Iranian SMEs Attract $1.8b in FDI Since 2013

Small- and medium-sized enterprises have attracted $1.84 billion in foreign direct investment since President Hassan Rouhani took office in August 2013, of which $653 million have been invested since the implementation Iran’s nuclear deal, according to Farshad Moqimi, deputy head of Iran’s Small Industries and Industrial Parks Organization.

“Since Rouhani became president, foreign investors have signed 47 contracts to establish small- and medium-sized industrial firms, creating 2,740 jobs,” he added.

By definition, enterprises run by 100 workers or less, and 50 workers or less are considered small- and medium-sized respectively, according to Iran’s Small Industries and Industrial Parks Organization.

“These contracts have been signed by Turkey, Azerbaijan, Ireland, Japan, Iraq, Afghanistan, Croatia, China, Germany, France, Turkmenistan and the UAE,” Moqimi was quoted as saying by IRNA.

“Of all the signed agreements, 25 projects have become operational and the rest are either under construction or their machinery are being installed.”

Moqimi noted that seven of the 47 contracts have been signed since the removal of sanctions.

Years of sanctions imposed against Iran over its nuclear energy program began to roll back in January 16, 2016, as part of a historic deal the country cut with world powers in 2015. In exchange, Iran has agreed to limit the scope of its nuclear program.

Earlier this month, deputy minister of industries, mining and trade, Reza Rahmani, said some 20,000 small- and medium-sized industrial units have emerged from recession since the beginning of the current Iranian year (March 20, 2016).

“About 140 trillion rials ($3.5 billion at market exchange rate) worth of loans have been granted to small- and medium-sized enterprises for their reactivation,” he said.

The loans are part of a stimulus plan prepared by the government’s economic team recently, based on which loans worth 160 trillion rials ($4 billion) will be given to struggling SMEs in the industrial and agricultural sectors.

Sonya Pouryamin, an advisor to industries minister, said the government has also helped revive factories whose production had stopped.

“With the support of the government, 3,319 shuttered industrial units have come back on track,” she said.

Some 88,000 manufacturing units are active in 992 industrial parks across Iran, which account for 42% of all employment in the industrial sector.

It is estimated that 96% of these businesses are considered small- and medium-size.

Iran’s industrial sector saw the highest growth of 9.1% during the first six months of the current fiscal year (started March 20, 2016) among other economic sectors of Iran, according to the Statistical Center of Iran.

The overall GDP growth for the period under review stood at 6.5%, including the growth in oil sector, and 4.5% without it.

The agriculture and services sectors experienced a 5.9% and 5% growth respectively.

The substantial growth is largely due to the removal of economic sanctions, which led to the opening up of the Iranian economy and normalization of commercial ties with other countries.