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( Foreign
Investment Protection Act )
1- The attraction of foreign investments in
Iran has been the subject of controversial
debates and discussions in almost every
corner of Iran's political, economic and
financial institutions.
2- Although efforts have been made by those
in the position of executive responsibility
to project a safe and attractive environment
for investment, but it seems it will require
a lot more convincing to be done and a lot
more demonstration of the effectiveness of
the current regulations need to be carried
out before we can expect a material in flow
of foreign investment.
3- The Law for Attraction and Protection of
Foreign Investments was passed and became
effective in November 1955. Since its
enactment, it has undergone certain minor
changes and amendments the latest of which
was in 1999 and recently in March 2002 .
4- The 2002 Act provides for the protection
of investments by foreign and Iranian
entities and individuals in industrial ,
mining , agricultural and services
activities in Iran , provided the sourcing
of investment is overseas.
5- All investors wishing to enjoy the
protection provided by the Act, have to
apply to the Organisation for Investment ,
Economic and Technical Assistance of Iran.
6- The original investment can be imported
in cash or non-cash form.
7- Once approved the investor can transfer
the benefits received from the investment in
the form of dividends , out to home country.
8- The rate of foreign exchange for transfer
of profits or repatriation of capital under
uniform exchange rate shall be the Official
Bank Rate otherwise at open market rate at
the discretion of the Central Bank of Iran.
9- There is no set limit on foreign
investment in any given project provided the
foreign investor’s share of the production
value do not exceed 25 percent of the total
production of the sector ( Agriculture ,
Industry , Mine and Services ) and 35
percent of the specific line of activity (
e.g. car industry , chemical industry , coal
mining , wheat production, engineering …
etc. ) . The limits sets for each general
line of activity is expected to be issued
shortly. Exports are excluded from
computations leading to predetermined
limits.
10- Major changes introduced by the new Act
includes recognition of Iranian legal or
real person as foreign investors if the
investment funds are sourced overseas,
accepting investment by foreign governmental
institutions and willingness to protect
investment in services sector which was
previously restricted to transportation.
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