The main role of attracting domestic and foreign investments will be highlighted by reviewing the development processes in developed countries. In addition to this, increase in foreign investments can be considered as a sign of economic and political strength.

After enactment of business law in 1931, foreign investors had begun to invest in Iran’s private companies. In 1955, protection law of foreign investors was registered for the first time in order to encourage them more to enter Iran’s market. After more than four decades, since 2002, the new law has been approved for providing safer and more legal investment environment. Nowadays, post-JCPOA[1] era can lead to better situations for investment which helps economic boom and development through some pros like transferring of technology, increasing market size, accessibility to foreign markets and gaining export benefits and some others.

Studies in early 2016 showed that the best investment opportunities are available in petrochemical, energy and tourism industries of Iran according to Exim News report. In particular, petrochemical industry is more attractive than others because of its advantages for foreign investors such as accessibility to:

  • Major gas reserves
  • High demand from the markets in the west, east and north neighborhood countries
  • International waters
  • Special petrochemical economic zone with tax exemption

On the other hand, foreign investments play more important role in this industry rather than other industries, because of the necessity of more up to date technology and management skills.

Entrancing of foreign investors will lead to progress in semi-finished projects and also useful interaction between domestic petrochemical companies and foreign markets. Therefore, selling raw materials in this sector will be stopped and as a result, it would be possible for these companies to complete their production chain.

 

Investment opportunities of petrochemical industry can be divided to two different groups as below:

  1. Investment in the companies which operate with less than their nominal capacities: these companies need to receive fund in order to increase production volume and by doing so they can improve their profitability. For instance, Zagros Petrochemical Company as one of the major methanol producers has capacity of 3,300,000 Tons in producing methanol but only 2,900,327 Tons had been supplied in 2015.
  2. Investments in companies with unfinished projects: petrochemical productions can be classified in four main groups which are lubricants, ethylene, methanol and urea. In the table below a company that has semi-finished projects from each of these groups has been shown.

Iran Investment

Source: Financial statements of each company mentioned above (2015)

 

 

According to the newest data, at the moment, there are 51 semi-finished projects in various stages in Iran’s petrochemical industry. At present, completing of these projects will lead to increase in petrochemical’s production capacity to 105 million tons per year. Brief information about them are shown in the table below:

Iran Investment

Source: The National Petrochemical Company’s website (www.Nipc.ir)

 

 

Jahrom’s high and low density polyethylene, Fasa’s low density polyethylene, Darab’s high density polyethylene and Estahban’s ethylene vinyl acetate are the biggest unfinished projects in this industry.

Iran Investment

Source: The National Petrochemical Company’ website (www.Nipc.ir)

 

 

To conclude, petrochemical industry creates the most value added among oil and gas industries. Furthermore, holding the first place in non-oil exports along with other pros show the main role of this industry in Iran’s economic growth. On the other hand, petrochemical industry has the lowest risk of investment because of its strategic geographical location and various hydrocarbon reserves. Thus investments in this sector will have so many benefits for both sides.

[1] The Joint Comprehensive Plan of Action (JCPOA)