Iran laying basis for non-oil economy

Iran expects to attract $15 billion in direct foreign investment this year as the biggest economy closed to international business since the fall of the Soviet Union is humming back to life.

A number of global corporations are eyeing the potential dividends of repressed demand in the country of 80 million people, which is sitting on the world‘s biggest oil and gas reserves combined.

Several car manufacturers, engineering companies, oil and industrial gases producers have already chipped in with pledges to a number of development projects.

Earlier this month, the country signed an agreement with Japan for $10 billion in investment and is seeking similar deals with other nations.

Germany’s industrial gases company Linde and Japan’s Mitsui Chemicals plan $4 billion of investment in Iranian petrochemical projects.

Italy’s engineering company Maire Tecnimont has signed a collaboration agreement worth 1 billion euros for construction of refineries and petrochemical plants in Iran.

Another Italian company Saipem signed a deal worth between $4 billion and $5 billion to revamp and upgrade Iranian oil refineries and build pipelines in the country.

On Saturday, Economy Minister Ali Tayebnia said Iran is seeking $45 billion in foreign investment in next few years.

The country’s strategic location, political stability and population, he said, has made it an attractive destination for foreign investment.

“All these factors have led to a capacity to attract more than $45 billion in foreign financial resources for next year, with about $15 billion in direct foreign investment,” he told a news conference in Tehran.

Any foreign investment must strengthen Iran’s economy, Tayebnia said as he put in his proviso for the plan.

“We won’t welcome any proposal that doesn’t lead to transfer of technology and capital or doesn’t boost production and exports.”

President Hassan Rouhani also said investment and transfer of technology was the key to an economic boom.

“We must create an opportunity in which all domestic and foreign investments are employed,” he told a forum on labor in Tehran.

Rouhani said Iran has now “turned threats to opportunities” with the lifting of sanctions on the country with its annual output of $400 billion.

“Today, those who feared Iran’s name and were competing with each other for distancing themselves from Iran are in a race to come closer and invest in the country,” he added.

Foreign investment is crucial to Iran’s efforts to wean itself off oil revenues and develop its non-oil sectors, including agriculture, tourism and mining.

“Our past experience showed that oil at $147 cannot solve our employment and public welfare problems,” Rouhani said.