Foreign Investment in Iran; A Growing Trend

Although Iran’s economy has been under pressure since US unilateral withdrawal from JCPOA, UNCTAD’s latest report published in June 2022 shows a 6.18% growth in Foreign Direct investment in Iran throughout 2021. In its report “World Investment Report 2022”, UNCTAD anticipated even further growth in foreign investment in Iran. With this in mind, the question may arise as to what industries in Iran were more successful in attracting foreign investment?

According to a report published in September 2021 by the Planning Deputy of Iran Ministry of Industry, Mine and Trade (MoIMT), 80% of foreign investment were made in the industry and mining sectors. As far as the number of projects are concerned, four sectors of petrochemical production, rubber and plastic, basic metals and manufacturing of equipment and machinery were amongst the top areas that created huge appetite for foreign investors. Meanwhile, in terms of investment size, five sectors of manufacturing petrochemical products, basic metals, products of oil refining including coke and other products, radio, television and other products in communication industry occupy the top of the list, compared to mining and raw material-based industries.

The above report refers to all the approved investment applications including investment for new investment/commercial plans, purchase of shares in existing enterprises as well as foreign investment through contracting arrangements. In a subsequent report published three months later, i.e., December 2021, MoIMT announced that the 80% share of foreign investment in industry and mines sector was unprecedented since 2010. The February 2021 report by MoIMT also shows that from 102 foreign investment projects in industry, trade and mining sector, 39 companies with 100% foreign shareholding, 43 companies through joint shareholding with Iranian companies, and the rest of 20 cases have invested in Iran through contractual arrangements, buyback and BOTs.

During the 10 months of activity of the new Iranian government, the number of approved investment applications has reached 230 cases, and this shows an 18% growth compared to the same period of last year, where 195 investment plans were approved by Iran’s 12th government. Additionally, the size of foreign investment attracted withing the first 10 months of the new government was 5.160 b USD, which shows an increase of 34% in comparison with the same period last year (being 3.849 b USD), and this proves UNCTAD’s report on growing trend of foreign investment in Iran.

Foreign investors willing to invest in Iran industry and trade sectors must follow certain procedural steps starting from application to approval of their investment plan and legal formalities of starting/joining a business in Iran. Our expert counsels at MSLI provide tailor legal services to foreign investors who seek a smooth landing of their investments in Iran through securing their legal interests.