Investment Opportunities in Iran at a Glance
Mr. Mohammad Otaredian who had played a key role in holding the 2nd International Conference on Investment Opportunities in Iran’s Post-Joint Comprehensive Plan of Action (JCPOA), Dec. 18, 2016, Tehran, submitted a report on investment opportunities in Iran. Here it is:
Greetings to all dear guests and participants,
In July, this year, 2016, I travelled to the beautiful country of Malaysia, attending an international conference titled Investment Opportunities in Iran’s Post - Joint Comprehensive Plan of Action (JCPOA)
That event was a positive outcome of an innovative partnership between Iran and Malaysia. As a policy member of that event, I thanked the Iranian and Malaysian organizers and partners for their generous contribution of time and assistance in providing us with this invaluable opportunity.
And, now here in Tehran, I have the pleasure of thanking, again, the both sides of Iran-o-Malaysia for providing this invaluable opportunity. I would like to wish with hope that all of us will be able to assess and evaluate the outcome of this event as very positive and effective.
While having the pleasure of hosting Malaysian business delegation in Tehran, I touch on the main issue of the event: developing mutual trade and business cooperation between the two sides.
First, let’s have a general glance at Iran,
Located in the southwest Asia, Iran has an excellent geographical location, sandwiched between Europe, Russia, the booming markets of the Persian Gulf, and close enough to much of Asia to trade with that region, as well. It enjoys a very strategic location on the Persian Gulf and Strait of Hormuz, which are vital maritime pathways for global crude oil transport. In fact, Iran has long been of geostrategic importance because of its central location in Eurasia and Western Asia, and its proximity to the Strait of Hormuz.
Iran is a country with deep history and culture rich with tradition and delicate balances, and certainly with a long history of foreign trading.
Iran Economic Overview and Opportunities:
Iran currently has the second largest gas reserves, and fourth largest proven oil reserves in the world. It has highlighted its desire to increase oil output to 1mn barrels per day in 2016. Its re-introduction to the global oil market has, as always, had an impact on global oil prices, by adding more supply into the market.
Iran’s economy is currently reliant on the oil and gas sectors, though the country is looking to diversify its economy.
Iran also possesses significant agricultural, industrial and service sectors. Opportunities will exist in infrastructure projects, many industries, including agri-foods, construction, oil and gas, banking, tourism, pharma and beauty products.
Furthermore, service providers also have many opportunities. The opportunity is real for large investment, and the market is large and ready to come back into the global economy.
Ladies and gentlemen,
There is no doubt that Iran has a lot of potential. It is a country that boasts a domestic market of 80 million people, 11% of the world’s proven oil reserves, 15% of the world’s proven gas reserves, 11 petrochemical complexes, 3 major steel plants, various natural resources and minerals, and much more. It is populous, rich in natural resources and apt to technological progress and international developments.
Even though, Iran has a lot of potentials, its economy suffered int’l sanctions, mismanagement, and underinvestment. But in these days everything is going to be changed.
, with a positive development, on July 14, 2015, Iran and the P5+1 (China, France, Russia, United Kingdom, United States and Germany) agreed on the Joint Comprehensive Plan of Action (JCPOA). The agreement allowed Iran to re-engage in the global economy by effectively rolling back significant portions of the international sanctions framework developed by the United Nations, and the West since 2006.
Large delegations from Switzerland, the Netherlands, France, Germany, Italy, South Korea, China and other countries have flocked to Iran recently to explore new trade opportunities after Iran reached a historic deal with world powers in Geneva on November 24, 2015.
A group of more than 100 potential investors, the largest European business delegation, visited Iran in this January. They met private Iranian business leaders, attending a joint business conference” on January 26.
Executives from some of France’s biggest companies, including energy giants Total, telecoms group Orange, power company GDF Suez, car manufacturer Peugeot, car maker Renault, and engineering firm Alstom are just part of the delegation on a recently three-day visit to Tehran.
Moreover, an Italian delegation, comprising Italian Employers’ Confederation, met, in Tehran, with Iranian construction leaders, including me, in person (M. Otaredian), with a very positive result.
All those and many larger delegations are trying to identify areas where they can move forward, hoping to revive economic and trade ties between Europe and Iran, following the agreement reached on our nuclear program.
Now, Iran is "considered a strong emerging market" by global investment and trading firms.
What opportunities exist, for foreign businesses, in Iran:
Iran has opportunities in most sectors and these are to grow as the market in Iran expands. There are a number of key sectors in the country that have potential for foreign companies, including:
Oil and Gas:
Iran holds the fourth largest crude oil reserves globally. According to the 2015 BP Statistical Review of World Energy, Iran has proven oil reserves of 158 bn barrels, equivalent to more than 150 years of production at the rate of extraction recorded in 2014.
Moreover, on gas export, Iran possesses the world’s second largest gas reserves, but the country has a slim share in the international export markets. The issue of gas export to Europe has been on top of the agenda for long, because gas export would bring an advantage for Iran and prepares the ground for the country to boost its economic and political relations with other countries.
It is the second-largest industrial sector after oil and gas.
Airports and Infrastructure:
Our aviation infrastructure is in need of investment. There are 54 airports around the country, including eight international airports. Investment is planned at a number of the country’s airports, not least to provide for the expected surge in visitors as Iran returns to the international mainstream.
As of 2015, Iran has a mainline rail network of 10,223km. The network is centered on Tehran. From the capital, lines run northwest to the borders with Turkey and Azerbaijan, northeast to the Caspian Sea port of Bandar Turkman, and east to Mashhad and Sarakhs on the Turkmenistan border. Iran has plans to extend its network to 25,000km by 2025. A lot of construction work is planned or underway.
At present, there are, in Iran, around 240,000 km freeway, highway, sub-way and rural route which is underutilization. However, up to 2025, construction of around 2500 km freeway, and 30000 km other ways is planned for which the government has taken steps to attract investors. Additionally, due to the sanctions imposed on Iran, there are 4000 unfinished road projects in other areas, seeking investment in different methods / styles.
The matter of privatization is on the top of our country program. The government is planning to privatize the state companies in Iran. The program is expected to help enhance the monetary turnover of Iran’s stock exchange market.
There is great potential for foreign direct investment in Iran. Equities listed on the Tehran Stock Exchange may very well become the target for many investments.
Another area worth considering is Tourism. The number of foreign tourists is increasing constantly and the government is undertaking big efforts to even more support this sector. There is a big demand for services in various tourism segments.
There are many other remarkable opportunities for foreign investment in Iran:
IT is definitely another interesting sector with the biggest growth potential in the next few years.
Furthermore, with a very large and young "tech savvy" population, telecommunications and advanced technologies are to benefit from being re-connected to the global economy.
That is another interesting area. When talking about the Service Industry, meaning not only classic business service, such as consultants, lawyers, tax advisors, designers, recruitment agencies, computer specialists, etc. but also the oil and gas-related service industry. Today, professional foreign services companies will find a wide-open field in Iran.
Ladies and gentlemen,
Companies involved in the transportation sector will see opportunities and will, with a little attention, be able to realize tangible benefits in the short-to-medium term, in particular, companies involved in the commercial aviation and car manufacturing and related parts industries.
Due to the availability of Iran’s human capital and educated and skilled manpower, some car manufacturers have even discussed the potential of making Iran the manufacturing hub for the wider Middle Eastern and African markets.
Both the “life sciences” and “technology and telecommunications” sectors in Iran are also to experience growth. Iran’s own domestic pharmaceutical industry will be able to purchase raw ingredients previously unobtainable for the development of its own medicines.
There are many other remarkable opportunities for foreign investments in Iran, such as:
financial and banking sectors, insurance sector, shipping, shipbuilding, electronic and electrical equipment, cement & other building materials, metallurgy, home appliances, textile, rugs and carpets, miniature, ceramic, food processing, which create valuable opportunities for trade cooperation.
I will conclude here by wishing you the best of luck on the initiative and emphasize that Iran has a great ambition to develop and expand its business relations with countries in the world.
Given a very dynamic business environment created in the post-sanctions’ Iran, it is obvious that our two organizations can play a very constructive role in facilitating and accelerating business development among ourselves. In such a sense, we wish all the success in your future work and express our hope for successful cooperation with Malaysian businesses.
Distinguished delegates, dear guests,
I thank you all for giving me a patient hearing.