This Page is Under Construction
Please Be Patient
Iran Chamber of Commerce, Industries, Mines and Agriculture has established an investment consulting center to act as a bridge between Iranian companies and foreign investors, in preparation for the opening up of Iran’s economy after the lifting of sanctions, due early 2016.
The center aims to initially identify suitable business associates and then prepare the ground for establishment of targeted connections between foreign and domestic businesses, apart from rating domestic companies, according to ICCIMA.
The move comes after a growing number of Iranian and international companies called on the chamber to inquire about investment prospects, due to a lack of precise information on Iran’s investment opportunities, ICCIMA member Ferial Mostofi was quoted as saying by Financial Tribune’s sister newspaper Donya-e-Eqtesad.
“We will try to make investments worthwhile by providing consultancy and assistance to investor companies,” she said.
Furthermore, by establishing the consulting center, the ICCIMA is aiming to assess Iran’s investment opportunities and deficiencies such as burdensome regulations and poor infrastructure.
“Reaching the 8% growth target highlighted in the sixth five-year development plan (2016-21) will not be feasible without the presence of such consulting firms,” Mostofi said.
Experts claim Iran needs $50 billion in Foreign Direct Investment each year, to reach the ambitious annual growth target set in the sixth plan, which is currently being drafted by the government.
“The government will face many challenges in reaching this target, considering that in recent years FDI has averaged $1 billion to $2 billion per annum,” pro-free trade professor at University of Isfahan, Komeyl Tayyebi told Tribune’s sister magazine Tejarat-e Farda.
This is while as per the Fifth Plan (2011-16), $220 billion should have been invested, 7% of which by foreign investors.
The average annual growth rate during the Fifth Plan is estimated at minus 0.36%, as the required investments were never made.
“Sanctions have been the biggest stumbling block to foreign investment. Government efforts to promote foreign direct and indirect investments are bound to fail as long as economic restrictions are in place,” says Tayyebi.
Sanctions imposed over Iran’s nuclear energy program have curtailed foreign investments in various ways. For one thing, Iran’s banking system was cut from the international money transfer network, SWIFT, making it impossible to transfer money in and out of Iran using common global means.
For another, international restrictions on Iran’s economy and penalties leveled at companies who broke them skyrocketed Iran’s investment risk.
Convincing investors that the risks of doing business in Iran are a thing of the past is one of the policies that the government should aim for as the country opens up following the implementation of the July 14 nuclear deal, according to Tayyebi.
Iran and the P5+1—US, Britain, France, Russia and China plus Germany—agreed to lift sanctions against Tehran in exchange for mothballing sensitive parts of its nuclear works.
“The lifting of sanctions will definitely pave the way for foreign investments. But the question is to what extent has the government laid the groundwork for it,” he said.
According to the economist, the government should encourage the private sector to play a greater role in attracting FDI. It should also remove burdensome regulations and provide incentives like tax exemptions to facilitate the investment process for international businesses.
Tayyebi cited stabilization of foreign exchange rates as a requirement for diminishing the risks of doing business in Iran.