5. 5Source :World bank; IMF, October 2015
*GDP per capita PP = $ 16.5 K *GDP PPP = $ 1357 bn
6. Iranian government in parallel
to resolve the nuclear issue,
mobilized all its energy and
resources to do a better
management of Iran’s economy
With all the hard work done,
Iran’s economy has reached to
a, relatively, stable condition:
National currency (IRR/USD)
▪ Annual change is 6% +
Inflation rate (9.5%, less than 10%
after 26 years)
Iran’s economic growth rate
4.3
0.4
4.5
4.1 4.1 4.2
2.6
2.1
3.2 3.2
3.4
3.6
2014 2015 2016 2017 2018 2019
Iran MENA
6Source: IMF , 2016
7. 23% of gross value-added is from oil and gas
Retail trade, real estate, construction, and professional services
together make up a larger share of the economy than oil and gas.
7
44
53
67
75 77
56
47
33
25 23
0
10
20
30
40
50
60
70
80
90
100
1995 2000 2005 2010 2014
Sectoral contribution to
Iran’s total gross value added(%)
other oil and gas
Other, 28
Construction
Professional and
other services
Real estate
Transport
Retail
Agriculture
Public sector
2014
10
9
8
6
28
5
5
5
Source: IHS Global Insight
8. 1/3 of Iranian graduates have engineering-related degrees
Iran has as many engineering graduates each year as the United
States, almost a quarter million.
8
114
130
140
148
168
234
238
454
757
1635
0 200 400 600 800 1000 1200 1400 1600 1800
Mexico
Ukraine
Indonesia
South Korea
Japan
Iran
United States
Russia
China
India
36% of Iran's graduating cohort in 2013
received an engineering-related degree
Source: UNESCO Institute for Statistics
9. Aspiring consuming class: more than half of Iran's households have
income exceeding $20,000
As a proportion of the population, Iran has twice as many
households with annual income above $20,000 as China or India.
3 1 2 5
20
36
25 20
6
5 14
38
50
40
54
35
41
69
59
50
27
22 19
3750
25 25
6 3 2 2 9
0
10
20
30
40
50
60
70
80
90
100
United States Germany Turkey Iran Indonesia China India Brazil
Household income distribution, 2015 (%)
<7.5 7.5-20 20-70 >70
9
Income categories $ thousand, 2005 purchasing power parity
Source: McKinsey Global InstituteCity scope
10. 8 cities with more than 1 million population
Tehran’s gdp is larger than rio de janeiro’s
10
11. There is no Amazon or Uber in Iran but that
does not mean Iranians are digitally starved. On
the contrary, local Iranian versions of all of
these services have sprung up.
Entrepreneurs in Iran enjoy a status that is on a
par with the United States and higher than in
France.
11
12. 12Source:Griffon Capital, Iranian internal infrastructure and policy report, July 2014;
Takhfifan
Order Food online
from the best
restaurants in Tehran
Reyhoon
13. The pattern of Iran’s trade has changed
markedly.
China today is the number-one partner,
accounting for almost 40 percent of all trade.
Iran could become a hub for regional commerce
Iran’s exports have fluctuated in recent years but
still amount to about one-third of GDP, on a par
with Japan and Australia.
Cross-border flows for Iran have diminished but
still account for more than 40 percent ofGDP
13
14. Iran is located at the nexus of east-west and north-south transit routes
17. status quo :
Iran’s one of the most important and leading sectors
136 billion barrel of proven reserves equal to the 10% of the world
total proven petroleum reserves(4th largest oil reserves)
Production costs for Iran’s oil fields are among the lowest in the
world
2nd gas reserves in the world with 940 trillion cubic feet in proven
reserves
Gas will likely play a key role in Iran’s long-term development
goals
17
18. Opportunities :
18
In the last decade Iran’s oil & gas sector has received little investment,
Many projects are waiting to be re-initiated and the offshore natural gas
fields in South Pars (Persian Gulf) is critical to meet increasing domestic
consumption
Around 62% of natural gas reserves are located in fields which have not yet
developed
Local and foreign private investment and ownership is allowed in down and
mid stream
Private sector investment without ownership in the up stream is also
allowed through contractual arrangements specifically buyback method
by receiving remuneration fee through entitlement to oil and gas from
developed fields
Iran is not making full use of gas reserves, Iran total proven gas reserves
are triple United States but Its annual production is less than one-fourth
the output in the United States (the largest producer)
19. Vast natural gas resources provide low-cost feedstock (80% ethane )
Even with uncertainties in global growth and petrochemical prices, Iran is likely to remain a profitable producer
whilst other Middle East producers are facing NGL shortages, Iran’s supply is expected to increase as gas
production from South Pars rises, sustaining its advantage for decades.
With many ongoing mega projects, Iran's ethylene capacity will be doubled in 2020 (12.7
mt per annum)
developed infrastructure for exports and financial incentives under special economic zones
at Mahshahr and Assaluyeh
To take advantage of the petrochemicals opportunity, foreign investment is needed to
supplement local investment, increase utilization, and meet growing domestic
demand with a broader product mix that includes end-use plastics and synthetic
rubber.
19
20. Status quo:
Iran has deposits of more than 68 minerals that worth up to $700 billion.
The world 5th zinc reserves
7th reserves of copper
Sarcheshme mine in Kerman province contains the world’s second
largest lode of copper ore.
9th reserves of Iron
Significant reserves of lead, chromate, manganese, coal and gold
20
21. Opportunities :
21
Almost 90% of all mines owned by the government and included in
privatization program which provides a good opportunity for foreign
investors contribution
The need for foreign investment and financing in steel and copper sector.
Support of government for transfer of know-how and modern technology
and equipment by the foreign investors.
Possibility of 49% participation of IMIDRO (national specialized company
in mining sector) with private investors in less developed regions
Most mines being located in the less developed areas variety of corporate
and salary tax holidays and exemptions plus custom duties exemption
are applied
22. Status quo:
Iran ranks 8th(282 bn KWH) largest producer in the world
20th largest consumer of electricity in the world(231 bn KWH)
Iran is planning for at least 10% annual increase in the installed capacity
to meet the 7-9% annual demand growth
The huge domestic industrial and non industrial need for electricity and
unique potential for exportation to neighboring countries 5 of which are
currently receiving electricity supply from Iran
22
Source:OIETAI
23. Opportunities:
23
As a priority, the government is seeking to diversify, modernize, and expand its electric
system. Creating efficient utilities will involve maximizing the throughput of electricity
and gas, (for example by converting simple cycle to combined-cycle power plants)
Iran is also focusing on attracting investment in renewable energy
The production gap is encouraged to be filled with investments by local private and
foreign investors in the context of IPPs
Existence of required regulatory framework for the issuance of government payment
guarantee and coverage of contractual commitments of government agencies as
parties of PPAs
Coverage of all political risks of the IPPs and its operation by the government in case of
foreign investors contribution
Water supply can also be increased to reduce the strain on existing sources:
-Desalination plants could be paired with power plants
-More facilities are needed for wastewater treatment
24. Status quo:
Iran is ranked 10th on potential tourism attractions and 5th
on ecotourism
19 world heritage sites recognized by UNESCO
A target of 2% of international tourists per year hosted by
the country in 2025 in the context of Iran 20 year vision
The estimates show that US$ 50 billion of investment is
required to increase the capacity and develop the tourism
industry
24
Source:OIETAI
25. Opportunities:
25
by 2035 Iran could need as many as 60,000 new hotel rooms
Large investments is required for development of accommodation facilities,
roadside service complexes both for the infrastructure investments and
providing professional management and trained human resources.
Based on new tax incentives enforced from March 2016, Duration of tax
exemption for Hospital & Hotels is 5 – 13 years
50% tax exemption with no time limitation for tourism projects
Extending financial facilities from government resources for tourism projects
in prioritized areas
Source:OIETAI
26. In rail, Iran has ambitions to be a nexus both for
east-west and north-south travel and transport
Iran’s transport sector accounts for
approximately 6 % of the economy.
With a well-connected road network and low
fuel costs, trucking accounts for more than
three-quarters of total freight volume
Iran’s seaports also need to expand and
modernize.
The port of Bandar Abbas, which handles about 75%
of cargo passing through Iran’s Persian Gulf ports, is
doubling its capacity.
26Source:OIETAI
27. The government is eager to
upgrade its urban infrastructure
Companies in master planning,
engineering, water and waste
management and other sectors of
urban solutions are in high
demand
The government has been taking
steps to reduce its subsidies for
fuel and electricity
27Source:OIETAI
28. Domestic brands dominate a high-consumption market
Imports account for just 8 percent of all sales in fast moving
consumer goods, compared to more than 40 percent in
India, Malaysia, Mexico, and Russia.
Iran has above-average retail sales per capita
28
29. Total vehicle penetration in Iran is relatively high
(at 200 cars per thousand people, compared with a
peer average of 138)
Iran has the potential to become a regional
automotive manufacturing hub for global brands
that could meet the needs of neighboring
countries
To achieve this aspiration, automakers will need to
attract significant investment to upgrade production
29
30. Iran has advanced scientific capabilities including in
stem-cell research and biotechnology
Iran reportedly ranked fourth globally in stem-cell
research in 2015 and first in the region for production of
biotechnology
Demand for many types of drugs is likely to increase
in line with Iran’s demographics and disease burden
Iran’s population will age over the next 20 years, with
individuals aged 50 to 64 growing from 12 percent of the
population to 22 percent;
aged 65 and older will grow from 5 percent to 12 percent
30
31. Almost 1.5 mobile subscriptions for every person, mobile
penetration in Iran is more than 50 percent higher than in China,
Mexico, andTurkey
MCI Hamrah-e-Aval, the 14th-largest post-paid
telecommunications operator by number of subscribers in the
world and the largest in the Middle East and South Asia
The penetration of fixed broadband has been growing rapidly and
market is open for competition with hundreds of Internet service
providers
Tehran has several advantages as a potential IT outsourcing hub
(strengths include a large pool of engineering talent and low labor
costs.)
The Iranian government has prioritized development of ICT as part
of its five-year plan and has promoted several technology parks.
include the PardisTechnology Park inTehran, which houses more than
120 companies with more than 2,000 employees
31
32. Iran ICT Key Facts
3G & 4G Rapid rollout of 3G and 4G
in the next 18 months country wide
57% Internet connectivity
In country
30m Mobile internet users
Unprecedented 3x growth
Highest Proportion of engineers
Per capital in the world
Largest Number of engineers
After Russia and the USA
World
Record
For number of research
Articles in 2005-2015
12 Accelerators
Around the country
22 Technology Parks
In different cities
1.6%
Share of the world’s market share
In science and technology
30%
Iran’s e-commerce sector growing
By over 30% a year
33. The government has ambitions to triple steel
production
Iran is an outlier in its use of direct reduced
iron as the primary method of production
only 4 % of global crude steel production uses
direct reduced iron which Iran has a share of 20%
It has a lower level of impurities compared to
most types of scrap; however, its higher silica
content affects productivity.
33
35. Iran Cement competitive advantages:
Large production capacity distributed in the country
Low production cost
Large and increasing domestic market size
Investment opportunities:
Developing of Export Infrastructures& logistics
Introducing New Products to the Market (Concrete
pavements, dry mortar, architectural construction
elements ,…)
Energy saving projects (WHRS,…)
Entering new export markets
35
36. A 20 years tax exemption
No visa for the entrance of foreigners
Custom exemption for raw materials and
industrial machineries of producing units
Easy registration of Companies
Easy circumstances for re-export and
transit of commodities
Possibility of exporting products to the
mainland
Long-term lease of the land for the
foreigners
Suitable rates for the energy consumption
36
37. Preparation of suitable land for industrial projects in accordance with
technical, engineering and new constructions methods
No need for permissions from various agencies and organizations
Be exempted from the municipalities
Easy and fast access to facilities such as roads, water, electricity…
Use of software services from technology and business centers such as
technical, engineering and management consulting
Free of Charge services to take the construction permit and finish license
Reduced investment costs due to the organized common services
Rent/ purchase of ready-built Sites
Payment of exploitation costs by cash and installment
Reduction in price of land and facilities exploiting based on project
execution duration, job creation and productivity
37
39. Including:
Introducing Iran macroeconomic performance
investment climate
Areas of Opportunities
The Regulatory Framework
Visas &Work Permit and procedures to obtain
required permissions and licenses for doing
business in Iran
39
Organization for Investment, Economic andTechnical
Assistance of Iran (OIETAI)
www.investiniran.ir
www.iio.ir
IRAN INVESTMENT GUIDE
Economic growth of Iran will surge by %4.5 after the sanctions are lifted.
Iran will remain as the most important and attractive opportunity in frontier market globally.
It further indicates that boosting economic cooperation and foreign investment in Iran is not only very sizeable but also favorable
-Iran has the largest proven gas reserves in the world and the fourth-largest proven oil reserves
-production costs for its oil and gas fields are among the lowest among its peers
-Iran’s economy is highly diversified and not overly dependent on oil and gas, which in 2014 accounted for just 23 percent of gross value added, less than many other oil-producing countries in the region. For example, that compared with 30 percent in the United Arab Emirates (UAE) and 50 percent in Kuwait.
-Technical literacy is a powerful factor that can drive productivity and employment if the talents developed by Iran’s education system are unleashed on the economy in rewarding jobs.
-In the past, some of the country’s best and brightest have moved abroad to continue their studies or take employment or become entrepreneurs.
They include Maryam Mirzakhani, the first woman to win the Fields Medal, the most prestigious global award for mathematics.
-Almost two-thirds of Iran’s current cabinet members have doctorates, six of them from Western universities including three in the United States.
By comparison, only two members of President Obama’s cabinet have PhDs, whilst ten have law degrees (JDs).
This proportion is more than double that of China and India, and of the BRIC economies of Brazil, Russia, India, and China, only Russia matches Iran.
Iran consuming class define as “consuming households”.
Iran’s retail sales per capita are higher than those in Turkey, Malaysia, or Mexico
Iran’s degree of urbanization outstrips its global ranking in terms of GDP per capita, which suggests that there is potential for future growth.
Tehran has a GDP larger than that of Rio de Janeiro
With three-quarters of the population living in cities, Iran is more than twice as urbanised as India and also ahead of several European nations, including Italy, Portugal, Austria, and Ireland.
Whilst the country has extensive urban and industrial infrastructure, this would need to be upgraded. Roads, ports, rail, and airports require heavy investment, and enhancements are needed in digital infrastructure, including high-speed broadband networks, both fixed and mobile.
-Some of the three million or more Iranians who live outside Iran are notable entrepreneurs,
They include Pierre Omidyar, the French-born founder of eBay (net worth: $8 billion); Omid Kordestani, the former chief business officer at Google ($1.9 billion); Farhad Moshiri, an investor whose holdings include a stake in Everton, the British football team ($1.9 billion); Manny Mashouf, founder of retailer BeBe ($1.3 billion); and Arash Ferdowsi, cofounder of Dropbox ($0.5 billion)
In absolute terms, Iran exports more than Egypt, Pakistan, and Morocco combined, albeit mostly in oil-related
products
-The legendary Silk Road between East and West once traversed the Persian Empire could again give Iran the potential to become a regional hub for commerce and a center of diversified trade.
-Iran borders seven countries by land whose total population is 430 million, including nearly 40 million consuming households
Iran has among the lowest stock and flows of
Refrence :oiiti
Lower world crude oil prices have reduced the cost difference, but Asian ethylene produced from naphtha is still more than three times as expensive to produce as Iran’s NGL-based output
1 Given the potential size of its reserves, Iran is also spending relatively little on exploration(one-fifteenth the exploration budget of Chile)
2 foreign entities can own 100 percent of the rights to a discovery in mining
3 Iran is targeting $29 billion of investment opportunities in copper, iron ore and zinc
Iran already has several competitive advantages. Its average automotive manufacturing
wage levels
country’s high number of engineering graduates (mechanical engineering is one
of the most popular degrees), is also an advantage
low-cost energy and electricity
Iran benefits from a local supply chain
of inputs such as steel.
Target export countries could include Iraq,
Syria, Pakistan, and Central Asian states including Kazakhstan and Turkmenistan
Leader companies like:
-CinnaGen’s interferon
beta-1a drug CinnoVex, a biosimilar of Biogen and Pfizer’s treatments for multiple sclerosis.
Iran is one of only three countries in the world capable of producing this complex drug,
Others companies:
Preparation of suitable land for industrial projects in accordance with technical, engineering and new constructions methods
Easy and fast access to facilities such as roads, water, electricity, gas, sewage system, telecommunications and Internet.