Iran: Investing
In this page: FDI in Figures | What to consider if you invest in Iran | Procedures Relative to Foreign Investment | Investment Opportunities
According to UNCTAD's World Investment Report 2024, FDI inflows to Iran amounted to USD 1.42 billion in 2023, down by 5.2% year-on-year. At the end of the same period, the total stock of FDI was estimated at USD 63 billion, around 15.6% of the country’s GDP. Iran recorded a new high in FDI in the calendar year ending March 2024, despite U.S. sanctions. The Organization for Investment, Economic, and Technical Assistance (OIETA) reported a net FDI of USD 5.5 billion—the highest in its 16-year history. An additional USD 2.5 billion in foreign investment was drawn into projects not registered with OIETA. China led with USD 2 billion, followed by Turkey, the UAE, and the Iranian diaspora. Most FDI went into manufacturing, mining, and metals, while the oil and gas sector attracted the largest share over the past three years, during which total authorised FDI reached USD 11 billion. OIETA dismissed claims that Afghan investments played a major role, noting they totalled just USD 35 million. More recently, in its latest meeting for the current Iranian year, spanning from March 20, 2024, to March 20, 2025, the Foreign Investment Board approved USD 900 million in investment plans from foreign investors. Russia, China, the UAE, and Turkey emerge as the leading investors, with nearly half of this sum allocated to the oil and gas sector.
The flows of foreign investment in Iran have remained relatively very weak in recent years, compared to the enormous potential that the country can offer. This is due to several factors: the omnipresence of the state in the economy, external political risks (the American embargo, economic sanctions, escalating tensions in the region), as well as internal issues (the impoverishment of the population, social risks, inflation, crisis of the political regime), and heavy bureaucracy in all sectors. State interference erodes economic freedom across all fronts, while corruption and institutional weaknesses in the legal framework weaken the rule of law. With the government dictating production and deriving the majority of its revenue from the oil sector, the private sector faces constraints imposed by a burdensome regulatory environment. Additionally, employment regulations are restrictive, leading to a stagnant labour market, and monetary stability suffers from government controls that distort price levels. The situation is exacerbated by the U.S.-imposed sanctions, which hinder FDI into Iran by restricting access to international financial markets and limiting foreign investors' ability to transfer funds and engage in business transactions. On the other hand, the country offers a poorly penetrated, large consumer market; moreover, the country benefits from its strategic location, providing access to both regional markets in the Middle East and Central Asia, while also serving as a crucial waypoint for trade between Europe and China, and is rich in natural resources. Iran ranks 64th among the 133 economies on the Global Innovation Index 2024, 151st out of 180 in the 2024 Corruption Perception Index, and 169th out of 184 countries on the latest Index of Economic Freedom.
| Foreign Direct Investment | 2020 | 2021 | 2022 |
|---|---|---|---|
| FDI Inward Flow (million USD) | 1,342 | 1,425 | 1,500 |
| FDI Stock (million USD) | 58,711 | 60,136 | 61,636 |
| Number of Greenfield Investments* | 0 | 0 | 0 |
| Value of Greenfield Investments (million USD) | 0 | 0 | 0 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Iran represents an important market (70 million inhabitants) with a young population eager to consume foreign products. It is a solvent market with an enormous need for consumer goods, equipment and large infrastructure projects (electricity, water, accommodations, transport, etc). Production costs (labour, energy, etc) are low.
Iran is the world’s second largest known natural gas reserves and fourth largest oil reserves, which will last over 100 years at current rates of extraction (according to the government).
The influence of the State on the economy is very important, with numerous organisations linked to the state and disposing of funds and important budgets without coherent management. Corruption is wide-spread in the country.
Geopolitical tensions, particularly with Israel and domestic instability are also major risk elements.
In order to attract foreign investment and promote knowledge transfer, buy-back systems have been established in which the revenues of a foreign investor partner can be repatriated in the means of goods and services produced by the project. In terms of investment, the Iranians offer privileges to investors who can provide long term strategies and transfer of technologies.
After Iran agreed to limit its reserach on the nuclear, the 5 permanent members of the UN, together with Germany and the EU reached an agreement called the Joint Comprehensive plan of action in 2015, as a result of which most of the economic sanctions on Iran were raised. Nevertheless, President Trump stongly criticized the agreement from which the US withdrew in May 2018. Trump also threatened the companies pursuing business with Iran, saying that they will have to make a choice between the US and Iran. The EU announced on September 2018 that its members would set up a payment system to allow oil companies and businesses to continue trading with Iran in a bid to evade sanctions after the US withdrawal. The oppportunities for investment remain very uncertain and major companies already annouced they would leave Iran (Total, Siemens, Daimler ... ).
Useful information may also be found in the World Bank 2018 Report on Doing Business in Iran. It is advised to inquire about the position of one's country towards investment in Iran and to learn more about specific risks from the national Ministries of Foreigns Affairs.
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Latest Update: May 2025
