Iran qualifies from many respects to be a good location for investment and doing business. Some of the features are mentioned below:
Vast domestic market with a population of 77 million growing steadily as well as quick access to neighboring markets with approximately 400 million inhabitants. Irans population is considered young. As much as 54 percent of the population is less than 30 years old. The population growth rate is 1.2 percent per annum.
In 2015/16 the economic participation rate of the population aged 10 and above jumped by one percentage point and reached 38.2 percent, consisting of 63.2 percent for men and 13.3 percent for women. The graduation of a large number of university students that previously had chosen to enter higher education—partly to avoid unemploymen and a general aura of optimism about economic improvements following the implementation of the contributed to this significant shift of the population from economically inactive to economically active categories. Out of the 24.7 million economically active individuals, 2.7 million, or approximately 11 percent, were unemployed. As in previous years, the unemployment among women was much higher than among men, and was much higher in urban areas than in rural areas.
Iran holds the second largest proven natural gas reserves in the world (17 percent of total), next only to Russia, and fourth largest proven oil reserves (10 percent of the worlds), next to Venezuela, Saudi Arabia and Canada. Iran is also rich is many other natural resources, including copper, zinc, cobalt, iron ore, lead, manganese and sulfur.
Iran has a strong and broad economic infrastructure. The countrys transportation network includes 12,000 km of railway and 220,000 km of roads. Airliners also haul 19 million passengers per year. Iran has nine commercial ports in the south, including Shahid Rajaee Port just north of the Strait of Hormuz that trades with over 80 foreign ports via 35 container lines. Shahid Rajaee Port with its area of 2400 hectares and capacity of 70 million ton a year has been ranked 44th among the top 3500 ports in the world in 2011. Apart from the nine commercial ports in the south by the Persian Gulf and Oman Sea, there are also three commercial ports by the Caspian Sea in the north.
Iran currently has 167 internet servers or 2.12 per one million persons, and 31 percent of the population uses the internet. Land lines number 29 million and mobile phones number 65 million.
In 2013 Irans GDP consisted of 9 percent in agriculture, 17 percent in oil and gas, 13 percent in manufacturing and mining, 9 percent in construction and the remaining 53 percent in services. Irans GDP in 2014 was estimated by the IMF at $403 billion in current prices and $1,284 billion in purchasing power parity (ppp) terms, resulting in per capita incomes of $5,243 in current prices and $16,236 in ppp terms.
Oil and Gas Sector
The Ministry of Petroleum of the Islamic Republic of Iran is responsible for all kinds of oil and gas activities. The Ministry by itself has got the four major subsidiaries body as follows which undertake implementation and operation of the above mentioned activities:
The Irans Unique Position in terms of hydrocarbon reserves is as follows:
Biggest Oil and Gas Companies in terms of Hydrocarbon Reserves
National Iranian Oil Company (NIOC)
Since 1951, National Iranian Oil Company (NIOC) has been directing and making policies for exploration, drilling, production, research and development, refining, distribution and export of oil, gas and petroleum products.
National Iranian Gas Company (NIGC)
National Iranian Oil Refining & Distribution Company (NIORDC)
Mission & Strategies Mission
National Petrochemical Company (NPC)
Quantity goals of the 5th five-year development plan (2011-2015)
Qualitative objectives and policies
NPC strategic goals pivoting around its developmental/sovereign role
Industry & Mining
Steel, weaving, food processing, car, electrical and Electronics Industries are among the key industries in the country.Iran now produces a wide range of manufactured commodities, such as telecommunications equipment, industrial machinery, paper, rubber products, steel, food products, wood and leather products, textiles, and pharmaceuticals. Iran is also known throughout the world for its hand-woven carpets. The traditional craft of making these Persian rugs contributes substantially to rural incomes and is one of Irans most important export industries.
The pharmaceuticals, paper, sugar, packaging, and textile segments have been identified as key growth areas of the industrial sector by the Industrial Development & Renovation Organization of Iran.
Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) is the major state-owned holding company.
• There are approximately 5,000 mines in operation in Iran, with 12 metals and 36 non-metal ores currently being exploited.
Ministry of Roads and Urban Development of the Islamic Republic of Iran is responsible for all kinds of transportation. The Ministry by itself has got five important sub-sectors as follows which undertake implementation and operation of transport infrastructures:
• Company for Construction and Expansion of Transport Infrastructures
• Road Maintenance and Transportation Organization
• The Railways Company of the Islamic Republic of Iran
• Ports and Maritime Organization
• Civil Aviation Organization
- Considering the key role of transportation in economic development of the country especially foreign trade and transit operation, Islamic Republic of Iran approved in 2000 its general policies in transportation sector with focus on the following priorities:
- Establishment of transport system and regulating portion of each sub- sector through giving priority to the rail transportation and with regard to the following aspects:
• Economic considerations
• Decrease in energy consumption
• Decrease in environmental pollution
• Increase of safety
• Balancing between infrastructures and fleet, navigation equipment and demand
• Increase in productivity at the highest level through promoting transport modes and management and human resources and information.
-According to the countrys fifth Five-Year Development Plan (FYDP), the Iranian government allocated approximately $34 billion to the transportation sector in 2010. With renewed interest in connecting international points by land, sea, and air, the government had utilized about 80% of these funds by 2012.
-The amount of cargo and passengers traveling along these routes has increased significantly in the past decade, with airline companies seeing some of the largest growth. In 2011, 27 million travelers and businesspeople passed customs, and the government surpassed its passenger and cargo targets by over 100%.
-Rail and road networks are being focused on as the key for a streamlined transport corridor from east to west, and in 2012 there has been an increase in the number and quality of a variety of valuable connection routes both throughout the country and extending beyond its borders.
-Sea freight capacity has steadily increased since 2009, on a growth pattern that has been accelerated by better quality services and faster loading and unloading times. By 2011, Irans TEU handling capacity reached 2.8 million, up from 1.7 million TEUs in 2007. Over the same period, passenger traffic by sea displayed 21% growth, making Iran an increasingly accessible destination for
a variety of both new and loyal markets.
Models of Transportation:
-In total, Irans road network covers a distance of 180,958 kilometers, with 9,124 kilometers of paved highways and freeways. In 2011, the government launched projects to construct 6,500 kilometers of additional roads, many of them designed to enhance the travel experience beetween major international cities and Tehran, as well as cut transportation costs and times.
- Islamic Republic of Iran has given a priority to construct, rehabilitate and upgrade the existing roads of Asian Highway Network and has made noticeable measures in this regard.
-Ministry of Roads and Urban Development has paied attention to public- private partnership in construction and completion of transport infrastructure projects. In road sector, many freeways, highways projects are being constructed or rehabilitated on BOT, Partnership or other methods.
- The rail network of the Islamic Republic of Iran is connected to middle East and Europe railways from West (Razi border), to Azerbaijan railway from North West (Jolfa border), to Caspian sea and ports of Turkmenistan, Kazakhstan, Azerbaijan and Russia from North (ports of Amirabad, Neka and Turkmenistan), to Central Asian, Russia and China railways from North East (Sarakhs border), to Pakistan railway from South East (Mirjaveh border) and to Persian Gulf and open seas of the world from South (Bandar Abbas and Imam Khomeini ports).
-Railroads currently stretch across 11,760 kilometers of the country, with 3,352 kilometers currently under construction. With a wider range and increasingly useful routes, passenger traffic increased 5.3% in 2011. In 2011, 27.7 million people used the countrys rail networks, and 32.8 million tons of goods were transported, accounting for 9% and 11%, respectively, of the countrys total transportation.
-In accordance with the fifth FYDP, the government intends to add 15,000 additional kilometers of rail to its existing network by 2015. To help achieve this goal, the Ministry of Roads and Urban Development worked to attract €17 billion in FDI, much of which will be used to expand the rolling stock of the Islamic Republic of Iran Railways (RAI) and its associate companies, Raja Passenger Train and Railway Transportation.
3- Civil Aviation :
-In civil aviation sector, there are 54 airport in the country ,which 8 of them are international
- Iran Air is the national carrier. Today, the company services 6 million passengers per year, many of them flying on one of the 100 daily domestic flights to 28 destinations.
- Domestic passenger traffic has increased by an average of 7% over the last 10 years, and at the same time international air travel in Iran has grown by a robust 9% per year, which is far above the world average.this growth trend will continue for at least the next few years. With 3,300 employees and growing, the expansion of the business may lead to a bright future.
-promotion of capacity of ports of Chabahar and Shahid Rajaee in South and Amirabad in North as well as establishment of shipping lines in the region are among measures taken in the framework of transport cooperation vision which shall deeply affect transportation and trade in Asia and the Pacific.Ports of Shahid Rajaee, Amirabad and Anzali enjoy outstanding location in transit route of the North- South corridor. In addition, ports of Imam Khomeini, Shahid Bahonar, Lengeh, Boushehr, Chabahar and Noshahr have got their own unique potentials.
-The nominal capacity of commercial ports grew to over 150 million tons in 2010-2011, marking an increase of 5.6% over the previous period.
Leading this growth is Bandar Abbas, Irans main container port in the country and largest hub in the Persian Gulf. In 2010, the ports cargo ally and 52traffic reached 2.5 million TEUs, accounting for nearly 95% of the countrys total TEU handling activity. In addition, the port accounted for 37% of the countrys total transit traffic in 2011.
. 5-Transit Operation:
-Islamic Republic of Iran has targeted in transit sector in a way that it shall reach to figure of 40 million tons of goods by the end of Fifth Economic Development Program (2015).
Agricultural is one of the most important sectors of the Iranian economy, accounting about 11%of GDP, 23%of the employed population and 15%of the foreign exchange revenues (form nonoil exports). Agricultural and animal husbandry products have always provided the major non-oil export items such as pistachios, raisins and even carpets (the wool or silk used in them).
About %20 of the land Iran is arable .the main food-producing areas are in the Caspian region and in valleys of the northwest. Some northern and western areas support rain-fed agriculture, while other areas require irrigation for successful crop production.
Agri-food & Packaging
• Iran is one of the most populous countries in the region, and so there was a real long-term strategic intent from the side of international companies to make an entry into this market
• A total of 12,198 entities are engaged in the Iranian food industry, or 12% of all entities in the industry sector. The sector also employs approximately 328,000 people or 16.1% of the entire industry sectors workforce, according to the Iranian Food Industry Organization.
• Investments now total $7.7 billion, or 18% of total investment in the industry sector. Sector exports range around $1 billion per year, and the main export items are confectionary, dairy products, tomato paste, fruit juice and concentrate, mineral water, and pasta.
• The main export regions include the Middle East, Central Asia and other CIS nations, Europe, and South America. The country is also increasingly importing food technology, including processing and packaging equipment.
• The beverages sector is growing quickly in Iran as part of an expanding FMCG scene. As local consumption increases, players in the sector look to gain market share while improving supply and quality.
1- The income derived from all agriculture and horticulture activities, fish farming, bee-keeping, hunting and fishing, sericulture, revival of pastures and forests, is exempt from payment of tax. All the natural and juridical persons (Iranian and Foreign) can enjoy above mentioned exemption at the outset their activities.
2- %100 of the income derived exportation of industrial finished goods and products of agricultural sector(including forming ,horticulture husbandry, poultry ,fishery, forest and pasture products) and its conversional-signal and complementary industries and also %50 of the income earned from exportation of other goods that are exported for achieving the objectives of the exportation of non-oil goods, shall be exempt from tax. A List of goods subject to this article, in the course the of each development plan based on proposal of the ministries of economic affairs and finance, commerce, jihad-e-agricultural and industries and mines, shall be approved by the council of ministers.
Irans trade has been strongly affected by the sanction, both in value and in terms of country partners. Limited by the sanctions, the volume of oil exports dropped from a daily average of … million barrels in 2013 to 1.4 million barrels in 2014 and oil export revenues fell from its height of $119 billion in 2011 to only $65 billion in 2013 and even lower in 2014 – the year in which oil prices fell sharply. In 2013, non-oil exports amounted to $31.1 billion, while imports amounted to $49.1 billion. Petrochemicals constituted over a third of Irans non-oil exports, followed by other manufacturing products, agricultural products, and metallic and mineral ores.
Sanctions have also shifted Irans trade partners away from Europe and toward Asia. Germany, France and Italy that for many years ranked among the top five trade partners have now left the list; and the ranks of Switzerland and UK have also fallen. As can be seen in the pie charts below, in 2014the top five sources of imports into Iran were China, UAE, Korea, Turkey and India while ten years earlier they had been UAE, Germany, France, Italy and China. In other words, Germany, France and Italy have been replaced by Korea, Turkey and India. The new pattern emerged after Iran was barred from exporting oil to most countries and repatriating its export earnings from those few destinations, and thus had to resort to barter trade and settle for lower quality merchandise with the few countries – notably, China, India, Japan, Korea and Turkey -- it could export its oil to.
Irans financial market is heavily bank-oriented and businesses have sourced 89 percent of their financing requirements from the banks. As percentage of the GDP, bank deposits are 73 and bank loans are 61; and 20 percent of bank claims are on public sector. Foreign assets constitute 14 percent of the banks assets and foreign exchange loans and deposits constitute 11 percent of their liabilities. The high share of non-performing loans to total loans, estimated at 15-20 percent, constitutes a major risk to the banking industry, especially since Iranian banks are heavily dependent on interest incomes.
Irans capital market is small and limited in depth and spread compared to that of the industrialized countries. The global capital market in 2011 is estimated at $212 trillion, consisting of $157 trillion (74 percent of total) in debt instruments and $55 trillion (26 percent of total) in stocks. The size of Irans capital market is only around $100 billion, consisting almost exclusively of stocks; the structured debt market is very small, mainly because the necessary instruments consistent with Islamic banking have not been devised or properly utilized. Irans capital market is estimated to finance only 11 percent of the capital requirement of businesses, with the remaining 89 percent being financed by domestic banks.
Irans insurance market is underdeveloped although it ranks 42nd in the world in terms of the value of total premiums. Irans per-capital insurance premium is $84; life insurance premiums constitute 10 percent of the total; and the countrys Insurance Index (premiums as percentage of the GDP) is 1.73. All these three indices are below their respective global averages.
The Foreign Investment Promotion and Protection Act (FIPPA) of 2002 governs direct foreign investment in Iran, including all types of project financing such as civil participation, buy-back, countertrade and various BOT schemes. The text of the Act is available at:
The labor law that was legislated in the aftermath of the 1979 Revolution is fairly unhelpful to business, but formal and informal ways have been devised to ameliorate its negative effects. Many positive measures have also been taken to make the country more business friendly, including streamlining procedures for business registration, enforcing contracts, obtaining construction permits, company taxation and trade inspection.
Enactment of the new Foreign Investment Promotion and Protection Act (FIPPA)