The Central Securities Depository of Iran (CSDI), the capital market clearing house, says 4,374 trading codes have been issued for foreign investors and 27 codes were issued during the twelfth month of the last fiscal year that ended in March.
Total investment by foreigners reached close to 67.63 trillion rials ($127.2 million) – up 83% during the year.
Most individual investors are reportedly from Afghanistan, accounting for more than a third of the non-Iranian codes.
Investors from the US, the UK, Spain, Russia, Germany, Sweden, Switzerland, Uzbekistan, China, the Netherlands, India, Turkey, Lebanon, South Africa, Japan, Cyprus, Italy, the UAE, Norway, Greece, Indonesia, Poland, Qatar, Iraq, Pakistan, Syria, Luxemburg, Kuwait, New Zealand, Malaysia, South Korea and Afghanistan hold stakes in Iran’s equity markets.
Problems associated with banking and money transfer due to the US economic sanctions are seen as obstacles to foreign investment in the stock market.
Despite the major hurdles, economic officials in Tehran have often announced their support for foreign investment to help lift the struggling economy.
To this end, the government has eased conditions, particularly in the share market. Recently it reduced the minimum investment for foreigners applying for residency in the country.
Foreign investors are eligible for five-year residence permits if they invest €90,000. In the past foreigners needed to invest at least $250,000 to be able to get a residence permit, according to Abolfazl Koudei, head of the foreign investment department at the Investment and Economic-Technical Assistance Organization of Iran.
Apart from these initiatives, stock market officials have floated the idea of launching an international stock market in the free trade zones.
Recently they said an equities exchange will open in Kish Island Free Trade Zone off the Persian Gulf and focus on attracting foreign investment, connecting the sanction-hit economy to international markets and pave the way for new export markets.
FDI
Ever since the government of President Ebrahim Raisi took office in August 2021, Russia has made the biggest investment in Iran, according to deputy economy minister, Ali Fekri.
Putting the total overseas investment at $5.95 billion during the period, the official, who doubles as the head of the state-run Organization for Investment and Economic and Technical Assistance of Iran, said: “Russians account for $2.7 billion. They’ve invested in two oil projects,” ILNA reported.
After Russia are the UAE, Turkey and China.
“Given the circumstances [banking sanctions], the investments were made through bureaux de change.”
Voicing dissatisfaction with the Chinese for their insignificant investment in Iran, he said they invested about $185 million during the period. “Obviously we are not satisfied…they have invested in small and medium-sized [projects] like our neighboring countries, mostly in transportation and transit terminals.”
This is while China and Iran have announced plans for cooperation in areas such as energy and infrastructure, after signing a 25-year cooperation agreement.
The landmark agreement, which was signed in March 2021 and entered implementation phase on Jan. 14, was supposed to see the two sides expand cooperation in the fields of energy, infrastructure, production, science and technology, and medicine and healthcare, according to a statement from China’s Foreign Ministry.
Bilateral cooperation was also expected to be expanded to third-party markets in agriculture, fisheries and cybersecurity.
The cooperation document for the first time was discussed in 2015, when Chinese President Xi Jinping visited Iran. The agreement reportedly pledges Chinese investments of $400–600 billion.
Referring to UAE investment in Iran, Fekri said the nationality of most investors from the UAE is not in fact Emirati. “They have mostly put their money in Iran’s industry and mining sector.”
According to the United Nations Conference on Trade and Development, Iran attracted an estimated $1.425 billion in foreign direct investment in 2021 – up 6% from $1.342 billion in 2020.
UNCTAD put the volume of FDI inflows to Iran at $3.372 billion, $5.019 billion, $2.373 billion and $1.508 billion from 2016 to 2019.
