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Encyclopedia > Foreign Direct Investment in Iran
Iran major commercial partners are China, Germany, South Korea, Japan, France, Russia and Italy. In 1996, he U.S. Government imposed sanctions against Iran because of its alleged support for terrorism in the Middle-East.

In the 1990s and early 2000s, some indirect oilfield development agreements were made with foreign firms. Buyback contracts in the oil sector, for instance, were arranged in which the contractor funded all the investments, and then received remuneration from the National Iranian Oil Company (NIOC) in the form of an allocated production share, then transferred operation of the field to NIOC after a set number of years, at which time the contract was completed. Shortcut: WP:-( Vandalism is indisputable bad-faith addition, deletion, or change to content, made in a deliberate attempt to compromise the integrity of the encyclopedia. ... Shortcut: WP:-( Vandalism is indisputable bad-faith addition, deletion, or change to content, made in a deliberate attempt to compromise the integrity of the encyclopedia. ... Image File history File linksMetadata Download high-resolution version (2515x1493, 1025 KB)[edit] Summary Boeing 747 200 - Germany, Hamburg [edit] Licensing I, the creator of this work, hereby release it into the public domain. ... Image File history File linksMetadata Download high-resolution version (2515x1493, 1025 KB)[edit] Summary Boeing 747 200 - Germany, Hamburg [edit] Licensing I, the creator of this work, hereby release it into the public domain. ... This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling. ... This article outlines economic, trade, scientific and military Sanctions against Iran, which has been put forward by the U.S. government, or under U.S. pressure. ... The traditional Middle East and the G8s Greater Middle East Political & transportation map of the traditional Middle East today The Middle East is a historical and political region of Africa-Eurasia with no clear definition. ... Natural olive oil Synthetic motor oil An oil is any substance that is in a viscous liquid state (oily) at ambient temperatures or slightly warmer, and is both hydrophobic (immiscible with water, literally water fearing) and lipophilic (miscible with other oils, literally fat loving). This general definition includes compound classes... The National Iranian Oil Company (NIOC), under the direction of the Ministry of Petroleum of Iran, is an oil and natural gas producer and distributor headquartered in Tehran. ...


Foreign Direct Investment in Iran has been hindered by unfavorable or complex operating requirements and by international sanctions, although in the early 2000s the Iranian government liberalized investment regulations. In the early 2000s, foreign investors have concentrated their activity in a few sectors of the economy: the oil and gas industries, vehicle manufacture, copper mining, petrochemicals, foods, and pharmaceuticals. Iran absorbed 24.3 billion dollars of foreign investment from Iranian calendar year 1372 (March 21, 1993) to April 20, 2007.[1] Foreign transactions with Iran amounted to $150 billion between 2000 and 2007 worth of major contracts and both private and government lines of credit.[2] This article outlines economic, trade, scientific and military Sanctions against Iran, which has been put forward by the U.S. government, or under U.S. pressure. ... Wikipedia does not yet have an article with this exact name. ... In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. ... Natural olive oil Synthetic motor oil An oil is any substance that is in a viscous liquid state (oily) at ambient temperatures or slightly warmer, and is both hydrophobic (immiscible with water, literally water fearing) and lipophilic (miscible with other oils, literally fat loving). This general definition includes compound classes... This article does not cite any references or sources. ... The Trikke is a Human Powered Vehicle (HPV) This article is about the means of transport. ... General Name, Symbol, Number copper, Cu, 29 Chemical series transition metals Group, Period, Block 11, 4, d Appearance metallic pinkish red Standard atomic weight 63. ... Chuquicamata, the largest open pit copper mine in the world, Chile. ... A petrochemical is any chemical derived from fossil fuel. ... Pharmacology (in Greek: pharmacon is drug, and logos is science) is the study of how chemical substances interfere with living systems. ... March 21 is the 80th day of the year (81st in leap years) in the Gregorian calendar. ... Year 1993 (MCMXCIII) was a common year starting on Friday (link will display full 1993 Gregorian calendar). ... April 20 is the 110th day of the year (111th in leap years) in the Gregorian calendar. ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era. ... A line of credit is a type of credit in which a bank undertakes to provide credit to a client during a predefined period. ...


The most active investors have been Germans, Norwegian, British, French, Japanese, Russian, South Korean, Swedish, and Swiss companies. The Swedish Svedala Industri has played a major role in developing Iran’s copper mines since the late 1990s while Tata Steel of India has been investing in the steel sector. The Kia, Nissan, Peugeot, and Renault auto companies have licensing agreements with Iranian auto manufacturers. Nestlé of Switzerland and Coca-Cola and Pepsi-Cola of the United States have joint ventures with Iranian companies. Total, Statoil, Shell, Gasprom, and Lucky Goldstar of South Korea have been active in Iran’s natural gas industry. Iran’s constitution prohibits direct concession of petroleum rights to foreign investors. Alcatel of France, MTN Group of South Africa and Siemens of Germany gained major telecommunications contracts in 2004 and 2005, respectively.[3] Motto None (Unofficial: Broadly benefit humankind also translated as Devotion to the welfare of humanity) Anthem Aegukga (Patriotic Hymn) Capital (and largest city) Seoul Official languages Korean Government Presidential republic  -  President Roh Moo-hyun  -  Prime Minister Han Duck-soo Establishment  -  Gojoseon October 3, 2333 BCb   -  Independence declared March 1, 1919... Tata Steel, formerly known as TISCO (Tata Iron and Steel Company Limited), is Indias second largest steel company (slated to become largest after the completion of its ongoing takeover of Corus). ... KIA or Kia may mean: Killed in action Kirby Ian Andersen Kings Indian Attack, a chess opening Kuwait Investment Authority Kachin Independence Army, in Kachin State, Myanmar Kia Motors Kia Asamiya, a popular Japanese manga artist. ... Nissan Motor Co. ... Peugeot is a major French car brand, part of PSA Peugeot Citroën. ... Renault S.A. is a French vehicle manufacturer producing cars, vans, buses, tractors, and trucks. ... This article is about the company. ... The wave shape (known as the dynamic ribbon device) present on all Coca-Cola cans throughout the world derives from the contour of the original Coca-Cola bottles. ... The current Pepsi logo Pepsi-Cola (often shortened to Pepsi), is a carbonated cola soft drink manufactured by PepsiCo, and the principal rival of Coca-Cola. ... Look up Total on Wiktionary, the free dictionary A total is a sum. ... A Statoil petrol station sign in Estonia Statoil (OSE: STL, NYSE: STO) is a Norwegian petroleum company established in 1972. ... Shell Canada Limited (TSX: SHC) is one of Canadas largest integrated oil companies. ... Gazprom (Cyrillic Газпром, sometimes transcribed as Gasprom) is the largest Russian company and the biggest natural gas extractor in the world. ... ... The Iranian constitution prohibits the granting of petroleum rights on a concessionary basis or direct equity stake. ... Alcatel SA is a global company, headquartered in France that provides hardware, software and services to telecommunications service providers and enterprises. ... MTN Group is a South Africa-based multinational mobile telecommunications company, operating in many African and Middle Eastern countries. ... Siemens has the following uses: Siemens is a German family name carried by generations of the telecommunications industrialists, including Werner von Siemens, Sir William Siemens, Wilhelm von Siemens and Peter von Siemens Siemens AG is a German electrical and telecommunications company, founded as a telegraph equipment manufacturer by Werner von... Telecommunication involves the transmission of signals over a distance for the purpose of communication. ...


Foreign investment hit a record $10.2 billion in the Iranian year to March 20, 2007 from $4.2 billion in 2005 and $2 million in 1994. Asian entrepreneurs headed by China made the largest investments in the Islamic state by investing in 40 out of 80 projects funded by foreigners.[4][5] The largest amount of foreign investment was in the industrial sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, steel and oil derivates. The figure exceeded $8.76 billion. Water, electricity and gas sector ranked second, attracting $874.83 million. In the third place, the real estate sector absorbed more than $406 million. Investments in service, telecommunication and transportation as well as mines reached $193 million, $14.3 million and $14.2 million respectively. Asian countries invested $7.666 billion in various projects followed by several multinational consortia. Investments by these multinational companies exceeded $1.39 billion (in four projects). Although European entrepreneurs were involved in 34 projects, they invested only in the range of $1.2 in the Islamic Republic. American countries also committed $12.329 million in the country; while investments by African states registered close to four million dollars.[4] According to the American Enterprise Institute's estimates, 2007 promises to be an even richer year for investment in the Islamic Republic.[2] The Iranian calendar (Persian: ‎) also known as Persian calendar or the Jalāli Calendar is a solar calendar currently used in Iran and Afghanistan. ... March 20 is the 79th day of the year in the Gregorian Calendar (80th in leap years). ... 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era. ... This article deals primarily or exclusively with the definition of Asian in English-speaking countries, mainly referring to immigrants or descendants of immigrants living therein. ... The word drink is primarily a verb, meaning to ingest liquids, see Drinking. ... This article is about the product manufactured from Tobacco plants (Nicotiana spp. ... This article is about the type of fabric. ... Clothing protects the vulnerable nude human body from the extremes of weather, other features of our environment, and for safety reasons. ... Modern leather-working tools Leather is a material created through the tanning of hides and skins of animals, primarily cattlehide. ... A chemical substance is any material substance used in or obtained by a process in chemistry: A chemical compound is a substance consisting of two or more chemical elements that are chemically combined in fixed proportions. ... The steel cable of a colliery winding tower. ... Natural olive oil Synthetic motor oil An oil is any substance that is in a viscous liquid state (oily) at ambient temperatures or slightly warmer, and is both hydrophobic (immiscible with water, literally water fearing) and lipophilic (miscible with other oils, literally fat loving). This general definition includes compound classes... Impact from a water drop causes an upward rebound jet surrounded by circular capillary waves. ... Lightning strikes during a night-time thunderstorm. ... This article does not cite any references or sources. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... Wikibooks has more about this subject: Marketing In economics and marketing, a service is the non-material equivalent of a good. ... Copy of the original phone of Alexander Graham Bell at the Musée des Arts et Métiers in Paris Telecommunication is the transmission of signals over a distance for the purpose of communication. ... Chuquicamata, the largest open pit copper mine in the world, Chile. ... This article deals primarily or exclusively with the definition of Asian in English-speaking countries, mainly referring to immigrants or descendants of immigrants living therein. ... The word multinational can refer to: A Multinational corporation A Multinational State This is a disambiguation page, a list of pages that otherwise might share the same title. ... A European is primarily a person who was born into one of the countries within the continent of Europe. ... For the computer game previously called Entrepreneur, see The Corporate Machine. ... World map showing location of Africa A satellite composite image of Africa Africa is the worlds second_largest continent in both area and population, after Asia. ... The American Enterprise Institute for Public Policy Research (AEI) is a conservative think tank, founded in 1943, whose stated mission is to defend the principles and improve the institutions of American freedom and democratic capitalism — limited government, private enterprise, individual liberty and responsibility, vigilant and effective defense and foreign policies...

Contents

Laws concerning foreign companies

Generally speaking, Iran has two types of laws concerning foreign companies. The first are laws that address issues concerning foreign companies directly such as the Foreign Investment promotion and Protection Act (FIPPA) and the second are general laws of which certain articles or by-laws address foreign companies, for instance the Taxation Law and the Labor Law.


FIPPA

Following months of dispute between the Parliament and Guardian Council, the Expediency Council ratified the final version of a new foreign investment law in Iran coined as the Foreign Investment Promotion and Protection Act (“FIPPA”) on 26 May 2002. Under FIPPA and similar to the previous foreign investment law, commercial risks are not covered but any expropriation or nationalization will be compensated by the government. In some cases, if an act of the government disrupts the business activity, the government will be under obligation to make payments for any loan installments that are due on behalf of the project company. The law also permits more options for repatriation of profits in hard currency combined with a broader definition of foreign investment. For the first time, project financing schemes such as buy back agreements and BOT projects (only under an operator status) are specifically covered under the foreign investment law. Under the FIPPA, any foreign natural or legal person – including Iranian expatriates -- importing capital in Iran will enjoy the benefits and privileges of this law as long as: May 26 is the 146th day of the year (147th in leap years) in the Gregorian calendar. ... For album titles with the same name, see 2002 (album). ...

  • The investment leads to economic growth, promotes technology, promotes quality of products, increases employment opportunities, increases exports and entering the international markets.
  • The investment does not jeopardize national security and public interests or harm the environment or interrupt national economy or disrupt products of domestic investments.
  • The investment does not involve the granting of any special rights resulting into a monopoly.
  • The value ratio of goods and services produced by aggregate of foreign investments does not exceed 25% in each economic sector and in each economic branch shall not exceed 35%. FIPPA will be applicable based on the nationality of the Foreign Capital as opposed to the investor. As long as the capital comes from foreign sources, any one importing it will be eligible for FIPPA protection including Iranians residing in Iran or abroad.

Potential Approaches to the Market

First and foremost, it is crucial to realize that Iranian authorities insist on a long-term commitment and a transfer of technology as a requisite for getting a share in the market. Foreign companies are therefore advices to adopt a medium- to long-term strategy for the Iranian market. Iran will almost never honor the interests of a company that does not show long-term commitment. Tenders are strictly required for government contracts for purchasing or projects. These are rarely competitive. Breaking up contracts into smaller parts is a common practice to try and incorporate at least 30% of the contract's value in local capability and also to negotiate on specific prices. Broadly speaking, Negotiation is an interaction of influences. ...


Currently there are three main routes that a foreign company can follow to establish a long-term presence in Iran.


Joint Ventures

See also: Privatization in Iran

One possible strategy is for the foreign company to enter into a joint-venture agreement with a public or private Iranian partner. The existing level of technology and infrastructure makes many Iranian companies suitable for expansion and development in conjunction with foreign companies. Many Iranian companies, especially those in the private sector, are currently actively seeking joint-venture partners both to fill their technological as well as management gaps. Others are looking for a revival of their company through foreign capital. Should a company decide to adopt this approach to the market, it is advisable to look for products and services that have both domestic demand as well as regional export potential. If a joint-venture company can earn hard currency through export of its goods, it will not be too dependent on the Iranian banking system for the repatriation of profits and dividends. It should be noted that some joint ventures consist purely of the transfer of technology to Iran by the foreign partner without any capital commitment. Since Iranian authorities are very keen on the introduction of modern technologies, this path can prove very constructive. According to the Fourth Five-Year Economic Development Plan (2005-2010), the Privatization Organization of Iran affiliated to the Ministry of Economic Affairs and Finance is in charge of setting prices and ceding shares to the general public and on the stock market. ...


Buy-Back

The buy-back scheme is a formula used by the Iranian government to attract foreign investment. Following the end of the Iran-Iraq war in 1988, Iran faced a major problem: it needed foreign investment if it did not want to lose its vital income from the oil and gas industry, yet its revolutionary ideology and Constitution forbid granting “concessions”. A compromise solution was found in 1989 with the First Five-Year Economic, Social and Cultural Development Plan. Under Note 29 of the said plan, the Iranian government is allowed to employ “buybacks” in its effort to meet the industrial and mineral needs in connection with exports, production and investment. Put in laymen terms, a buy-back transaction is a method of trade where plants, machinery, production equipment and technology is supplied (by a domestic or foreign private firm), in exchange for the goods that will be produced directly or indirectly by means of such facilities. Under this scheme, the foreign partner that makes the initial investment can repatriate the return on the investment (at a pre-agreed fixed rate) through goods and services produced by the project. While many foreign companies believe that this method is a mere financing instrument for Iran, it is more accurate to say that it is a compromise formula for foreign investment in the short-run. In the medium to longterm, more appropriate laws and regulations will probably replace the buy-back scheme. In other words, once the constitutional concerns have been dealt with, the foreign partners of buy-back agreements can take over the projects that they are involved in, or they can enter into a joint venture with an Iranian partner.


Build-operate-Transfer (BOT)

This is a rather new possibility in the Iranian market. Recent regulations have also introduced the Build-Operate-Transfer (BOT) scheme for Iranian projects. In this scheme, the foreign partner invests in one project, which is then operated for a certain period of time by the foreign investor before it is fully transferred to the Iranian government. Iranian authorities are showing some flexibility regarding the BOT, which could potentially pave the way for more foreign investment in the market.


See also

A Map of the nations in the list. ... The economy of Iran has been improving steadily over the past two decades but a continuing strong labour force growth unmatched by commensurate real economic growth is driving up unemployment to a level considerably higher than the official estimate of 11%. According to experts, annual economic growth above five per... Roughly one-fourth of Irans labour force is engaged in manufacturing and construction. ... This page lists all the major Iranian companies operating inside and outside of Iran. ... According to the Fourth Five-Year Economic Development Plan (2005-2010), the Privatization Organization of Iran affiliated to the Ministry of Economic Affairs and Finance is in charge of setting prices and ceding shares to the general public and on the stock market. ... The term Iranian diaspora or Persian diaspora refers to the Iranian people living outside of Iran. ... This article outlines economic, trade, scientific and military Sanctions against Iran, which has been put forward by the U.S. government, or under U.S. pressure. ... Wikitravel is a project to create an open content, complete, up-to-date, and reliable world-wide travel guide. ...

References

  1. ^ Iran attracted $24.3b foreign capital in 16 years Payvand's Iran News
  2. ^ a b AEI - Global Investment in Iran
  3. ^ COUNTRY PROFILE: IRAN {March 2006) Library of Congress - Federal Research Division
  4. ^ a b Foreign Investment At Record Level. Iran Daily (April 10 2007).
  5. ^ Money Magazine - Iran Is Open For Business

April 10 is the 100th day of the year (101st in leap years) in the Gregorian calendar. ...

External links

  • Ministry of Economic and Finance Affairs of Iran - Information on the Foreign Investment Promotion and Protection Act (FIPPA) and Taxes.
  • High Council of Iran Free Trade-Industrial Zone
  • Golbal Investment in Iran with Interactive maps - American Enterprise Institute
  • FDI.net - Information about FDI in Iran from the World Bank.
  • UNCTAD Fact Sheet - Iran

 
 

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