Diverse Economic Development in Iran

9 Mar 2016

investment in Iran

Press T.V. has recently declared that Iran expects to attract a massive $15 billion injection of foreign investment this year, since trade with Iran is once more an option for global businesses. 

Not since the Soviet Union opened its doors to the west has any country seen such potential for growth in import and export business opportunities.

Global corporations recognise repressed demand from Iran’s 80 million consumers and the fact that Iran is an internationally leading provider of oil and gas.  A wide cross section of industries from around the world are already negotiating joint ventures and industrial development programmes, including car manufacturers, engineering companies, energy producers.

Japan has committed to a $10 billion investment.  In addition, Japan’s Mitsui Chemicals and Germany’s industrial gases company Linde will be bringing $4 billion of investment to petrochemical projects in Iran.  Italy too will be contributing 1 billion euros for construction of refineries and petrochemical plants via their engineering company Maire Tecnimont; the agreement has already been signed.  Saipem, also from Italy, have signed up to investments estimated between $4 - $5 billion to upgrade existing Iranian oil refineries and construct energy pipelines.

Iran’s Economy Minister, Ali Tayebnia, has said that Tehran is eyeing $45 billion in foreign investment within the next year potentially.  This should be entirely feasible, given a number of favourable conditions for investment in Iran.  In particular, the country benefits from its highly strategic location, relative political stability, aspirant population and wealth of natural reserves.  Approximately $15 billion – one third of expected figures - will be direct foreign investment, according to Mr Tayebnia news conference in Tehran.

The Minister stated that the aim of this foreign investment would be to strengthen Iran's economy for its citizens and Iranian companies, as far as Mr Tayebnia is concerned.  He said:

We won't welcome any proposal that doesn't lead to transfer of technology and capital or doesn't boost production and exports."

This statement was supported by President Hassan Rouhani who also has cited investment and transfer of technology being key to a booming Iranian economy during a Tehran forum on labor on February 21st.

This time of massive injections of investment calls for co-ordination with internal investments by businesses in Iran seeking expansion.  “We must create an opportunity in which all domestic and foreign investments are employed,” said Mr Rouhani at the forum.

Rouhani cited Iran’s annual output of $400 billion in output as a real opportunity for the country to build on, as overseas investors shift their position from focussing on risks present whilst the sanctions against Iran depressed opportunity, to focussing on potential profit now to be made at a time when the global economy seems to be facing slow down.

Today, those who feared Iran’s name and were competing with each other for distancing themselves from Iran are in a race to come closer and invest in the country,” said Mr Rouhani.

Against a backdrop of falling revenues from oil, it is now more vital than ever that Iran seeks to diversify its economic development to move forward.  Whilst the investments in the energy and engineering sectors will be a welcome boost for Iranian workers, other sectors also will need to see growth, including agriculture, tourism and mining.  This fact is understood in Tehran, given struggles in growth, even when oil prices were four times higher than they are at present.

Mr Rouhani stated: “Our past experience showed that oil at $147 cannot solve our employment and public welfare problems”. 

This potentially makes for some difficult transitions for some of Iran’s people, who will not be used to looking beyond Iranian borders for opportunities, which are now greater than ever before, as foreign businesses look to diversify their outlets for expansion as China’s and the BRIC nations’ growth slow down. Now is a potential golden age for Iran, as her internal transportation and logistics infrastructure develop apace and all eyes are on Iran’s potential power in the region.

 

 



Skontaktuj sie z nami
For more information on any of our services, please fill in
our contact form.
The White Rose Group looks forward to hearing from you.