Iran FDI Down 30%

EghtesadOnline: The volume of foreign direct investment in Iran declined by more than 30% in 2018 to reach $3.48 billion from about $5 billion the year before, the United Nations Conference on Trade and Development's latest World Investment Report shows.

News ID: ۷۴۷۵۶۱

15 June 2019

The chief reason for the decline should be sought in last year’s unilateral withdrawal of the United States from the nuclear agreement Iran signed with five other world powers in 2015.

The deal, better known as Joint Comprehensive Plan of Action, had been signed between Iran and world powers with the aim of removing international economic sanctions against the Islamic Republic in exchange for it to limit the scope of its nuclear program, according to Financial Tribune.

The US walkout, though, has left JCPOA hanging in balance as the administration of US President Donald Trump reimposed sanctions against Tehran, described as "the toughest ever".

The nuclear deal, upon its enactment, initially saw a growing number of foreign companies flocking to the Iranian market left untapped after years of pent-up demand as a result of longstanding sanctions.

So much so that Iran was described as the "last frontier market" in the world for potential investment.

The new UNCTAD report was released by Fars News Agency as a subscriber to the website of the international body on Wednesday–a day before the official release of data.

According to the report, foreign direct investment in Iran jumped from around $2 billion in 2015 to $3.37 billion in the following year when JCPOA came into force, indicating a 64% rise.

The uptrend continued in 2017 as $5.01 billion worth of foreign direct investment were made in Iran that year, up 48% compared to 2016.

Among the notable names who took the opportunity of making foray into the newly opened Iranian market for investment were French energy giant Total, automakers Renault and PSA, Germany’s Daimler and Volkswagen, Siemens, pharmaceutical giant Sanofi and planemakers Boeing and Airbus, among many others.

The specter of US reprisal, following Trump's reintroduction of sanctions, however, prompted the newcomers to leave Iran one after another.

The volume of foreign direct investment in the world stood at $1,297 billion in 2018, meaning Iran had a 0.26% share of the sum.

Iran's share stood at 0.17% and 0.33% in 2016 and 2017 respectively.

Developing countries attracted the lion's share of foreign direct investment in 2018 with $706.43 billion or 54.4%. Emerging economies had a 2.6% share.

Developed countries attracted $556.892 billion (42.9).

The United States, China and Hong Kong were the biggest destinations of foreign investment last year with $252 billion, $139 billion and $116 billion respectively.