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Major Deals Signed in Iran After Nuclear Accord

Major Deals Signed in Iran After Nuclear AccordMajor Deals Signed in Iran After Nuclear Accord

A growing number of multinational companies have been galvanized into action following the landmark nuclear deal Iran signed with world powers in July last year and its implementation in January this year.

Years of pent-up demand in the nation of 80 million people is being touted as a once-in-a-lifetime boon.

“Iran is one of the last remaining places, short of Mars and the Moon, where there is significant opportunity,” says Sir Martin Sorrell, CEO of the global advertising giant WPP and one of the world’s most widely followed analysts.

The country has also been referred to as the world’s biggest emerging market since the collapse of the Soviet Union 25 years ago, according to Britain’s newly-appointed trade envoy to Iran, former chancellor Lord Lamont.

AP has listed some of the biggest deals signed between Iran and major world companies after the nuclear deal.

  Boeing

Iran Air recently signed an agreement to buy aircraft from the Chicago-based Boeing Co.—the biggest business deal between Iran and a US company since the 1979 Islamic Revolution in Iran.

The provisional agreement to buy 100 commercial aircraft from Boeing is expected to amount to $25 billion.

  Airbus

The European aircraft manufacturer is also in agreement with Iran to sell 118 planes, a deal estimated to be worth $25 billion as well.

  ATR

The French-Italian aircraft manufacturer sold 20 ATR 72-600 passenger planes to Iran Air—a deal that is estimated to be worth over $1 billion.

  Danieli Group

The Italian metals industry concern signed deals worth $6.2 billion to supply machinery and install steel and aluminum plants in Iran.

  Gavio

The Italian construction and infrastructure group signed agreements worth up to $4.5 billion for projects including railroads.

  Peugeot-Citroen

The French carmaker on Tuesday finalized a joint venture agreement expected to invest up to $450 million over the next five years in manufacturing and research efforts in Iran.

  Siemens

The German company signed a memorandum of understanding to provide $1.6 billion in transportation equipment and services to Iran.

 Soaring Foreign Direct Investment

The withdrawal of many economic and financial sanctions in Iran has reopened the county’s economy to a stream of new investments.

Data from fDi Markets, an FT service that monitors cross-border greenfield investment, show that before the lifting of sanctions, Iran was ranked 12th out of the 14 Middle East nations for FDI between January 2003 and December 2015, equating to a market share of 1.62%.

Since sanctions were lifted this year, Iran has climbed to number three in the rankings, with a market share of 11.11%, placed only behind regional powerhouses the UAE and Saudi Arabia.

Global investment into Iran has been steadily increasing since 2013, a year in which the country attracted just three FDI projects. This increased to eight in 2014 and nine in 2015.

It was in the first quarter of 2016, however, that the impact of sanction relief became evident. Iran won 22 FDI projects during the quarter, the highest rate of investment since fDi Markets began recording data in 2003.

Job creation and capital expenditure also rose between 2013 and 2016. Some 352 jobs were created in 2013 with a capital expenditure of $79 million, rising in 2014 to 2,732 new jobs and capital expenditure of $1.67 billion.

Although 2015 showed a 48% increase in capital expenditure overall, the first quarter was notable in failing to attract any FDI projects, in stark contrast to the same period this year.

Predictably, Tehran attracted 36% of recorded investments into the country during the first quarter of 2016 and 40% of all FDI into Iran since January 2013.

  Financial Services: Leading Sector for Investment

Since the sanctions were lifted, the leading sector for investment into Iran has been financial services, which has attracted four investments from separate companies with a capital expenditure of $60 million.

The country has also attracted investments from the automotive sector, business services, consumer electronics and textiles, among others.

The principal countries investing in Iran during the period were South Korea and Germany, which together committed to a capital expenditure of $2.15 billion.

South Korea-based steel producer Pohang Iron and Steel (Posco) has been the single largest investor in Iran this year, with plans to invest $1.6 billion to build an integrated steel mill in the Chabahar Free Trade-Industrial Zone by March 2017.

The company’s subsidiary Posco Energy also said it had entered a memorandum of understanding with Iran-based PKP to build a 500-megawatt off-gas power plant (using gas generated during steelmaking) nearby.

The upward trend recorded by fDi Markets suggests the economic rebound Iran is experiencing is set to continue. Nineteen investors signaled an interest in future investments in the country, representing an increase of 90% from 2015.

Financialtribune.com