By commencing the new year, Iran is going to unveil new investment and business opportunities. Major mineral and oil resources, vast infrastructures, intact investment opportunities, the rich and respectable culture and the internal stability, all indicate that Iran is the land of opportunities and economic potential. “A country which should be rediscovered for its abundant opportunities and rich resources”.
The lifting of sanctions actually caused Iranian economy re-enter global market, which was also welcomed by foreign countries. Accordingly, following the JCPOA, various business delegations, especially Europeans entered Iran. More than 200 economic envoys from the European Union signed memoranda, contracts and business documents with Iran, as some of which are currently in process. By raising credit rating after JCPOA, Iran has concluded more than 12 bn USD in FDI and financing of 40 bn USD for various projects development.
The most important Post-JCPOA agreements
|TOTAL Co.||2 bn EUR||Oil purchase|
|Shell Co.||2 bn USD||Oil purchase of 130,000 bbl /d|
|TOTAL CO.||4.8 bn USD||The South Pars Phase 11|
|SKE & C (S. Korea)||1.8 bn USD||Tabriz Petrochemicals rebuild|
|United International (Turkey)||4.2 bn USD||7 Natural gas power plants|
|SINOPEC (China)||1.2 bn USD||Abadan Petrochemical Complex phase 1|
|Shell Co.||–||Study of three oil and gas fields e.g. Azadegan & Yadavaran|
|MECI Group (Switzerland)||750 mn EUR||Wind power plant construction in northern Iran|
|Peugeot (France)||940 mn USD||Auto joint manufacturing|
|Renault (France)||350 mn USD||Auto joint manufacturing|
|Volkswagen’s German||–||Sales of two vehicle models and the company return to Iran|
|Air Bus (France)||20 bn USD||Delivery of more than 100 Airbus planes|
|ATR (Italy)||536 mn USD||Delivery of 20 ATR aircrafts|
|Boeing (USA)||16.6 bn USD||Buying 80 aircrafts|
|Italian Railways||1.4 bn USD||Investing in the construction of railways|
|Siemens (Germany)||2.2 bn USD||Production & equipping of rail fleet|
|Alstom SA (France)||–||Construction of Train and Metro|
|Transmash holding (Russia)||–||Railways|
|Ober Bank (Austria)||1 bn EUR||Financing|
|Danske Bank (Denmark)||500 mn EUR||Financing|
|Invitalia Global (Italy)||5 bn EUR||Financing|
|CITIC Trust (China)||28 bn USD||Financing|
|Eximbank (S. Korea)||8 bn EUR||Financing|
|Vnesheconom bank (Russia)||2.2 bn EUR||Financing|
For many years, Iran has been more known in political aspects and less concerned in economic and business issues by the world. Lack of international promotion on economic arena has led to neglecting Iranian potentials, and foreign delegations are surprised at different infrastructures and advantages, admitting that Iran is not fairly well understood in global setting. By providing relevant information concerning Iran’s potentials and capabilities, the current report will open a gate for foreign investors into Iranian economy.
Top foreign companies have invested in Iran
Nestle Attended in Iran
After 15 years of activity in Iran, the world’s largest food company recently decided to share its experiences of working in the country with the media.
“When it comes to Iran, this country is, I would say, a special market for us with considerable opportunities. We have here an 80 million population who have a lot of interest in premium-quality food. Iranians look for variety, which is what we can deliver,” Nestle’s Qazvin Factory Manager Faisal Haroon told Financial Tribune.
$150m of Investments by 2018
Nestle started production in Iran in 2001 and has two factories in the country: one in Qazvin where seven kinds of infant formula, eight kinds of baby cereal and Nesquick are manufactured and Nescafe is packaged, and another in the northern Mazandaran Province’s Polur where mineral water is produced. The company’s central office is in Tehran.
“By the end of 2018, Nestle will have invested around $150 million in different projects it has and will be carrying out in Iran, some $100 million of which have already gone into the Qazvin factory. Within the next one and a half years, we will be investing $15 million in an extension producing cooking aids and Nescafe. Another $15 million are going to be spent on our upgrading and renovation programs to maintain the standards of this factory over the next two years,” the Nestle manager said.
The Qazvin factory, according to Haroon, has the same standards and technology as any other Nestle factory around the world.
Figures of Success
A look at sales figures by Nestle’s Qazvin factory officials reveals that their investments have paid back quite considerably.
Nestle Iran has, over the years, engaged in activities ranging from sustainable production, social responsibility, environment preservation and shared value creation.
Despite handicaps in the way of production, which are more or less experienced across the world, the scope of success in such activities is high in the Iranian economic environment.
“In 2016, our sales amounted to $150 million in the Iranian market, but that’s not where it ends. We are not producing for Iranians only but we export from Iran to all Middle Eastern countries, excluding Saudi Arabia. Our exports stood at between 4,000 and 5,000 tons of products worth $25 million last year,” he said.
“What is very important for us is local sourcing. We have tried to supply our raw materials from domestic sources over the years. In 2015 and 2016, we spent $20 million and $30 million on locally sourced raw materials respectively and our mission is to go for $40 million by 2020.”
MoU With Iranian Nutrition Association
To expand its humanitarian activities in the country, Nestle Iran and the Iranian Nutrition Association signed a memorandum of understanding in November.
Based on the MoU, the two sides agreed to cooperate in promoting the culture for healthy nutrition, providing assistance in technological matters, transferring know-how in the field of nutrition and eliminating malnutrition in deprived regions of Iran.
Jalaleddin Mirzaye Razzaz, the head of the association, said 75-80% of patients in Iranian hospitals are suffering from non-communicable diseases like diabetes, hypertension and obesity, the cause of which is unhealthy lifestyle and bad nutrition.
“If nutrition is put right, we can lower NCD disease rates. Together with Nestle, we will be working to arrive at this goal,” he said.
TOTAL in Iran
Total wanted to test the banking system and learn how difficult it was to make day-to-day transactions in Iran.
As it considers investing in Iran, the company is moving cautiously. It has assigned a full-time compliance officer to the country to ensure it doesn’t run afoul of any rules: It can’t allow any Americans to work on its projects there, and has to be careful to avoid sanctioned Iranians.
Like many international oil players, Total has been lured by the promise of a large and lucrative market with vast energy reserves. But the changing geopolitical landscape has made companies wary of the sanctions and restrictions tied to working there.
Some major global companies have made the leap anyway. Boeing and Airbus have reached agreements to sell a combined 180 aircraft to Iran. The French automaker PSA has committed 300 million euros, or $320 million, to make Citroëns in the country, and hotel groups like Accor and Rotana have struck tourism deals.
Energy companies, in particular, have been eyeing Iran.
The country has the world’s largest natural gas reserves and the second-largest trove of oil in the Persian Gulf, according to the BP Statistical Review of World Energy. And after Iran reached a deal with world powers nearly two years ago to lift sanctions tied to its nuclear program, the hope was that international investment would follow.
Banking restrictions are still in place. Corruption is widespread. And political opposition to letting foreigners invest in Iran’s natural resources is strong.
American companies are still effectively barred by Washington from making investments in Iran’s energy sector. And with oil prices still less than half their level in 2014, European companies like BP, which traces its origins to the discovery of oil in Iran, have also hung back.
That has presented an opportunity for Total.
“We are a little bolder than others,” Patrick Pouyanné, the company’s chief executive said.
Auto companies have been appeared in Iran
New auto contracts
So far, with the public and private companies, 6 agreements have been fnalized between Iran and the world’s leading automotive companies. Meanwhile, 5 European and Asian companies havesigned contracts.
3 French, 2 German and a Korean companies have signed a contract with 5 Iranian car makers and an industrial organization.
Iran Khodro Contract with Peugeot
Peugeot, with more than two decades of partnership was one of the frst automakers to leave Iran with nuclear sanctions and after JCPOA immediately re-establish their position in the Iranian market. It is planned to manufacture 200,000 cars in four years and in order tointernalize the quality and the original price reduction, the joint company of Peugeot and Iran Khodro with the name of IKAP has been invested by 50 -50. Also, 19 subcontracts were signed and in the new partnership, three models 2008, 301 and 208 will be manufactured.
IDRO contract with Renault
Renault, a global automaker, concluded a contract with IDRO as the first contract and investment of more than 50% of foreign automakers.All management, engineering fnancial and export issues are
implemented by Renault.
Renault is supervising on 60 Iranian parts manufacturers and link them to Renault–Nissan Alliance. According to the contract, the investment in the first phase between IDRO and Renault is estimated at 660 mn EUR for 300,000 cars. Two Renault products – New Duster and New Symbol are considered to be manufactured. A car manufacturing Group in Saveh waspurchased and will be available to Renault. Manufacturing will start domestically of 40%, after 18 months this figure willreach 60%. The trio contract was signed between the French automaker, IDRO and a private company, with Renault’s share
of 60% with each Iranian party of 20% share. Renault is to make 30% of cars and parts. Considering the positive points of the contract, it can be viewed as the second output of JCPOA in the automotive industry. Without JCPOA, there was no success, neither Renault nor any other authoritative foreign car
could engage in extensive operations.
Saipa and Citroen
Following negotiations between Saipa and Citroen, in was signed the contract for the production and sale of Citroen cars in Iran in September 2016.Peugeot-Citroen and Saipa automotive group have been old partners since 1966 and the former Xantia and Dyane. A joint venture agreement to co-produce at Saipa factory in Kashan as Saipa’s contribution share was signed. Citroen will own 50% of this plant.
300 mn EUR is to by invested on research and production technology over the next 5 years in transfer and significant use of domestic capabilities to manufacture Elysee Sedan and Crossover XR C3. Both cars have a joint platform (PF1) with IKCO, Peugeot 301, Peugeot 208 and Peugeot 2008. Citroen production is expected to begin in Kashan province since 2018.
Kerman Motor Contract with Hyundai
Motor of South Korea The Hyundai Motors Corporation of South Korea signed a contract with Kerman Motors. According to the contract, while transferring technology to Iranian partner with a moderate price, Hyundai import its domestic and luxury products as CBU. This contract was fnalized in the fall of 2016, starting with Hyundai i10 and i20 in the special economic zone of Arg. Apart from the Hyundai I-10, I-20 and Accent assembly; the models of Elentra, Tucson, Sonata and Santa Fe partly reﬂect the future conditions of Kerman Motor.
Mammuth contract with Volkswagen
After JCPOA, Volkswagen started negotiations with Mammuth
auto company, both 50% to produce and deliver Volkswagen
cars in Iran. The production of Polo and Golf seem to be the
first products of Mammuth auto Company.
Contract with Benz
Iran Khodro and Mercedes-Benz signed a contract for a joint venture in sales and after-sales service of commercial vehicles, on January 2016 and fnalized in September 2018. The contract between Iran Khodro Diesel Co., on behalf of Iran Khodro and Benz Co., from the Mercedes-Benz head quarters of Wurth, was a joint venture in sales and after-sales service targeting Mercedes Benz commercial vehicles.
A second contract will be fnalized for manufacturing Actrose truck. According to the plan, the joint venture will be 20% in the first year and can be increased by 30-50%if economically viable. Of course, the need for measuring and manufacturing new products and replacing with current products is expected to be met in the joint venture between Iran Khodro and Daimler. Due to the cooperation in the field
of commercial vehicles, the cooperation of the parties on theagreement and memorandum of the last year is followed as the same.