Foreign investment is welcomed in Iran by the government and investors must peruse Iran’s Foreign Investment Promotion and Protection Act (FIPPA) and its executive bylaws to know their own rights and be informed of the facilities and protections they may enjoy as well as the legal obligations and requirements caused by investing in Iran.
The applications by foreign investors to the Investment Organization of Iran is briefly discussed in this manual prepared by LegaMart team.
Does Iran Allow Foreign Investment?
Meanwhile, foreign investment in Iran is allowed in different areas for the purpose of development, prosperity, and performing production activities. In view of the IRI’s government, only those investments which have already received the relevant permit based on this law could benefit from the benefits and supports provided in Foreign Investment Promotion and Protection Act (FIPPA).
The Process of Examining the Applications
The first step is to fill out a special form online and submit it to the organization. The application is presented by the Investment Organization to the Foreign Investment Council and will be pursued until a permit is issued. The type of foreign investment and the agreement concluded between the parties (domestic and foreign investors) decide on choosing the form. More elaborations on this issue are accessible in the Manual to Foreign Investment in Iran.
Guarantees and Protections
Foreign Capital is guaranteed against nationalization and expropriation, and in such cases, the Foreign Investor shall be entitled to receive compensation (Article 9 of the FIPPA).
Should laws or government regulations lead to prohibition or cessation of approved financial agreements within the framework of this Act, then the government shall procure and pay the resulting damages (Article 17 of the FIPPA & Article 26 of the bylaws).
The purchase of goods and producer services of the foreign investment is guaranteed in cases where a state-run organ is the only buyer or supplier of a product or producer service at a subsidized price (Article 11 of the bylaws).
Rights and facilities are all explained in the above-mentioned article of LegaMart. Besides, LegaMart is always there for you to solve your legal questions and issues.
Legal Commitments and Obligations of the Investors
Applications of Foreign Investors in respect of issues such as admission, importation, utilization, and repatriation of capital under the FIPPA shall be submitted to the Organization shall only be submitted to the organization and followed up through it (Article 5 of FIPPA).
The foreign investor is required to announce the entry of its capital including cash and non-cash items to the Organization within the framework of the license issued for the foreign investor so that they will be registered in the Organization and subjected to FIPPA. Failure to register the entered capital is tantamount to not being covered by the FIPPA. (Article 11 of the FIPPA & Article 24 of the bylaws)
The Iranians who intend to utilize capital of foreign origin in Iran and wish to be subjected to FIPPA must be involved in economic and trade activities abroad and need to submit the relevant documents to the Organization (Article 5 of the bylaws).
Acceptance of foreign investments in the existing Iranian enterprises and economic companies (purchase of shares) is possible provided that added value is created in that economic unit after the purchase of shares.
Which Country Has The Highest Foreign Investment in Iran?
According to the United Nations Conference on Trade and Development, Iran ranked sixth globally in 2010 in attracting foreign investments. According to the head of the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI), in 2008 Iran ranked 142 among 181 countries in terms of working conditions last year.
Iran stands 96 in terms of business start, 165 in getting permits, 147 in employment, 147 in registering assets, 84 in getting credits, 164 in legal support for investments, 104 in tax payment, 142 in overseas trade, 56 in the feasibility of contracts and 107 in bankruptcy. Iran is a member of the World Bank’s Multilateral Investment Guarantee Agency. Iran ranks 69th out of 139 in the Global Competitiveness Report. Iran has more than 50 signed-bilateral investment treaties with other countries.
But statistically speaking, let us divide countries by continents:
- Asia: India (Via Chabahar Port), United Arab Emirates (UAE), Singapore, Indonesia, and Oman, are the leading countries with over 190 projects and an amount of $11.6B
- Europe: Germany, the Netherlands, Spain, the UK, Turkey, Italy, and France, invest over $10.9B with around 253 projects
- Americas: Canada, Panama, the USA, and Jamaica, spent $1.4B on around 7 projects
- Africa: Mauritius, Liberia, and South Africa, which invest $8B
Keep in mind that, upper mentioned statistics may change over time.
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