuss ways of promoting Iranian exports to Turkey.
Secretary-General of Turkish-Iranian Business Council Seyyed Jalal Ebrahimi, chairman of the council, Biligin Aygul, and Iran’s commercial attaché to Turkey, Hamid Zadboom, are among keynote speakers at the conference, which is being organized by Zoodel, online business-to-business marketplace portal for Iranian exporters to neighboring countries, in cooperation with Turkish-Iranian Business Council.
Annual trade between Iran and Turkey plunged 29% in 2015 to stand at $9.8 billion.

A new round of talks between Iran and UOP LLC Petroleum industry company of America has kicked off over investment and supply of new technologies.

Association of Petrochemical Industry Corporations (APIC) announced that a fresh round of negotiations has begun between Iran’s petrochemical officials and three major American and European petrochemical companies with the main axes of talks being construction of new polymer units, knowledge and technology transfer as well as issuance of license for new petchem plans.

On the sidelines of K Trade Fair 2016, the world's premier fair for the plastics and rubber industry in Germany, high ranking officials of Iran’s petrochemical industry held meetings with authorities of France’s Total and Air Liquide as well as America’s UOP, formerly known as Universal Oil Products.

The talks with UOP mainly revolved around supply of modern technologies to petchem industries especially in the field of propylene production, cooperation in methanol-to-olefins (MTO) technology as well as propane dehydrogenation (PDH) as a process step in the production of propylene from propane.

Presently, 80 per cent of propylene production is directly being converted to polypropylene since a centerpiece of the Sixth National Development Plan has been to uplift production capacity of propylene in order to feed petrochemical complementary industries.

Development of petrochemical industry in Iran also aims to increase production capacity of propylene and polypropylene to supply feed to petchem plants; accordingly, projects to convert methanol to polypropylene have been put on the agenda.

In addition to UOP, separate talks were also held with representatives of France’s Total oil company aiming to construct a polyethylene complex with new grades on the basis of modern technologies.

Undoubtedly, Total has been to most active European company in Iran’s oil, gas and petrochemical industries in the post-JCPOA era.

Also, Iranian officials at the German exhibition attended a meeting with representatives of Air Liquide Industrial gases company exchanging views on turning methanol to propylene and construction of industrial gases units in petchem industries.

Iranian Vice-President for Science and Technology Sorena Sattari said  that $20bln  is total worth of electronic goods are traded every year in the country.

"$20bln worth of electronic goods are traded in Iran's electronics market at present and the Iranians are now in possession of 50 million smart phones now," Sattari said, addressing a forum in Tehran on Monday.

He  predicted that the Iranian electronics trade market would witness a jump to $80bln of interactions in the next two years.

Iranians have been frantically buying smartphones, tablets and flat screen TVs in recent years.

Many world analysts describe Iran as one of the most promising economies of the 21st century – and perhaps the next China, a lion ready to awake.

The Iranian officials announced in 2015 that over 20 million of Iran's 78 million people are smart phone users.

Considering the fact that Iran's mobile network's penetration rate is almost 100 percent, mobile phones are the most pervasive media in Iran, they added.

The officials have predicted that the number of the smart phone users in Iran would reach 40 million in 2016.

We will lower corporate tax rates by 5 percent and reduce our reliance on bonds. We hope to reduce the budget deficit by increasing the salaries of government employees at rates less than the inflation rate, Iran's finance minister Dr. Ehsan Khandouzi wrote in an article for Financial Times.

The full text of the article is as follows

In Iran, sanctions, currency fluctuations, and high inflation rates have led to subpar economic performance and a negative growth rate in recent years. Other adverse shocks such as the Covid-19 pandemic and natural disasters have further increased the fiscal pressure. Hence, the budget has grown faster than inflation — that for 2021 was about three times that for 2019.

I do not yet know what the outcome of Iran’s current nuclear negotiations with the 4 + 1 in Vienna will be. Regardless, we must take a cautious approach to our next budget so as not to upset the administration of the economy. Our government’s strategy was first to stabilize the economy and then to stimulate inclusive growth. In the past few months, part of the first goal was achieved, with point-to-point inflation decreasing on a monthly basis (from a 3.8 percent increase to 1.6 percent). The 2022 budget framework, which begins with the Iranian new year on March 21, must continue this strategy.

Given the current sanctions-related obstacles to exporting crude oil, the previous government’s strategy in financing the growing budget deficit increased our reliance on the bond market. The repayment and settlement of these debts are the responsibility of the new administration. We have also tried, over our seven months in office, to sell more oil under the existing restrictions (with an increase of 40 percent) and to raise tax revenues.

The recent mushrooming of Iran’s budget was a direct result of an increase in the government’s current expenditure, while its investments in various sectors have declined. This, along with widespread uncertainty over the country’s economy because of the pandemic, has also led to a decline in private sector investment. This, in turn, has resulted in a negative net investment in recent years, severely undermining future production and household welfare.

Against this background and in response to growing inequality, the new government has sought to change the course of fiscal policy. Our aim is to promote economic growth, price stability, and inclusive growth. We also seek institutional reforms to improve financial discipline and reduce spending.

As such, our budget for 2022, which is already approved by the parliament, includes several structural reforms. We will lower corporate tax rates by 5 percent and reduce our reliance on bonds. We hope to reduce the budget deficit by increasing the salaries of government employees at rates less than the inflation rate. We also predict increased oil export revenues.

Iran’s new budget is designed to promote equitable growth, including by increasing government investment. The public sector must play a more active role in investing in physical capital. Capital asset acquisition declined from 24 percent in 2012 to 14 percent in 2021 but, in the new budget, the share of credits for acquiring capital assets has increased by 4 percent. This is an essential step in strengthening public investment.

We also wish to reduce the growth in current expenditure. In the 2021 budget, this stood at around 60 percent. This has been reduced to 38 percent in the new bill.

Finally, we plan to increase tax revenues. Despite the reduction in corporate tax rates, the government has increased its reliance on sustainable tax revenues instead of mainly depending on oil. This has come about through substantial reforms to the tax system as well as by increasing financial transparency to reduce tax evasion and introducing a capital gains tax.

Our models suggest that Iran’s new budget will lead to positive medium-term outcomes in variables such as output, investment, employment, and inflation. The approach adopted in the 2021 budget is expected to reduce inflation significantly in the next three years. Moreover, total investment and non-oil production will grow more quickly.

Needless to say, the government is determined to keep the money supply and monetary base under tight control. This will require significant reforms in the banking sector, as well as in areas outside the government budget (such as pension funds, the national wealth fund, and so on). The current negotiations in Vienna could potentially lead to positive economic outcomes for Iran, especially in the banking sector and foreign exchange. We are ready for whatever scenario emerges — pessimistic or otherwise.

An Interview with Mohammad Berami
Managing Director of Siraf Energy

Mohammad Berami started his petrochemical career with the Iranian National petrochemical company in 1973. During his 43-year tenure in the petrochemical industry, he assumed different responsibilities in Iranian as well as other reputed international companies.
He served as the Managing Director and Board Member as well as Design and Maintenance Engineer for the Razi, Mobin, Zagros, Shiraz, Siraf and Tabriz petrochemical companies. He also held many respectable positions at several other petrochemical complexes in Iran.
He holds a degree in electrical engineering from Shiraz University and completed his Master degree in Instruments Engineers from the University of Huddersfield Polytechnic in  UK .
World Business Year talks to Mohammad Berami, the industry expert with more than 43 years of experience in the petrochemical sector, on investment opportunities and potential challenges for foreign investors in Iran.


What is your assessment of the investment opportunities in the petrochemical sector in Iran?

After the lifting of sanctions against the country, many international companies flocked to Iran with the purpose of assessing the potential investment opportunities in the country.  There are many investment opportunities in Iran, but it is the foreign investors who should have the courage to initiate the work. Often, many investors avoid facing the challenges and risks associated with investment in Iran.
The Basf Company has had a meeting with the Iranian petrochemical company for investment in Assaluyeh.

Any company that has success stories in petrochemical investment?

The Razi Petrochemicals is one of the success stories for investment in the petrochemical sector. As matter of fact our expectation is very high. We expected that giant petrochemical companies will come to Iran for investment in new projects.
Due to the privatization of the state-owned companies, the investment situation in the petrochemical industry has substantially changed. Earlier, the Iranian petrochemical companies had to sell their products to the Ministry of Agriculture. But now everything has been changed with privatization  in favor of private sector.  The petrochemical complexes can sell and export their products to domestic and international market.
What makes Iran a different destination for investment compared to the other countries?
There are many advantages of investing in Iran, including highly competitive prices for gas-based raw materials, rich ethane content in the country’s gas reserves, easy access to the ocean for export is main advantage, presence of highly  constructing service engineering  companies, cheap labor force and access to growing international market are big drivers for investors to invest in Iran.


What challenges do you think investor face with in Iran?

There is a bureaucratic red tape in Iran’s administration, but Investors should be patient because the government supports creating jobs. Investor should consider investing in other sectors like accommodations, hotels construction, health centers in Energy zones which can bring economic development   . There are  a few hotels but they are not sufficient and need more  investment in Hotel and accommodation sector .

What is your message to International Investment community?

Having 43 years of experience in petrochemical industry, has created in-depth knowledge for me on Iran’s petrochemical sector.  I can assure them that there are many people like me who are willing to share their knowledge and experience. We are even ready to tackle obstacle and challenges to pave the way for their investment with peace of mind.  

Guarantees and protections which offers by Iranian government :
- Foreign Capital is guaranteed against nationalization and expropriation, and in such cases the Foreign Investor shall be entitled to receive compensation (Article 9 of the FIPPA).
- Should laws or government regulations lead to prohibition or cessation of approved financial agreements within the framework of this Act, then the government shall procure and pay the resulting damages (Article 17 of the FIPPA & Article 26 of the bylaws). Foreign Investor can also benefit from MIGA Investment Guarantee.

- The purchase of goods and producer services of the foreign investment is guaranteed in cases where a state-run organ is the only buyer or supplier of a product or producer service at a subsidized price (Article 11 of the bylaws).

Rights and facilities:
- Foreign investments subject to this Act shall enjoy the same rights, protections and facilities available to domestic investments in a non-discriminatory manner (Article 8 of the FIPPA).
- The Foreign Investment and its profits may be transferred in foreign currency or goods (Articles 13-18 of the FIPPA).
- Acceptance of foreign investments in all the production, industrial, agricultural, transportation, communications, and services  fields as well as in fields related to water, power, and gas  supply and energy fields
- The possibility of the referral of investment-related disputes to international authorities (Article 19 of the FIPPA).
- The possibility of land ownership in the name of the company (registered in Iran) in joint ventures (Article 24 of the bylaws).
- Issuance of visas for three years in Iran for foreign investors, managers, experts and their immediate family members and the possibility of visa renewals  (Article 20 of the FIPPA & Article 35 of the bylaws).
- The investors are notified of the final decision regarding their applications within at most 45 days (Article 6 of FIPPA)
- Having a choice to choose the investment method in the project as FDI or Foreign Investment in all sectors within the framework of “Civil Participation”, “Buy-Back” and “Build-Operate-Transfer” (BOT) schemes (Article 3 of FIPPA).
- Acceptance of investments by any natural or legal non Iranian or Iranian person utilizing capital of foreign origin and granting the facilities envisaged in FIPPA to them (Article 1 of FIPPA).
- The foreign investor must choose an audit institute out of the audit institutes recognized by the Association of the Official Auditors of Iran to substantiate their financial and annual reports (Articles 1, 22-23 of the bylaws).

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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.