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Major rise in foreign investments in Iran

22 June 2016 0:53

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The Financial Times says the latest figures show that the volume of Foreign Direct Investment (FDI) in Iran has reached the highest level in years following the removal of sanctions against the country in January. 

The FT has emphasized in a report on Tuesday that figures show Iran was ranked 12th out of the 14 Middle East nations for FDI between January 2003 and December 2015, equating to a market share of 1.62 per cent.

Since sanctions were lifted this year, Iran has climbed to number three in the rankings, with a market share of 11.11 per cent, placed only behind regional powerhouses the United Arab Emirates and Saudi Arabia, it added.

Global investment into Iran has been steadily increasing since 2013, a year in which the country attracted just three FDI projects. This increased to eight in 2014 and nine in 2015, FT added.

It was in the first quarter of 2016, however, that the impact of sanction relief became evident. Iran won 22 FDI projects during the quarter, the highest rate of investment since fDi Markets, , an FT service that monitors cross-border greenfield investment, began recording data in 2003.

Although 2015 showed a 48 per cent increase in capital expenditure overall, the first quarter was notable in failing to attract any FDI projects, in stark contrast to the same period this year.

Predictably, Tehran attracted 36 per cent of recorded investments into the country during the first quarter of 2016, and 40 per cent of all FDI into Iran since January 2013, the report added.

Since the sanctions were lifted the leading sector for investment into Iran has been financial services, which has attracted four investments from separate companies with capital expenditure of $60m.

The country has also attracted investments from the automotive sector, business services, consumer electronics and textiles, among others.

The principal countries investing in Iran during the period were South Korea and Germany, which together committed to capital expenditure of $2.15bn.

South Korea-based steel producer Pohang Iron and Steel (POSCO) has been the single largest investor in Iran this year, with plans to invest $1.6bn to build an integrated steel mill in the Chabahar Free Trade-Industrial Zone by March 2017.

The upward trend recorded by fDi Markets suggests the economic rebound Iran is experiencing is set to continue. Nineteen investors signaled an interest in future investments in the country, representing an increase of 90 per cent from 2015, the FT report concluded.

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