Foreign direct investment (FDI) is considered as a main factor of linking economies to each other and also it has a key role in transferring funds, technology, knowledge and management among countries. FDI is divided into two categories including inflows and outflows. FDI inflows are the value of inward direct investment made by non-resident investors to a country however FDI outflows means the value of outward direct investment made by the residents of a country to external economies. Besides geographical risks and policy uncertainly, some factors like economy boom in major economies and improvement of corporate profits in those regions will lead to about 5% growth of global FDI and it will reach to 1.8 billion Dollars in 2017 according to annual investment report of UNCTAD (united nations conference on trade and development). The global trends of inflows and outflows from 2000 to 2016 have been shown in the charts below:
Based on UNCTAD’s report, foreign direct investment inflows of developing Asia including Iran hit 442.7 billion Dollars in 2016 with near 25.3% of global share. This amount was 15.5% lower than the previous year which is varied region by region. For instance, uncertainties about global economy in south-east Asia and low price of oil and policy uncertainty in west Asia are the main reasons of FDI inflows reduction in these areas. Only south Asia was an exception from this sharp decline in the mentioned period because of stable flows to India and a rise in flows to Pakistan. On the other hand, foreign direct investment outflows in developing Asia rose 7% to 363 billion Dollars mainly as a result of surging FDI outflows from China.
The procedure of changing FDI inflows and outflows in last seven years are shown in the charts below:
Status of announced FDI projects by industry and by region/economy are shown respectively in the tables below:
Unit: Millions of Dollars
Unit: Millions of Dollars
Iran’s FDI inflows increased 65% to 3.372 billion Dollars in 2016 which improved the position of Iran to 51st place in attracting FDI among 201 countries, while FDI inflows in world and developing countries decreased 2% and 14% respectively. Iran’s foreign direct investment from 2011 to 2016 is shown in the table below:
After JCPOA (according to solar year: from 1396/10/01 to 1396/05/20), some main factors like of political and economic risks reduction, development of financial market and trade liberalization have simplified foreign investments. In this period of time, total attracted foreign investment was about 13.242 billion Dollars which was mainly absorbed in water, gas and electricity sector. Approved FDI data by sectors after JCPOA is shown in the table below:
All in all, during last 23 years, Iran has taken its rank as 50 on average in attracting FDI but some basic factors like reforming the bureaucratic system, reducing costs of activity registration and transferring assets can improve the place of Iran in getting FDI. On the contrary, there are a lot of investment opportunities which could be attractive for foreign investors who are seeking for profitable options. For instance, Iran’s petrochemical industry with around 50 billion Dollars of investment capacity could achieve productions with value of 40 billion Dollars. Furthermore, construction can be pointed as another sector which has abundant growth potential and according to the 28th Annual Islamic Banking Conference held in Tehran on August 29th, Iran’s construction projects in different provinces needs 26 billion Dollars of investment too. Therefore, Iran can touch its goals in a shorter period of time for Sixth Five-Year Development Plan (2017-22) by foreign direct investment flows.