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The Characteristics and Main Advantages of Iran’s Economy

Iran’s economy is the 18th biggest in the world, when comparing purchase power parity. The richness in natural resources - mainly the oil and natural gasses reserves - give Iran big advantage and are the key elements in the economy’s positive growth, despite the global financial crisis.
The young and very well educated population - secured by the widely spread and economically sound infrastructure; and assured by available health system – is the main and most needed factor in the growing economy.
The economy is well diversified and more than 40 different types of industry are traded on the Tehran Stock Exchange. 

Natural and Mining Advantages

Iran is the 4th largest producer of oil in the world and boasts with the 2nd largest deposits of natural gasses. Aside of the rich oil and natural gasses resources, the further advantages are also in the diverse industrial sectors related to this main industry.  

The other mining industries and natural resources deposits consist of zinc (4th largest in the world) and cobalt (10th largest in the world).  The aluminum, manganese and copper deposits rank among the richest resources in the world, as well. The mining industry is one of the most diversified in comparison with the Middle East and North Africa Region.

Even though roughly 50% of income is covered by the main industry – mining of oil and other resources – the agriculture remains the second biggest industry in the country. Agriculture, utilizing renewable natural resources, is continuously growing and capable of sustaining the needs of the whole country. The diversity of commodities grown ranks at the 4th best place in the world.

Economic Transformation Based on the “Fifth Development Plan”

The Fifth Development Plan specifies overall economic goals, as well as very specific means of reaching those goals. To list a few of the main goals:

  • Support of the USD 20 billion investments – which are to be extended by the private sector and the foreign investors in the oil and gas industry.
  • The reduction of unemployment from the current  13%  to only 7%  by creating 1 million jobs per year – mainly in the travel industry, service and utilities industry, and health sector.
  • The improvement of the country’s health system – to reach better availability of health services to the population and to increase the quality in services already provided.
  • To expand the current international relations and improve the import/export status and results.
  • To double the country’s GDP within the period planned in the Fifth Development Plan”.
Vast Privatization Process

The privatization plans include large transformation of many industries and specific companies. It is suggested that full 80% of the state-owned assets should be eventually transferred to the private sector. 40% of the transfers would be made through so called “Justice Shares”; and 40% would be sold through the Tehran Stock Exchange. The Government would thus maintain the ownership of 20% of assets and property in the important sectors.

Within the past 5 years, the transformation of assets and property - worth of USD 63 billion out of the USD 120 billion owned by state/government -  already started in the privatization process. After the privatization is finished, the government’s influence on GDP generation will decrease from 80% to approximately 40% - this process shall offer the advantages of privately facilitated income, while maintain control and protection against overly influential foreign investments.

Foreign Investments and Projects
Protection and Guarantee Coverage

There are several Articles within the Iran Law that specifically address the various instances of business situations, which may arise.

The Foreign Investments, and compensations arising in such cases as expropriation and nationalization, are covered in the Article 9 of the above mentioned Law. The compensation for losses to foreign investments and businesses incurred due to arising prohibition or interruption of international agreements, or Cabinet decrees, are covered in the Article 17 and Clause 26 of the Implementing Regulation.

Should the government be the sole and exclusive client or purchaser of the goods or services produced during a foreign investment project, or when the goods and services are supplied at subsidized prices, the government usually guarantees agreed prices – as covered by Clause 11 of the Implementing Regulation.

However, it is always advisable to discuss additional and international coverage when considering investment in the country; as well as hiring a local expert attorney and/or insurance agent.

Rights and Facilities

There are several important rights and obligations that the potential foreign investor must be aware of and comply with. To list a few:

  • The foreign investors are entitled to the same rights, protection and facilities to which the domestic investors are entitled to ( as per Article 8 of the Law).
  • The principal resulting from the investment made in the country and the profits may be freely transferred either through foreign currency or a non-cash transaction (as per Articles 13-18 of the Law).
  • The foreign investment may consist of up to 100% of any given investment project (as per Clause 4 of the Implementing Regulation).
  • The introduction of the foreign investment is permitted in all the manufacturing and industrial sectors, in agriculture, in transportation industry, in telecommunications, in the service and utilities industry - water, gas, electricity and energy.
  • Any investment disputes may be referred to the international judicial bodies (as per Article 19 of the Law),
  • Within the joint investments, the ownership of the land in the name of the company - if the company is registered in Iran - is permitted (as per Clause 34 of the Implementing Regulation).
  • There is a possibility of  Visa issuance and  three-year residence permits for the foreign investors, directors, experts and their immediate family. The extension of such visa is also possible (as per Article 20 of the Law and Clause 35 of the Implementing Regulation).
  • The decisions on regard of the foreign investment applications shall be delivered within a 45-days time period (as per Article 6 of the Law).
  • The investment methods for the foreign investment projects, either through foreign direct investment or  through contractual arrangements, BOT, Buy-Back or Civil Participation categories remain at the discretion of the investor (as per Article 3 of the Law).
  • The natural or judicial Iranians - using capital from foreign origin to invest in the country - are entitled to the facilities and protections of the Law on Promotion and Protection of Foreign Investment (as per Article 1 of the Law).

However, as this is only a very brief listing of the most important and interesting points for the foreign investors, it is always advisable, when considering investment in the country, to discuss all such investments with local and/or international advisors/lawyers.

Recognition and Identifying the Foreign Investment Opportunities in Iran

The best possible start in looking into the investment in Islamic Republic of Iran is to utilize the facilities of the Investment Opportunities portal at:  
The portal, divided into several sections each offering specific services, includes but is not limited to the following:

  • The access to the current investment opportunities in Iran within different economic sectors - with the advance of search engine capabilities.
  • The access to the full citation of “Law on Promotion and Protection of Foreign Investment”; as well as to the “Implementing Regulation” – both are available in various languages.
  • Foreign investment statistics and figures – with the listing of projects that are currently carried out by foreign investors in Iran.
  • The online application for foreign investors who are interested in the investment opportunities presented at the website.
  • The online form for filling out the “Summary Sheet” at the “New Project” section of the portal – which then serves as a collecting point for data collection in relation to the investment projects in Iran.
  • The access to data about offered opportunities and the inclusion within the databank of potential investors.
  • The assistance in participation on international forums – accompanying the potential project owners.
Foreign Investment Services Center

The Foreign Investment Services Center provides information to foreign investors. It also offers the consultancy services and helps with assembling meetings with potential business partners, with negotiations among applicants; and offers email and contact facilities

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