Over 400 foreign companies investing in Iran

Iranian Deputy Economy Minister Behrouz Alishiri said Iran ranks among the world's top countries in terms of the growth of foreign direct investment (FDI), and added that despite economic sanctions, over 400 foreign firms and companies are now directly investing in Iran in different sectors.Alishiri, who also heads the Organization for Investment, Economic and Technical Assistance of Iran, made the remarks in an interview with Tehran Times, where he also stated that all the international banks and big companies which left Iran under the pressure of western powers and unfair sanctions confess that they are woeful of losing Iran's profitable and emerging market. The following is the text of interview with Mr. Alishiri. Q- Would you please describe for us the latest situation of foreign direct investment in Iran according to official reports, especially the United Nations Conference on Trade and Development (UNCTAD) data? A- Firstly, we must know about duties of the UNCTAD. UNCTAD is an organization belongs to the UN, with the main responsibility of regulating issues related to foreign direct investment in the world. It is the principal organ of the United Nation's General Assembly, dealing with trade, investment, and development issues. UNCTAD produces a number of topical reports, of which "The World Investment Report" has a significant importance. One of the most important aspects of latest UNCTAD's investment reports is the growing trend of direct investment in Iran in the recent 2-3 years. In the mentioned period, in terms of the growth of FDI, Iran is placed among the world's top states. For example, while Iran's FDI in 2005 stood at 900 million dollars, the figure increased to 1.6 billion dollars in 2006, and was repeated roughly in 2007 and 2008. But in 2009 the country's FDI was nearly doubled, reaching to 3 billion dollars. The amount surged again in 2010 and hit 3.7 billion dollars, which shows a tremendous growth of 124 percent in comparison to two years before. The enormous growth occurred in Iran, while the global trend of FDI has been downward in recent years. Q- Does the enormous growth of FDI indicate the excellent performance of Iran's economy or it occurs just incidentally? For the economy of Iran, which is under massive external pressures and restrictions, reaching such a growth should be wonderful for all. In terms of FDI, the comparison of the country's situation with other countries in the region and rivals in the world is very essential and important. Attraction of FDI in the global area is a progressive competition, which is named "the war of benefits". UNCTAD's reports show that the organization's members have implemented 140 economic reforms during the recent three years, aiming to improve their business environment for investment attraction. Attracting FDI is the swimming in the high-tensioned international environment. The status of Iran as a new growing economy with a young private sector, which can be called an emerging economy, is very hopeful. It is definitely the outcome of good performance and outstanding management of Iran's economy, despite high pressures of Western powers. Q- After publication of UNCTAD's positive report about the statistics of foreign investment in Iran, some Western media inaugurated propaganda and claimed that the UNCTAD's figures about Iran are incorrect. The Western media insisted that Iranian officials have presented incorrect data about the country's economic performance to UNCTAD. Basically, is it possible that UNCTAD mistakes in collecting the statistics? Or, can the UNCTAD's members give incorrect data to overstate their economic performance? A- Unlike the allegations, the FDI statistics should be (and really is) extremely exact, correct, valid, logical, and precise. Maybe some ones who don't like to see Iran's advance, say such irrational allegations. One section of the psychological warfare of Western powers against Iran, is really as such: ignoring Iran's developments. They don't want to watch our achievements in trade, FDI, subsidy reform, and so on. Although, it's not necessary to debate over these irrational allegations, but I would get the technical response to these accusations. The response is that despite this propaganda, the data of FDI should be extremely precise, even 1 dollar. Why? Because when a host country registers the investment amount of any foreign investor, the government makes itself liable to pay the investor its investment's principal and interests, any time he requested. It means that we are bound to pay the any dollar of the investment that the investor has entered to our state and declared it to us. In other hand, the easy response to these accusations is that if Iran aimed to lie about the data of its FDI, it could say that has attracted much more amount of FDI, for instance 10 billion dollars, not the current 3.7 billion dollars. Albeit, the exact amount of attraction of FDI in Iran is much more than the figure which was announced. Q- What's your reason for this claim that the exact amount of attraction of FDI in Iran is much more than the figure which was announced? A- Because we don't have yet a comprehensive "data bank" of investment transactions in Iran. Now, many of the foreign investors don't declare their investment to the government or the Organization for Investment, Economic & Technical Assistance of Iran. Accordingly, our data is comprised only the investments that has been declared to the Organization. We face accidentally many foreign investors who are now investing in Iran but have not declared their investment to government; therefore their investments are not covered in the official data of FDI to Iran. In addition, most of Iranian who come back from abroad and kick off investing in Iran, don't declare their investment in our organization. Furthermore, for accelerating the attraction of foreign investment in capital market, we omitted the liability of getting license issue for foreign investment in the stock exchange last year. As well, so far we don't received the exact data of FDI attraction to stock exchange for sake of some technical problems. As a result, I believe that the exact figure of Iran's FDI is around 6 billion dollars. Even though, for resolving this problem, we are negotiating with Central Bank to launching the data bank for tracing and recording any inflow and outflow of currency.Because of this technical fault, our official data only comprises the investments which have been declared to the government, so we don't access to the other ways of influx of the foreign investments to the country. Q- Isn't it binding for foreign investors to declare the investments in the Organization for Investment, Economic and Technical Assistance of Iran? A- No, we don't insist that foreign investors to declare their investment plans with the Organization for Investment, Economic and Technical Assistance of Iran. On the other hand, we are pursuing the deregulation in this area. But, we need a high careful monitoring system in the Central Bank, to register any inflow and outflow movement of currencies and report it to our agency. It's anticipated that the Central Bank precisely monitors the moving trend of exchanges, segregates the data of trade, finance and foreign direct investments, so we can obtain the exact data of FDI, which will be foreseeable more than the current amount. Moreover, A new topic that we understood from the last report of UNCTAD is the new method of foreign investment which is called "non- equity mood". Heretofore, we never assume the data of non-equity mood projects as the FDI, while many of Iranian companies use the technical and consultative services of foreign firms. But, according to the UNCTAD method such services are assumed as FDI. Namely, we perform according to the classic definition of FDI, while in the new methodological direction of UNCTAD, non-equity mood services are assumed as FDI. So if we calculate the non-equity mood services in our FDI statistics, the real amount of Iran's FDI will grow much more than the announced number of 3.7 billion dollars. Q- Some western media has claimed that the growing amount of FDI in Iran in recent years is the outcome of returning the Iranian immigrants to homeland because of economic crisis in their destined countries. What's your response? A- Statistics show that although in last year we approved 2 billion dollars worth of projects which belongs to the homecoming Iranians who live abroad, but of which only 16 million dollars has been effectively attracted. While the FDI of immigrant Iranians has increased in recent years, but it has yet the slight share of the foreign investment in Iran. Albeit, it would be a very positive trend if the Iranian immigrants who left some day the country for any reason, nowadays make decision to return home. As the matter of fact, in many other countries, the immigrants have the huge share of homeland countries' FDI. For example, in China which absorbs annually about 50 billion dollars of foreign investment, the Chinese people who live in other countries especially in Hong Kong, Thailand, Singapore and U.S., have the great share of the FDI which flows to China. In fact, they return the investment to China, which some years ago have phased out of it. So, if Iran's economy has achieved to a positive situation that shows warm signal to investors as persuades the Iranians abroad to come back to homeland, it is in its turn another reason that our economy is performing well. Indeed, the return of the investment of Iranians, who reside in other countries, shows the stabilization of Iran's economy despite high pressures of the western powers. Q- Despite the repeated reports of western media which say foreign companies increasingly withdraw from Iran market, you are emphasizing on the considerable growth in attraction of foreign investment. Isn't it a contradiction? A- No, because the sanctions don't include the investment matters, so any pressure on firms to not invest in Iran, is an ultra-sanction action. This shows that they (western powers) are very nervous over the failure of sanctions. My question is: if they aren't hopeless about the outcome of sanctions, why permanently try to expand the scope of it? In fact they really aim to paralyze Iran's economy. But when they see that Iran has implemented the largest economic reform, their anxious escalate, and they try hard to use any tool to prevent Islamic Republic from obtaining its goals. On the other hand, these big companies which left Iran in recent years, has grown by conducting our large projects and gaining large money from our huge contracts in recent decades. These big companies in face to face talks with us, say explicitly that made mistake to abandon Iran. They express: "we are profit-seeking and want to invest in Iran's profitable market." Seeing that the Western powers restrict the companies from doing business with Iran, I ask, which part would suffer loss? The company which loses a profitable project or a country which maybe at maximum is forced to suspend its project? All of the international banks and big companies who left Iran under the pressure of western powers, in informal negotiations, confess that are woeful of losing Iran's profitable and emerging market. They believe it is contrary to the economic logic to abandon the profitable market of Iran, because the investment rate of return in Iran is more than 30 percent, while those companies are forced to go in another states with 15 percent rate of return. Well, it is obvious that this situation for foreign companies is blunder. Q- Do the sanctions have some positive outcomes for Iran's economy? A- Sure, we've learned from sanctions many lessons. We've learned to employ what tools in international financial transactions to abort the sanctions and facilitate our maximum self-sufficiency. One lesson that we've learned is the fact that it's not necessary to rely permanently on big companies. We've learned to provide a new financial mechanism for attraction of small and medium companies. In fact, we've offered a new method for absorbing foreign credits in the region and even for the world. We believe it's not else essential that only some big western companies operate all of oil, gas and petrochemical projects of the Middle Eastern countries. We warn to other oil-producing states that these western companies may reiterate their attitude toward Iran, against any other country in the future. In addition, we witness the failure of sanctions in some events that we don't have any role in it. For example, some companies which signed a contract with Iran but then have been sanctioned by U.S. or EU, have protested their own governments over the sanctions, so as a final point have been removed from the sanctions list and came back to Iranian projects. Isn't this an explicit sing of sanctions' failure? Q- The western powers have been trying fiercely to cut finance flows to Iran in recent years. Have they succeeded in their efforts? A- For answering this question, I should illustrate at first the details and procedure of financing credits. The procedure of finance for a project is as such that at first, a foreign bank accepts to loan a host country (that is to say: Iran) in condition that we buy the required equipments, commodities and machineries from the suppliers of the home country of financer. In addition, the finance contract would be insured by the insurers of the financer's country. Consecutively, we pay the fees to the banks, suppliers and insurers of the financer's country and all of them profit from the contract of our project. Based on this procedure, when the finance contracts are cut, the side who suffers more loss is the financer not the host country. We can suspend temporarily our project or finance it by our domestic creditors or financers of another countries, namely from Asian banks. As a matter of fact, when they cut the finance flow, the part who suffers loss is the financer, not the host country. It's obvious that in the finance loan, the financer wins more than the host country, and its halting will impair more to financers than us. In line with this reality, we witnessed a report of the German chamber of commerce that confesses on losing more than 100,000 job opportunities because of Iran's sanctions. This reality occurs in many countries whose governments were forced to follow the U.S.-led sanctions against Iran, but they fear to admit and unveil their consequential losses. However, their measures to lose the beneficial projects of Iran are completely in contradiction to economic logic. Despite these restrictions, Iran approved 12 billion dollars worth of foreign investment plans and attracted more than 3.6 billion dollars of FDI last year. Q- Iran has conducted the massive economic reform since last year. Do you believe that implementing the subsidy reform plan is the sign of stability in Iran's economy? A- Sure, even the western economists believe that the governments implement the basic economic reform just in the highest social, political and economic stability of the country. As such, Iran inaugurated the huge and unprecedented subsidy reform plan last year in such situation: the highest social, political and economic stability of the country. Before implementation of it, IMF warned us not start it because of its possible damages. But after well performing of it, IMF has praised us for doing the reform. It shows that western bodies have no correct look at Iran's economy. Q- In moralizing of this debate, please tell us an unbiased view of economic sanctions on Iran economy? A- Although sanctions have had impacts on Iran's economy such as delaying in conducting some projects or increasing the cost of plans, but we strongly believe these costs are the precondition of "Independence". If we wanted to show smile to our enemies, so these problems and pressure never occurred. Look at other indices of Iran's economic performance: More than 100 countries are now transiting their goods via Iran territory, our trade has increased sharply in recent years, Tehran stock exchange has the best performance in the world, the privatizations value reached 70 billion dollars, while 70 percent of which has been done in recent 2-3 years, and at present we have more than 20 billion dollars inventory in National Development Fund which can leverage ten-fold money for our projects. On behalf of the sanctions, we have learned to execute 200 billion dollars projects with 20 billion dollars credit. In summary, the sanctions have qualified us to reach the new economic modeling. In other words, in normal situations, we never understood that there are many other methods of financing such as "civil participation". Formerly, we had learned only to use finance method to execute our projects, namely receiving loan on bankroll of our oil income. But now, we use the private sector capabilities to finance our projects, and these are the indirect outcome of sanction. Q- Would you tell us the latest statistics about the number of foreign companies which are now investing in Iran? A- At minimum, the companies which registered in our organization are more than 400. Namely, more than 400 foreign companies are now directly investing in Iran in different levels of investment. I should emphasize that this figure is the list of the companies on ongoing projects that we know; many other firms are now acting in Iran's market but have not yet register in our organization. Furthermore, this statistics is just about the companies which investing in Iran on FDI method. Many other foreign companies are now investing in Iran in other finance methods, but we don't have the exact statistics of them.