CONSULTING
A WORLD OF OPPORTUNITIES GUIDE TO DO BUSINESS IN IRAN A R H A X C O N S U LT I N G T E A M , S A R M A D A FA R I N E S H & H A B I B A L L A H D A D I N A S S O C I AT I O N W I T H S P R I
October 17th, 2016
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CONSULTING
ISLAMIC REPUBLIC OF IRAN
October 17th, 2016
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CONSULTING
HISTORY
October 17th, 2016
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GEOGRAPHY
Iran is the 2nd largest country in the Middle East Located between the Persian Gulf & Caspian Sea Borders with: Armenia, Azerbaijan & Turkmenistan to the North Afghanistan & Pakistan to the East Turkey & Iraq to the West The Persian Gulf, the Sea of Oman & the Caspian Sea provide Iran with strategic access to International waters DNI (direct normal irradiation) of 2100 kWh/m2, an average of 300 sunny days per year, and highwind locations in the mountainous regions (Alborz) north-west of Tehran, by the Caspian Sea and the Gulf of Oman. October 17th, 2016
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DEMOGRAPHICS
• 2nd largest population in the Middle East • Diverse country composed of many ethnic groups • Religion: Muslims (98%) & Other Religions (2%) • Language:
Official language is Farsi yet there are various ethnic languages as well as Turkish & Arabic.
• 70% of population is under the age of 35. • 8 Major cities with population over 1 million • Annual growth rate of October 17th, 2016
2% This content is; (a) copyright protected. (b) figures are based on public data. +1 (646) 233-1145 www.arhaxconsulting.com
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CONSULTING
DEMOGRAPHICS Iran’s 5 biggest cities will provide access to Iran’s 2.6 million wealthiest end-users and 13+ million middle-class Iran’s Urbanization Rate by Province and Cities (2012)
5 Tabriz
East Azerbaijan Province
Tehran Tehran Province
2
1
Razavi Khorasan Province
Province Capital
1.0
60% - 69.99% 70% - 79.99% 80% - 89.99% > 90%
Mashhad
0.5
Esfahan
0.4
Shiraz
0.4
Population 15+ yrs (with income in the top 10%)
Tabriz
0.3
Population 15+ yrs (with income in the middle 65%)
Mashhad
Tehran
Isfahan Province
3
Isfahan
Source: Solidiance’s research and analysis
Shiraz
4 Fars Province
Target Cities by Potential Endusers (2014, million)
October 17th, 2016
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POPULATION & URBANIZATION
1950: 17 million 2000: 66 million 2015: 80 million 2050: 105 million
October 17th, 2016
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ECONOMY
• Iran at ~ $400 Billion is the 27th largest economy in the world • Ranked upper middle income economy by the World Bank • The main driving forces contributing to the GDP are the Energy, Mining, Industry & Agriculture sectors
• Unemployment rate is at ~ 10% • Inflation official ~ 10% • Iran is the second largest economy in terms of population and the fastest growing country in the MENA Region
• With a young, Internet-savvy population, vast oil and gas resource base and a strategic location, Iran is poised for growth following sanctions relief, which could boost GDP growth to 5% a year by 2018.
October 17th, 2016
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OUTLOOK FOR GDP COMPOSITION
100
75
CooperaVves Private sector Semi-state insVtuVons Government
50
25
0 2005
October 17th, 2016
2010
2015
2020
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CONSULTING
ECONOMIC PRIORITIES With the signing of the Joint Comprehensive Plan of Action (JCPOA), Iran’s aim will now be to modernize its existing industrial base and upgrade its infrastructure. Estimates suggest capital requirements of close to 1 trillion USD. The oil and the gas sector alone are estimated to require 400 billion USD or more to upgrade and expand. Key sectors include: Oil and Gas • • • •
Telecoms Sector
World’s largest gas and the 4th largest oil reserves Production growth opportunities New contractual framework to attract investment 49 priority projects announced at various stages of exploration and development
• • • •
Energy-Intensive Industries
• •
Power Generation / Energy Efficiency
World’s 15th largest cement producer Produces same amount of steel as France and 15% more than UK
• Successful indigenous industry, but energy inefficient • 5 GW of generation capacity expected annually to reach a cumulative output of 96 GW by 2020
Petrochemical Sector
Automotive Sector • Largest producer in the ME (1.6 million cars produced in 2011) • Needs to respond to market demand and modernize the existing capacities
• Major investments to expand export potential • Developing petrochemical downstream to add value
Air and Other Transport Sector
Mining Sector • Major investment in mining industry development • 64 priority projects announced by Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO)
October 17th, 2016
Mobile penetration of 110% (about 85 million subscribers) Need for IT and telecom solutions Smartphone users: 8 million+ Digital and data opportunities
• •
Domestic air travel stunted due to lack of aircraft; estimates suggest 300-500 more planes are needed Substantial investment to expand metro and inter-city train networks
Food, Water and Wastewater Sector • Water scarcity • Need for a new concept for food security and water management • Need for modern equipment
Pharmaceutical Sector • Pharma market stands at approx. 3.6 billion USD, out of which 33.5% is imported and the rest domestically produced • Need to upgrade existing capacities • Need for investments in new medicine
Consumer Goods Sector • Country of 78 million has been all but cut off from global trade for years • Significant amount of brand loyalty still exists
Capital Markets Sector • Under-developed capital markets • Stock market trades over 100 million USD per day and has a market cap to GDP ratio of less than 30%
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IRAN DEVELOPMENT PLANS
• Iranian authorities have adopted a comprehensive strategy encompassing market-based reforms as reflected in the government’s 20-year vision
document and the recently issued sixth five-year development plan for the 2016-2021 period. The sixth five-year development plan remains ambitious, comprised of three pillars, namely, the development of a resistance economy, progress in science and technology, and the promotion of cultural excellence. On the economic front, the development plan envisages an annual economic growth rate of 8% and considers the implementation of reforms of state-owned enterprises, the financial and banking sector, and the allocation and management of oil revenues among the main priorities of the government during the five-year period.
• The resistance economy, pioneering in science and technology and the cultural superiority are three main pillars of the document which has been
formulated after long-term research, studies and consultations with Iran’s Expediency Council. Following the issued decree, this provision plan will be applied as a basis for the budget planning next year. This national plan also addresses a wide range of affairs: Economy, technological innovation, information and communication, social issues, defense and security, foreign policy, legal, judicial, cultural, and scientific issues. Iran has made the transition from a nominal constitutional monarchy to a democratic theocracy after a referendum. Iran-Iraq war began in 1980 and continued for 8 years.
1979-1989
1989-1997
Mohammad Khatami wins Ali Akbar Hashemi Rafsanjani becomes president after Iran-Iraq presidential election. war, the years of his presidency His period time called “Reforms time”. called “ Construction period”. Rafsanjani is an influential political people in Iran.
1997-2005
2005-2013
Mahmoud Ahmadinejad, Tehran mayor, who campaigned as a champion of the poor and pledged to return to the values of the revolution of 1979, elected president.
2013-now
Hassan Rouhani wins presidential election. Positive interaction with world is the main goal of his presidential.
Iran is a developed country, on first place in the region in the realms of economy, knowledge and technology; with an Islamic and revolutionary identity, an inspiration for the world and with p ro d u c t i v e a n d i n f l u e n t i a l interactions in International relations.
2025 Iran Vision
October 17th, 2016
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CONSULTING
IRAN DEVELOPMENT PLANS
2025 Iran Vision
Iran is a developed country, on first place in the region in the realms of economy, knowledge and technology; with an Islamic and revolutionary identity, an inspiration for the world and with productive and influential interactions in International relations.
8.6% 7% US$23.6 US$31.5
Economic growth rate of
Unemployment rate of
Industrial exports worth
Non-oil exports worth
October 17th, 2016
4.4% 7.2% 7% 10.9%
Labor productivity growth rate of
at the end of the horizon
Per capita income growth rate of
billion at the end of the horizon
billion at the end of horizon
Inflation rate of
Investment growth rate of
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CONSULTING
LIFTING OF SANCTIONS
GDP
On the Economic Front
Sanctions on Iran Mean?
On the Production Front
On the Spending Front
October 17th, 2016
Imports
Exports
Expected to increase at a CAGR of 5-7% from 2015 to 2020
To increase by 50% by 2020 for a value of USD 115 billion (from 2015)
To increase for a value of USD10 billion by 2017 (from 2015)
oil & gas Market
Manufacturing Market
Automotive Market
Expected to grow at 5% to reach USD 117 billion by 2016
Growing at 12% to reach USD 62 billion by 2016
To grow at 11% to reach USD 52 billion by 2016
Transaction Costs
Consumer Expenditures
Expenditures on R&D
Expected to decrease by 15% with Iran post-sanctions
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To reach USD 170 billion by 2017 (from 2015)
Iran’s 2025 Vision wishes to attract USD 1.3 trillion in foreign investment
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CONSULTING
IRAN POST SANCTIONS
October 17th, 2016
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CONSULTING
IRAN GDP GROWTH RATE PROJECTIONS
10 8 6 4 2 0 -2 -4
2013
2014
2015
2016
2017
2018
World Bank International Monetary Fund Iranian Bill submited in February 2016 by the Government for Parimentary approval (2016-2021) The Economist Intelligence Unit
October 17th, 2016
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CONSULTING
WHY IRAN: MARKET POTENTIAL
•
Vast domestic market with population of 80 million
•
A young educated population, credit based society with huge unsatisfied demand for everything from Refineries and Chemical Plants to Housing and Basic Infrastructure, the opportunities are huge!
•
Foreign companies would hope to supply much of the shortfall- in the form of Factories, Machinery, Buildings and Infrastructure.
•
Cheap Labor, Energy Resources and Geographical Location, gives Iran access to an additional Estimated 300 million people in the Caspian Market, Persian Gulf and ECO countries.
October 17th, 2016
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CONSULTING
WHY IRAN: ABUNDANT NATURAL RESOURCES
• Largest Proven Gas Reserves (~ 18 % of the World’s Gas Reserves) • 4th in Oil Reserves (~ 9% of Global Oil Reserves) • Abundant Strategic Minerals (~ 7% of World Mineral Reserves)
October 17th, 2016
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CONSULTING
PROVEN RESERVES OIL AND GAS
UAE 6%
Saudi Arabia 16% Kuwait 6%
Africa 8%
Oil
North America 14%
Iran 10%
South America 4% Venezuela 19%
Kazakhstan 2%
Asia Pacific 3% Russia 6%
Europe & Euroasia 14%
Rest of the world 9%
Asia Pacific 8%
Natural Gas
Qatar 13%
Rest of the world 1% Iraq 9%
October 17th, 2016
USA 5%
Africa 8%
Iran 18%
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Saudi Arabia 4%
Russia 17%
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CONSULTING
MINING INDUSTRY
Mining in Iran is underdeveloped yet the country is one of the most important mineral producers in the world.
• Iran ranks among 15 major mineral-rich countries. • Iran holds ~ 68 types of minerals. • ~ 37 billion tons of proven reserves
and more than ~ 57 billion tons of potential reserves worth ~ $770 billion in 2014.
October 17th, 2016
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MINING INDUSTRY
Large deposits which mostly remain underdeveloped:
• Zinc (world's largest) • Copper (world's Top 10 reserves in 2011) • Iron (world's Top 15 largest in 2013) • Uranium (world's Top 10 largest) • Lead (world's Top 15 largest) October 17th, 2016
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“ONE PERCENT OF THE WORLD'S POPULATION HOLDS MORE THAN 7% OF THE WORLD'S TOTAL MINERAL RESERVES.”
October 17th, 2016
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CONSULTING
WHY IRAN?
• According to the Petroleum Ministry, Iran plans to invest $500 Billion in its oil sector by 2025. • Iran has its sights at regaining its second position in OPEC producing an additional 1 million barrels per day.
• Iran is Ranked Top 14 Steel Producer in the world. • Iran is ranked as the largest Producer of MENA (Middle East & North Africa). • Government intends double steel production by 2025. • Government will invest $2.2 billion in near future. • 7 new facilities planned across the country. October 17th, 2016
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CONSULTING
AUTO MANUFACTURING
• Automotive Industry is the 2nd most active Industry in the Country after Oil & Gas • Iran is the largest car manufacturer in the Middle East • Iran is the Top 20 largest Motor Vehicle Producer in the World • Iran produces approximately 1.5 million cars annually • It has established joint ventures with foreign partners on 4 continents • There currently 13 public and privately owned Auto Makers within Iran • The most important are Iran Khodro and Saipa • Passenger Cars, Vans, Mini Trucks, Medium-size Trucks, Heavy Trucks, Mini Busses, Large Busses are produced in Iran
October 17th, 2016
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CONSULTING
AUTO MANUFACTURING: SHARES IN AUTOMOBILE PRODUCTION
Others 9.1%
IKCO 47.9%
SAIPA 43.0%
2012 October 17th, 2016
Others 9.9%
Others 7.4%
IKCO 49.9%
SAIPA 42.7%
2013
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SAIPA 36.4%
IKCO 53.7%
2014 27
CONSULTING
AUTO MANUFACTURING
• The Automotive industry is crucial for Iran’s economy, which is expected to be the biggest market for new car sales (1.5 million) in the MENA region by 2020.
• Iran’s automotive industry is the largest non-oil sector, employing ~4% of the
working population and is expected to be the fastest growing industry in Iran once sanctions are relaxed.
• The market is expected to see ~13% sales growth between 2015 and 2020 as sanctions relief allow foreign players to increase automotive supply to Iran via imports, assembly or manufacturing operations.
October 17th, 2016
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CONSULTING
AGRICULTURE
• Agriculture’s share of GDP has been decreasing over the years, due to low share of investment in the agricultural sector in comparison with other sectors. However, since Iran has the geographical potential as well as wide climatic variety, it has been noted that the agricultural sector can play a significant role in the country’s economic development.
• Population’s growth, need of various economic sectors for the products of the
agricultural sector, variety of climatic conditions, access to sea, fertile lands, pastures, forests and the work force ready for activity makes it attractive to invest in the agricultural sector in Iran.
October 17th, 2016
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CONSULTING
AGRICULTURE Iranian Agriculture Production Rank in the World Item
The agriculture industry in Iran may boost international trade and turn the country into a major food exporter post-sanctions Competitive Advantage of Iran in the Agriculture Industry
1
2
According to FAO, Iran ranks 4th among the top 10 countries in
The temperature fluctuation in
agriculture product diversity
different regions of Iran and the
for producing 15 types of the total 66
different climatic zones make it possible
world agriculture products. Iran is also
to cultivate a diverse variety of crops,
the #1 producer of berries, claiming
including cereals, fruits, vegetables,
90% global market share. Iran is better
cotton, sugar, pistachios, nuts, tobacco,
known for its dominance in the global
etc. The land covered by Iran’s natural
pistachio market, where it holds the #1
flora is four times that of Europe.
position at 38% global market share.
i
i
i
i
Rank
Share
Berries
1
90%
Pistachios
1
38%
Stone-fruit (fresh)
1
35%
Sa ron
1
20%
Cucumbers (and Gherkins)
2
11%
Apricots
2
3%
Almonds
3
13%
Cherries
3
11%
Dates
3
6%
Walnuts
3
4%
Wat ermelons
3
12%
Figs
4
4%
Onions
5
3%
Sour Cherries
5
9%
Pumpkins
5
3%
Source: FAO; Solidiance’s research and analysis
October 17th, 2016
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CONSULTING
WHY IRAN: INFRASTRUCTURE Overview of Major Ports and FTZs in Iran
Aras FTZ Anzali
Noshahr
Khorramshahr
Strong infrastructure is in place in Iran, making the country ready from day-one for significant economic activities
Bandar Abbas
•
Draft: 11-12.5 M
•
Up to 80,000 tonnes DWT
•
Handle mostly oil products
•
Main port in Iran, handling more than 80% of the container cargo
•
Dedicated as SEZ area with lack of tariff and custom procedures
Iran’s logistics has the potential to become a major international hub for the global trading community
Arvand FTZ
In fact, Iran already has major plans to capitalize on international flows of goods after the lifting of
•
Up to 14 M draft
•
Vessel size : Up to 100,000 tonnes DWT
•
sanctions due to its strategic geographical location,
Handle general Cargo , Container, Tanker
while offering alternatives to conventional shipping routes between Asia and Eastern Europe. Bushehr Assaluyeh
Kish FTZ
Qeshm FTZ
Bandar Chabahar
Lavan Island
Bandar Imam Khomeini •
Draft 9 to 12 M during high and low tides
•
Vessel size : 100,000 tonnes can pass this channel
•
October 17th, 2016
Sirri Island
Chabahar FTZ
Free trade zone
Handle general cargo / dry bulk and
Draft meter less than & equal 10 meters
container
Draft meter more than 10 meters
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CONSULTING
“PUT TOGETHER THE CONSUMER POTENTIAL OF TURKEY, THE OIL RESERVES OF SAUDI ARABIA, THE NATIONAL GAS RESERVES OF RUSSIA AND THE MINERAL RESERVES OF AUSTRALIA, IRAN HAS IT ALL IN ONE COUNTRY.”
October 17th, 2016
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CONSULTING
FDI IN IRAN
• "Vision 2025", the plan has set an investment target of $3.7 trillion within two decades (2005-2025) of which $1.3 trillion should be in the form of foreign investment.
• Iran has taken various steps to attract foreign investors. This briefing gives a brief
overview of some legal measures Iran has taken for the promotion and protection of foreign investment.
• The government of the Islamic Republic of Iran guarantees foreign investments in the country and intends to protect investments despite existing problems, particularly in the banking system, by offering investment initiatives. Moreover, the implementation of the Joint Comprehensive Plan of Action (JCPOA) will further encourage investments in Iran.
October 17th, 2016
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CONSULTING
FDI IN IRAN: GAUARANTEES BY THE IRANINAN GOVERNMENT
The security and protection of foreign investments in Iran are guaranteed by the state government.
Nationalization protection
A business formed and approved under the FIPPA shall not be nationalized within the term of the contract or the extended term
October 17th, 2016
Protection and Security of investors’ interests
The Iranian government is committed to facilitate the free flow of capital repatriation, and full and fair compensation for acts of expropriation by the government
Rights of foreign Investors
FIPPA recognizes the rights of foreign investors of guaranteed payments in cases of enactment of a law and/or a decision by the government seizing or interrupting the project
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CONSULTING
FDI IN IRAN Three Available Options for Foreign Investors to Enter the Iranian Market
1 Formation is based upon
LIMITED LIABILITY
Direct contributions of the partners to the partnership, but not by share subscription
2
JOINT - STOCK
Direct contributions of the partners in subscription shares form, available for secondary market trading
3
FOREIGN BRANCH
Foreign company establishing a branch in Iran to conduct business activities
Company Law
Iranian Commercial Law Iranian Attraction and Protection of Foreign Investment Act, Originally enacted in 1995
Founder
2 or more
3 or more
Mother Company
Initial Capital Investment
1 Million Rials
3 Million Rials
Not Required
Incorporation
Statues and Registration
Articles of Incorporations and Registrations
Registration
Formalities & Process
Low
Moderate
Low
Procedures
Sale activities
Sale activities
Post-sale services & future investments planning
Source: Iranian Lawyers Office; Solidiance’s research and analysis
October 17th, 2016
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CONSULTING
FDI IN IRAN: FOREIGN INVESTMENT PROMOTION AND PROTECTION ACT (FIPPA)
• The main Iranian foreign investment law is the Foreign Investment Promotion and Protection Act (FIPPA). The FIPPA grants foreign investors the same rights, protections and facilities available to domestic investors. This includes permission for investment in all fields where private sector activity is allowed and permission to hold up to 100% of shares in Iranian legal entities.
• FIPPA includes provisions to ensure free transfer of foreign capital and profits of foreign
investment abroad. Foreign investors may claim through the Act to acquire necessary foreign currency for such transfer. Furthermore, residence and work permits for foreign personnel are facilitated under the FIPPA.
• Any disputes between the Iranian government and foreign investors related to investments
subject of the FIPPA are subject to the jurisdiction of the Iranian courts, unless another dispute resolution mechanism has been agreed upon by a bilateral investment agreement with the relevant government of the jurisdiction of the foreign investor.
October 17th, 2016
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CONSULTING
FDI IN IRAN: BILATERAL TREATIES
• Iran has entered into more than 50 bilateral investment treaties with other
countries, such as Germany, France, Italy and Spain, providing for the promotion, admission and protection of investments by investors of such contracting parties. This includes assurances that the foreign investments will be treated no less favorably than its own investors.
• Additionally, Iran has concluded a number of double tax treaties, such as with Germany, France and SPAIN to avoid double payments on income and other taxes.
October 17th, 2016
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CONSULTING
FDI IN IRAN: COMPANY ESTABLISHMENT /FOREIGN PARTICIPATION
• The company structures most frequently used by foreign investors in Iran are the private joint stock company (sherkate sahamie khas) and the limited liability company (sherkat ba masouliate mahdoud).
• They require a minimum of three and two shareholders respectively. The shareholders can be affiliated companies.
• The directors and managers can be foreign nationals. The setup and registration process has
become, thanks to the introduction of an electronic registration procedure (amongst other reforms), swift and straightforward.
• It is permissible for foreign investors to hold 100% of shares in an Iranian company, irrespective of the applicability of the FIPPA and obtaining an investment license. However, public tenders may provide for a (majority) participation of an Iranian.
October 17th, 2016
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CONSULTING
FDI IN IRAN: FREE TRADE ZONES
• In order to attract and promote foreign investments, a number of free trade zones have
been established. Economic activities in such free trade zones are exempted from payment of income tax for a duration of up to 20 years from the date of commencement of operation.
• Moreover, imported goods in the zones are exempted from customs and import duties.
The same applies to the import of goods from free trade zones to the mainland, if the raw materials have been supplied domestically.
• The regulations of the free trade zones provide, similar to the FIPPA, for repatriation of the foreign capital and net profits, and for protection against expropriation and nationalization.
• Visa free entry for all countries except for 9 October 17th, 2016
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CONSULTING
FDI IN IRAN
Free Trade Zones (FTZ) have their own legal framework independent of the regulations from the rest of Iran, while Special Economic Zones (SEZ) provide tax incentives Free Trade Zones •
Easy registration of foreign companies
•
Investors can own up to 100% of an
Special Economic Zones •
commercial duties for the goods
investment without special formalities •
Free repatriation of profits and capital
•
Exemptions from income and capital tax
transferred to SEZ •
•
Customs exemptions for products manufactured in SEZ equal to their added
for 15 years •
Exemption from customs and other
value
Foreign investors can lease and own land,
•
Option to transit goods and re-export them
buildings and other installations
•
Full guarantee for foreign capital and profit
All goods imported are exempt from custom duties and commercial benefit tax
October 17th, 2016
resulting from investments •
Full freedom for foreign capital to be moved in and out of SEZ
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CONSULTING
TAX EXEMPTIONS
October 17th, 2016
AcVvity
Level of ExempVon
DuraVon of ExempVon
Agriculture
100%
No Time Limit
Industry and Mining
80%
4 Years
Industry and Mining in LessDeveloped Areas
100%
10 Years
Tourism
50%
No Time Limit
Exports
100%
No Time Limit
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CONSULTING
MINDSET
• Iran aims to develop a knowledge-based economy and as such is looking for the two important elements of skill and technology transfer in its partnership with foreign entities.
• Iran is in need of large industrial investment over the next 10 years. It should also be added that the country is moving away from an import-based mentality to one based on the development of its manufacturing base and export potential.
• As such entities that opt for the establishment of either independent or joint production units will be preferred over those seeing Iran as just an export destination.
October 17th, 2016
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CONSULTING
MINDSET
Iran is keen on concluding business negotiations and witnessing actual investment and physical presence as soon as possible.
• Without visible action and commitment, no foreign entity is likely to be taken seriously.
• Experience shows that those foreign entities that entered the Iranian market
during relatively risky and unstable periods, have benefitted from their first mover advantage. In contrast, those business partners that left the Iranian market as a result of the imposition of sanctions now find themselves in unfavorable situations in their attempt to re-enter the Iranian market.
October 17th, 2016
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CONSULTING
MINDSET
Most important of all Get the right advisors!
• In devising strategies and implementation plans for Iran, it is highly
recommended to make use of reputable local consultants who can bring significant value to the table though their local knowledge and deliver huge time and cost savings through lessons learnt from past relevant experiences.
• Arhax Consulting firm is a specialist professional services firm providing
consulting, financial advisory, transactions support and investment services to multinational corporations and diversified conglomerates with respect to their entry strategy into Iran.
October 17th, 2016
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CONSULTING
GUIDE TO DO BUSINESS IN IRAN A R H A X C O N S U LT I N G , S A R M A D A FA R I N E S H & H A B I B A L L A H D A D
October 17th, 2016
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CONSULTING
WE KNOW IRAN
• We are familiar with the Culture, the Language and the Mindset of Iranians. • We recognize the true Needs. • We address the real Targets & Opportunities.
October 17th, 2016
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CONSULTING
WE DO BUSINESS OURSELVES
• We are on the ground. • Years of global experience, even during sanctions. • We have faced challenges and rewards. • We have discovered solutions and refined methods. • We constantly face issues and opportunities.
October 17th, 2016
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CONSULTING
CATEGORIZING BUSINESS WITH IRAN
• Trading
Handicraft, carpets, foodstuffs, medication, natural resources, tech goods, consumer products, software and IT, management and quality control, energy saving etc
• Small, Medium & Large Business
Franchising, Pharmaceuticals & Medical, OEM Manufacturers, Raw Material Users, Commodity Trading, Agricultural Technology, Upgrades and Renovations
• Partnership
EPC Companies, Banks, Industrial Giants, Public Services, International Projects Long Term Project Partners in: Energy, Oil & Gas, Mining, Automotive, Infrastructures, Construction, Tourism, Research & Development
• Financing & Investment
Joint ventures, Buy-back, Project finance, Finance, Usance, Build, operate, and transfer (BOT), Loans, Leasing, Installment sale, Profit sharing & Line of financing.
October 17th, 2016
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CONSULTING
FINANCING & INVESTMENT
Joint ventures, Buy-back, Project finance, Finance, Usance, BOT, Loans, Leasing etc. Surprising Issues appear in: • Communications (Methods) • Market Study (Sources and Channels) • Transactions (Banking) • Guaranty and Contracts (Legal)
October 17th, 2016
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CONSULTING
STEPS OF THE BUSINESS
1. Get yourself informed; Market Research, Entry Options & Industry Scan 2. Communicate: Meetings, Negotiations & Events 3. Get a Road Map: Finalize Projects, Budgets & Legal Consulting 4. Set Up: Registrations, HR, Marketing Activities & Management 5. Execute & Operate: Follow Up, Consulting & Troubleshooting 6. Make Profit
October 17th, 2016
➔
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CONSULTING
RETURN ON INVESTMENT
➔ Financial Return ➔ Innovation ➔ Growth October 17th, 2016
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CONSULTING
FAQ
October 17th, 2016
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CONSULTING
FAQ
?
Can EU persons provide goods and services in connection with Iran’s energy sector?
Yes. It is no longer sanctionable for non-U.S. persons to provide goods, services (including financial services), or technology used in connection with Iran’s energy sector, the development of Iran’s petroleum resources, including the domestic production of refined petroleum products and petrochemical products, or associated services.
October 17th, 2016
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CONSULTING
FAQ
?
Can EU persons invest in Iran’s oil, gas, and petrochemical sectors? Yes. The sanctions on investments by non-U.S. persons in the oil, gas, or petrochemical sectors of Iran are lifted.
As a result, EU persons are no longer subject to sanctions for investing in Iran’s oil, gas, or petrochemical related sectors (including through participation in joint ventures).
October 17th, 2016
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CONSULTING
FAQ
?
Are EU persons able to purchase Iranian natural resources and related products?
The United States is no longer pursuing efforts to reduce Iran’s sales of crude oil and minerals. The restriction on use of proceeds of sales of Iranian petroleum and petroleum products for bilateral trade with Iran no longer apply.
In addition, the restrictions on Iranian oil revenues held abroad have been lifted.
October 17th, 2016
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CONSULTING
FAQ
?
Can EU persons purchase, acquire, sell, transport, or market petroleum, petrochemical products, and natural gas from Iran?
Yes. The United States lifted secondary sanctions on the purchase, acquisition, sale, transport, or marketing of petroleum, petroleum products (including refined petroleum products), petrochemical products, and natural gas (including liquefied natural gas) from Iran, and the provision of associated services. EU persons are no longer subject to sanctions for engaging in such activities.
October 17th, 2016
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CONSULTING
FAQ
?
Can EU persons export, sell, or provide refined petroleum products and petrochemical products to Iran?
the United States lifted secondary sanctions on the export, sale, or provision of refined petroleum products and petrochemical products to Iran. As a result, beginning on Implementation Day, non-U.S. persons are no longer subject to sanctions for engaging in these activities .
October 17th, 2016
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CONSULTING
FAQ
Which financial and banking sanctions are relieved?
• Transactions and other activity related to the Iranian rial;
?
• Provision of U.S. bank notes to the Government of Iran, including the provision of material support for such transactions;
• The purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt, including governmental bonds; and
• The provision of financial messaging services to the CBI and other Iranian financial institutions.
October 17th, 2016
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CONSULTING
FAQ
?
Will financial institutions be subject to sanctions for opening or maintaining correspondent accounts for Iranian financial institutions? No. EU financial institutions will not be not subject to secondary sanctions for opening or maintaining correspondent accounts for Iranian financial institutions.
October 17th, 2016
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FAQ
?
How does the lifting of sanctions affect the provision of insurance for transactions involving Iran?

The provision of underwriting services, insurance, or reinsurance by non- U.S. persons for activity that is consistent with the JCPOA is not sanctionable as of October 18th 2016.
October 17th, 2016
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CONSULTING
WHAT YOU SEE ON THE MEDIA TODAY BESIDE THE VIOLENCE AND IDIOTIC PRESIDENTIAL CAMPAIGNS
October 17th, 2016
"!
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CONSULTING
RECENT STORIES
October 17th, 2016
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CONSULTING
RECENT STORIES
October 17th, 2016
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CONSULTING
RECENT STORIES
October 17th, 2016
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CONSULTING
RECENT STORIES
October 17th, 2016
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CONSULTING
RECENT STORIES
October 17th, 2016
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CONSULTING
RECENT STORIES
October 17th, 2016
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CONSULTING
RECENT STORIES
October 17th, 2016
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CONSULTING
ISSUES
October 17th, 2016
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EASE OF DOING BUSINESS
companies, it will be a challenging place to do business in
#
Risk of Bureaucratic Delays
Complex Tax Structure
Basic request requires complex forms,
out of 189 other nations on paying taxes
Un-drawn Borders between Personal and Professional Relationships
administrative processes and stamps of
in the ease of doing business index.
Family and friends may interfere in the
This caused the country to rank 123rd
approval. One can expect serious delays
decision-process within the business.
when dealing with construction permits
It is crucial to understand this cultural
and property registration.
behavior and learn how to manage it.
October 17th, 2016
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CONSULTING
BUSINESS INVIRONMENT
• We help you analyze • Find Financial Alternatives
Political stability Tax regime
• Act with knowledge
#
Labour market
FDI policy
Business environment for foreign firms
Private enterprise & competition policy
Foreign trade and exchange controls
Ease of financing Infrastructure
October 17th, 2016
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CONSULTING
ISSUES
Implementation of the sanction-relief delayed UNODC & US Department of Treasury still continue to negotiate about implementation of the JCPOA.
SWIFT was officially connected last year, BUT realistically the international services of Iranian banks are not functional and big international players are yet to enter the market. Some exceptions exist, however progress has been, and will be slow.
October 17th, 2016
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CONSULTING
ISSUES
Banks refuse to cooperate
• Some banks or banking groups have been fined before JCPOA, those may still be suspended or are acting with caution.
• Some bank owners are part of political parties that disagree with JCPOA. • Some banks simply have no interest.
October 17th, 2016
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CONSULTING
ISSUES
Different Banking System Compatibility and Standards Through out years of sanctions, Irans banking system has become more of a localized system which did not require to be compatible with the global network.
October 17th, 2016
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CONSULTING
ISSUES
Multi-layered Exchange Rate System Currently there are two exchange rates in Banking operation • The official exchange rate (Set artificially by the CBI) • The TSE/Parallel exchange rate (Set by the market) The effect of the two different rates is to provide preferential access to Dollars which due to sanctions are in short supply - to basic necessities. This allows goods to be imported at a more favorable exchange rate, reducing the cost to domestic consumers. The official exchange rate is typically applied to goods including food and medicines as these are mostly consumed by the poorer consumers in Iran. The TSE/Parallel is applied to almost all other imports and exports and should be viewed by the international community as the key rate of exchange. October 17th, 2016
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ISSUES
Travel Difficulties for Iranian Citizens There is a complicated bureaucratic procedures for issuing Schengen visas to Iranians. Long waiting times and a lot of paperworks make it complicated for travelers to engage in European business activities. However EU citizens can obtain visa on arrival at Iranian Border Control Office for a small fee.
October 17th, 2016
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FACT
Iran is not a member of the World Trade Organization (WTO) The EU supports the goal of Iranian accession to the WTO, a necessary step for Iran to trade globally as an effective and reliable actor. 

October 17th, 2016
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THANK YOU! SERVICE@ARHAX.COM + 1 ( 6 4 6 ) 2 3 3 - 11 4 5
October 17th, 2016
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