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Foreign Investment in Iran: Laws and Regulations, Advantages, and Investment Opportunities Presentation by : Sharagim Shams Deputy Director General, Foreign Investment Office Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) - PowerPoint PPT Presentation
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Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
Foreign Investment in Iran:Laws and Regulations,
Advantages, and Investment Opportunities
Presentation by :Sharagim Shams Deputy Director General, Foreign Investment Office
Organization for Investment, Economic and Technical Assistance of Iran
(OIETAI)On the occasion of UBCCE Third Business Forum
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
Presentation Highlight
1.General Information about Iran -Fundamental Macroeconomic Reforms - Privatization2.Foreign investment in Iran : Policies, Laws
and Regulations and advantages
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
General Information about Iran
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
Geography
Location:
-Middle East, bordering Iraq,Turkey, Pakistan, Afghanistan and Turkmenistan t Oman Sea and the Persian Gulf from south and the Caspian Sea from north,
-Strategic location on the Persian Gulf and Strait of Hormuz, which are vital maritime pathways for crude oil transport
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
Area: 1.67 million km²Population: 71.5 million
Literacy ratio: %8530 Provinces
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Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
Climatic Characteristics: Numerous Diversity
Mid Winter
Climate Factor
North of Iran
South of
Iran
Temperature (c)
Min: -28 Max: 31
Humidity (%) 90 20
Rainfall (mm) 1200 125
Mid Summer
Climate Factor
North ofIran
South of Iran
Temperature (c)
Min: 5 Max: 50
Humidity (%) 70 10
Rainfall (mm) 165 0
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
GDP: US$ 382.3 billion, GDP per capita: US$ 5346GDP (PPP): US$ 842 billion , GDP per capita (PPP): US$ 12,800GDP average annual growth rate(2004-2008): % 7.5Trade Balance US$ 45 billion surplusImport (FOB) US$ 55 billionExport US$ 100 billion
Export - commodities:petroleum 80%, chemical and petrochemical products, fruits
and nuts, carpets
Import-Commodities: Industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services ,
Economy
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Export & Import Trends
70
55
0
10
20
30
40
50
60
70
19
81
19
90
19
94
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
/20
06
20
07
20
08
. .
`̀
Value: US$ BillionImportsExports
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
13438
5325
4915
3523
3082
2033
1970
1495
1978
1813
UAE
GERMANY
CHINA
SWITZERLAND
SOUTH KOREA
UNITED KINGDOM
FRANCE
INDIA
ITALY
TURKEY
Main Trading Partners (Top 10)
Non-Oil Export Partner
Value: $US MillionValue: $US Million Import Partners
587
539
526
410
394
2384
2328
2003
1172
821
IRAQ
UAE
CHINA
INDIA
SOUTH KOREA
JAPAN
AFGANISTAN
TURKEY
BELGIUM
SAUDI ARABIA
Source: I.R. Iran Customs
IMPORTSSHARE
Capital %16
Intermediate %67
Consumer %13
Other% 4
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Iran’s Main Advantages:• Diversified, Hydrocarbon-rich Economy• 4th largest oil producer in the World• 2nd highest gas reserves in the World• Largest industrial base in the MENA region• 10th Country on Tourism Attractions and 5th on Ecotourism• High GDP growth rate• 4th to 9th rank in production of Zinc, Lead, Cobalt, Aluminum,
Manganese and Copper in the world.• 4th rank on diversity of Agriculture products in the world.• 6 Free Trade-Industrial Zones • 19 Special Economic Zones
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Recent Developments: Comprehensive Tax Reform :Comprehensive Tax Reform :
Fixing corporate income tax at a flat rate of 25%, while under the previous law, companies were subjected to both a 10% corporate tax plus their dividends being taxed at ascending levels up to 54%.
Introduction of Many New Tax Holidays and exemptions
Creation of a Central Tax Authority.
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• Floating Single Exchange Rate System :Floating Single Exchange Rate System : Unification: from March 2002. Less than 5% Fluctuations.• Trade System :Trade System :• Replacement of Non-tariff Barriers by Tariffs.• Rationalization of the Tariffs (35.6% to 16.5%)• Privatization :Privatization :• More than 20 billion USD Privatized.
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Fundamental Macroeconomic Reforms (privatization)
• Expediency Council Resolutions:Expediency Council Resolutions: Opening up new areas formerly closed to private local/foreign Opening up new areas formerly closed to private local/foreign
investors. investors.
• The general policies of Article 44 of theThe general policies of Article 44 of theConstitution of the Islamic Republic of IranConstitution of the Islamic Republic of Iran
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Foreign investment in Iran: policies , laws and regulations and advantages
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Foreign Investment Policy• Contribution to Economic DevelopmentContribution to Economic Development
• Financing Projects, Upgrading Technological & Financing Projects, Upgrading Technological & Management Skills,Management Skills,
• Sharing Benefits and Risks on Equal Term without Sharing Benefits and Risks on Equal Term without DiscriminationDiscrimination
• Advantages in Enhancing Products and Output Advantages in Enhancing Products and Output Quality, Increasing Employment & ExportsQuality, Increasing Employment & Exports
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The Body in Charge
Minister of Economic
and Finance
State Tax Organization
Privatization Organization
Stock Exchange Organization for
InvestmentTreasury
First Deputy
Banking System Customs
The Organization for Investment is the sole official authority for the promotion of foreign investments in the country and for the investigation of all issues pertaining to foreign investments. (FIPPA , Article 5)
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The Legislation:
• The Foreign Investment Promotion and The Foreign Investment Promotion and Protection Act (FIPPA):Protection Act (FIPPA):– Substitutes Former LAPFISubstitutes Former LAPFI– Ratified in 2002Ratified in 2002
• By Laws:By Laws:– Implementing Regulations of the FIPPAImplementing Regulations of the FIPPA
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Features of FIPPA:
Types of Investments:Types of Investments:
Direct InvestmentDirect Investment(Equity Participation) in All Areas Open to Iranian(Equity Participation) in All Areas Open to IranianPrivate SectorPrivate Sector
Investment through Contractual ArrangementsInvestment through Contractual Arrangements (Non-Equity Forms):(Non-Equity Forms):
--Buy Back ArrangementsBuy Back Arrangements-Civil Partnership-Civil Partnership-BOT Schemes-BOT Schemes
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Features of FIPPA:
Areas of Investment:Areas of Investment:
All Areas in Industry, Mining, Agriculture, and All Areas in Industry, Mining, Agriculture, and Services:Services:
-In Greenfield Projects-In Greenfield Projects
-In Brownfield projects and existing companies-In Brownfield projects and existing companies
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Features of FIPPA:
Risks Covered under FIPPA:Risks Covered under FIPPA:
All non-Commercial RisksAll non-Commercial Risks,, i.e. Currency Transfer, Nationalization, i.e. Currency Transfer, Nationalization,
expropriation, Government Intervention expropriation, Government Intervention and Breach of Contracts by Governmentand Breach of Contracts by Government
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Features of FIPPA:
Boundaries of Investment:Boundaries of Investment:
No Limit on Equity Percentage,No Limit on Equity Percentage,No Limit on Volume of Investments,No Limit on Volume of Investments,No Limit on Profit Transfer,No Limit on Profit Transfer,No Limit on Capital RepatriationNo Limit on Capital RepatriationNo Limit on Types of Capital ImportedNo Limit on Types of Capital ImportedNo Import / Export RestrictionNo Import / Export Restriction
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Features of FIPPA:
Settlement of Disputes:Settlement of Disputes:Between Investors (Free),Between Investors (Free),Between Investors and Government:Between Investors and Government:
AmicableAmicableDomestic CourtsDomestic CourtsAd-hoc ArbitrationsAd-hoc Arbitrations
ICSID (International Center for Settlement of ICSID (International Center for Settlement of Investment Disputes):Investment Disputes):
UnderwayUnderway
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Features of FIPPA:
Organization:Organization: Organization for Investment, Economic and Organization for Investment, Economic and
Technical Assistance of Iran (OIETAI)Technical Assistance of Iran (OIETAI)Foreign Investment BoardForeign Investment Board
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Procedure For Foreign Investor( Phases 1 to 4 )
1. Identification and Selection of Investment Project1. Identification and Selection of Investment Project
2. Obtaining Preliminary Permit from Relevent 2. Obtaining Preliminary Permit from Relevent Iranian OrganizationIranian Organization
3. Issuance of Foreign Investment License3. Issuance of Foreign Investment License
4. Implementing of Project4. Implementing of Project
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Features of FIPPAFeatures of FIPPA Investment Licensing Procedure :
Simplified, Short and TransparentSimplified, Short and Transparent
SubmissionOf
Application
SubmissionOf
Application
FinalLicenseIssued
FinalLicenseIssued
DraftLicense
Communicated
DraftLicense
Communicated
PreparationAnd
SubmissionOf a Report
PreparationAnd
SubmissionOf a Report
Foreign
Investment
Board
Foreign
Investment
Board
OIETAIOIETAI
Max 15 Days Max 30 Days
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Why Invest in Iran? (Advantages):
1.Strategic Location
2. Market Potentials & Proximity
3. Labor Privileges
4. Developed Infrastructure
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Advantages (contd.):
5. Low Utility & Production Cost
6. Abundant Natural Resources
7. Climatic Characteristics
8. Fiscal Incentives
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Foreign investment
Statisticesunder the
Foreign Investment promotion & protection Act(FIPPA)
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68 6131358
2703
4275
10279
12746
2087
0
2000
4000
6000
8000
10000
12000
14000
2001 2002 2003 2004 2005 2006 2007 2008
Foreign Investment under the Foreign Investment Promotion & Protection Act
( FIPPA)
US$ million
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Sectoral Distribution of Foreign Investment
(1993 up to March year 2009)
Agriculture; 21
Mining; 2450
Water, Electricity & Gas Supply;
4771
Construction; 906
Trsnsportation &
Communications; 1826
Services; 3693
Other; 6
Industry; 20505
US$ million
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�ْGeographical Distribution of Foreign Investments (1993 to March 2009)
Asia, 11,689
Africa, 7,989 America, 1,040
Euroup, 11,056
Oceanic, 682 International, 26
Transnational, 1,699
US$ million
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Features of FIPPA:TreatiesTreaties
- Bilateral Investment Treaties (BIT) with 53 Countries,- Bilateral Investment Treaties (BIT) with 53 Countries,
- Regional & Multilateral Treaties with Member States - Regional & Multilateral Treaties with Member States ofof
•Organization of Islamic Conference (OIC),Organization of Islamic Conference (OIC),•Economic Cooperation Organization (ECO).Economic Cooperation Organization (ECO).
- Double Taxation Treaty (DTT) with 44 Countries
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Contents of BIT:
• Promotion of investments: (most-favored –nation treatment)
• Treatment of investment
• Expropriation , losses and compensation
• Repatriations and transfers
• Subrogation
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Contents of BIT:
• Dispute settlement procedure
• Validity of the agreement:
• Admission and establishment,
• Scope and definition of investment ;
• …
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International Memberships:
• Multilateral Investment Guarantee AgencyMultilateral Investment Guarantee Agency (MIGA)(MIGA) since since 20032003
• World Association of Investment Promotion World Association of Investment Promotion
AgenciesAgencies (WAIPA) since 1998 (WAIPA) since 1998
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International Co-operations:
• World Bank: Project for Enhancing Institutional Capacity of Foreign Investment Promotion in Iran
• FIAS: Assessment of Investment Environment in Iran
• UNIDO: Project for Capacity Building in Industrial Investment Promotion
• UNCTAD: Preparation and Launch of WIRs and certain other survey studies
Tel: +98(21) 33967075 www.investiniran.irFax: +98(21) 33967864 www.iio.ir
Contact InformationOrganization for Investment, Economic and
Technical Assistance of Iran( OIETAI)Address: Davar Ave. Tehran P.O.Box: 11365/4618
President of OIETAITel: +98 21 33967043-33967770
Fax:+98 21 33967759
Foreign Investment Office
Tel: +98 21 33967755 – 33967075Fax: +98 21 33967864
Websites: www.investiniran.ir; www.iio.ir
E-mails: [email protected] ; [email protected]