Domestic Economy

Invest in Safest, Most Stable Country in Region

Invest in Safest, Most Stable Country in Region Invest in Safest, Most Stable Country in Region

Iran is now the safest and most stable country in the region, said President Hassan Rouhani at a forum of business leaders in Rome on Tuesday.

“We are ready to attract investment, welcome technology and create a new export market,” IRNA quoted President Rouhani as saying at the forum.

The Iranian president is heading a 120-strong delegation of business leaders and ministers in a two-day visit to Italy before flying to France on Wednesday.

“Rules and regulations for investment in Iran are reliable. Iran has never failed to deliver on its promises to the world, neither has it ever breached the rules of other countries’ private sector,” he said. 

Iran needs annual foreign investment of $30-50 billion to reach an 8% growth target, the president said earlier this month.

“The government’s main policy after the nuclear deal is to attract foreign investment, expand non-oil exports and optimize [unfrozen] foreign exchange reserves,” President Rouhani told parliament as he submitted his budget for the next Iranian year, which begins on March 20.

“A stable and swift economic growth needs heavy foreign investment.”

The International Atomic Energy Agency confirmed on January 16 that Iran has abided by its commitment, as part of the landmark nuclear accord it struck with world powers in July 2015 to limit its nuclear program. The confirmation officially marked the end of western sanctions against the Islamic Republic.

“Needless to say, years of sanctions would leave the capacities of any given country untapped, which is the state of Iran’s economy as we speak. My country’s economy is unexplored,” the president said at the business forum.

  “Regional Economic Hub”

Elsewhere during his remarks, President Rouhani said Iran seeks to become a regional economic hub.

“In the new economic climate, we are planning to export at least 30% of our products. Seventy percent of the products we are aiming to manufacture should be consumed in the domestic market and 30% should head overseas,” he said.

Speaking at an economic conference in Tehran last week, the president said the government has set a target of increasing non-oil exports by at least 15% in the coming years.

The target comes against a backdrop of collapsing crude prices that have hit near 11-year lows. As such, oil revenues will make up less than 25% of the new Iranian budget, down from 33% in the current budget.

Referring to Iran’s strategic location in the Middle East, the president said investors should view Iran as a gateway to markets of other countries of the region via rail, road and air.

“Development of a port like Iran’s Chabahar will bring considerable benefits not only to Iran but also Afghanistan, Central Asian countries and way beyond to eastern China via railroad. This can be viewed as a major boost to the economies of these countries,” he said.

  Italy of Special Importance

The president also touched on the time-honored close relations between Tehran and Rome, and said Italy is of special importance to the Iranian economy.

“Our people have confidence in Italian industries as they have enjoyed their services in the past … The structure of Italian industries is a match to our needs. We are pursuing an inclusive economy which is robust and creates jobs. We place importance on small- and medium-sized enterprises and Italians are the very epitome of such an economy in this regard,” he noted.

Italy was Iran’s biggest trading partner in Europe before commercial ties dwindled as a result of sanctions. Since 2012, annual trade between the two countries has nosedived from €7 billion to €1.2 billion. As much as 58% of Italy’s exports to Iran are in the mechanics sector, followed by chemical products at 8%.

  Just the Beginning

Iran and Italy signed some €17 billion ($18.4 billion) worth of deals on Monday evening, Reuters reported, while contracts are also in the offing in France, with EU countries anxious to cash in on the recent end of sanctions following last year’s nuclear accord.

“This is just the beginning of a journey. There are sectors where we must work closer,” Italian Prime Minister Matteo Renzi said of the mega deals. Later in the day, President Rouhani tweeted that Renzi would visit Iran “in the coming months to boost economic ties”.

Among the deals struck on Monday were a pipeline contract worth between $4 billion and $5 billion for oil services group Saipem, up to €5.7 billion in contracts for Italian steel firm Danieli and up to €4 billion of business for infrastructure firm Condotte d’Acqua.

  More to Come in France

While in France, a major order for Airbus planes is expected to be confirmed on Wednesday along with tie-ups with French carmakers Peugeot and Renault.

Airbus and Iran have reportedly agreed in principle to a deal for 114 aircraft. The purchase is expected to include the double-decker A380 superjumbo jet as well as A320 family of aircraft, according to Iran Air Chairman and Managing Director Farhad Parvaresh.

“The first of the 114 aircraft intended for state-owned airline Iran Air are expected to be delivered before March 21,” said Iran’s Minister of Roads and Urban Development Abbas Akhoundi prior to President Rouhani’s departure to Europe.

French carmaker PSA Peugeot Citroen could convene a board meeting to discuss business opportunities in Iran on Wednesday, a source close to the company said ahead of the Iranian president’s visit to France.

For Peugeot, racing to expand beyond Europe after a brush with potential bankruptcy, reclaiming Iran is critical. The company said recently it was counting on Iran for about 400,000 annual vehicle sales by 2020.

A source close to Renault said on Monday that the carmaker hopes to sign a memorandum of understanding this week with at least one of its existing local partners, Iran Khodro and SAIPA, to market additional models in the Iran.

Renault has already begun assembling its no-frills Sandero compact in Iran, in addition to the original Logan saloon, and aims to introduce more models such as its Clio small car and Captur mini-SUV.

Renault and Peugeot are not alone in their attempt to conquer the Iranian market, as Volkswagen and Daimler are also keen on getting a piece of action.

Renault’s head of sales, Thierry Koskas, said last week that Iran’s car market has the potential to reach sales of 1.5 to 2 million vehicles a year.

Furthermore, according to the Wall Street Journal, French construction group Bouygues and Aeroports de Paris could be chosen to design and build a new terminal at Tehran’s international airport while Vinci could develop and operate airports in Mashhad and another Iranian city.

Patrick Pouyanne, the boss of oil group Total, is also among top French executives expected to hold one-on-one meetings with the Iranian president.

President Rouhani had originally been due to visit Europe in November but cancelled the trip after a deadly militant attack on Paris.