Increase in Foreign Investment in Iran After Sanctions Lifted

The Financial Times reported on Tuesday that the lifting of many economic and financial sanctions against Iran has opened the doors of the country to a new wave of foreign investment. According to the Financial Times, based on information from its research center on foreign investment markets, before the lifting of sanctions, Iran ranked twelfth among 14 Middle Eastern countries in terms of attracting foreign investment, with only 1.62% of foreign investments from January 2003 to December 2015. Since the sanctions were lifted in January this year, Iran has moved up to third place, attracting 11.11% of foreign investment in the Middle East, following the United Arab Emirates and Saudi Arabia. The report states that as a result of the lifting of sanctions, billions of dollars of Iran's assets that were blocked abroad have been freed, allowing the country to resume its oil exports to international markets. The restrictions imposed by sanctions from 2012 to 2015 cost Iran more than $160 billion. Despite owning the second-largest natural gas reserves and the fourth-largest oil reserves in the world, Iran had fallen behind other developing countries in the region in recent years. Since 2013, when the country attracted only three foreign investments, foreign investment in Iran has gradually increased. In 2014, the number of foreign investments rose to eight, and in 2015 to nine. However, in the first quarter of 2016, the effects of the lifting of foreign sanctions became clearly evident. During these three months, Iran attracted 22 foreign investments, the highest number of foreign investments since 2003. Between 2013 and 2016, employment and investment also increased. In 2013, with an investment of $79 million, about 350 job opportunities were created, and in 2014, with an investment of $1.67 billion, approximately 2,700 job opportunities were created. Iran attracted 36% of foreign investments in the first quarter of 2016, which is equivalent to 40% of total foreign investments in the country since 2013. Since the lifting of sanctions, the largest foreign investments in Iran have been made by the financial sector, which includes four investment projects from different companies amounting to about $60 million. Additionally, Iran has attracted investments from the automotive industry, the services sector, consumer electronics manufacturers, and the textile and clothing industry. The main countries that have invested in Iran during this period are South Korea and Germany, which have collectively committed to $2.15 billion in investments. Two South Korean steel companies, Pohang Iron and Steel and POSCO, have been the largest foreign investors in recent months. They are expected to invest about $1.6 billion in the establishment of a steel plant in the Chabahar free industrial zone by March 2017. POSCO's energy unit has also announced that it has signed a memorandum of understanding with Iran to construct a 500-megawatt power generation facility using gas produced during steel production. The increasing trend of foreign investment in Iran indicates that the country's economic boom will continue. Nineteen foreign investors have expressed interest in operating in Iran, showing an increase of about 90% compared to 2015.