Sat Mar 10, 2012 | 18:35
Iran offers incentives to draw investors
Mon, 26 Apr 2010 01:58:24 GMT
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Ali Saleh Abadi
Iran has ratified a new bylaw to facilitate foreign direct investment. Under the new regulation, foreign nationals and entities can invest in securities exchange and over-the-counter or off-exchange trading. Efforts have further been made to steadily eliminate any complications or constraints on foreign investors in the Iranian capital market.

On Sunday, Press TV had an exclusive interview with Ali Saleh Abadi, the director of Securities and Exchange Organization of Iran, on investment opportunities in the stock market. Excerpts follow:

Press TV: Tell us about foreign investment in Iran's securities and exchange market. What are the guarantees?

Saleh Abadi: The previous regulations restricted foreign investment in Iran. One restriction was that foreign investors could not transfer their money out of the country. Shareholders were allowed to take out their profits, though. But they had to obtain permission to do so. Foreign investors were allowed to purchase 10 percent of company shares. Now under a new law, they can get better incentives. The three-year restriction has been lifted and foreign investors can now invest in the capital market, trade shares or take out their money at any time. The Central Bank of Iran is also in charge of providing the investors with the necessary foreign exchange, which is also transferrable.

Press TV: Could you tell us about the investment guarantees and whether they are in place now?

Saleh Abadi: Foreign investors can transfer their entire capital and profit out of the country, even in foreign exchange. As I told you earlier, previously they could only buy 10 percent of company shares, but now the figure has been raised to 20 percent. They can now invest in Tehran's over-the-counter or the bond markets. They can also invest in mutual funds. The government is now offering broader incentives to foreign investors with fewer regulatory strings attached. They will be exempt from paying tax and will no longer be subjected to excessive regulations. Moreover, there will be fewer regulatory procedures regarding foreign direct investments. The organization has reduced the bureaucratic channels and issues investment permits for foreign nationals in less than seven days.

Press TV: What is the advantage of investing in Iran?

Saleh Abadi: The most important advantage that our capital market has in comparison with other regional markets is that there are 40 industries directly involved in it, which makes it diverse and distinguished. Industries such as the telecommunications, agriculture, petrochemical, mining, steel iron, copper, banking and insurance, financial mediation and others trade shares at the stock market, which makes it unique in the Middle East. There is no lucrative market as such in the entire region that has 40 major industrial traders. This reduces the investment risks. Furthermore, foreign investors can spread their investment portfolios across the denominations to reduce risks.
The second advantage is that most of the state-owned firms are going private under the general policies of Article 44 in the Iranian Constitution. Under the circumstances, people are allowed to buy the shares of newly-privatized firms.
Another advantage is the PBE or price-to-earnings rate. The PBE rate in our market stands at around six. Therefore, if your share makes one toman in profits, it means its real market price is six tomans. However, the price in other regional markets is about 15 tomans, which translates into the fact that prices are much lower in our market and we have the potential to absorb greater investments from the overseas.

Press TV: Where does the Iranian stock market stand in the midst of the global economic downturn?

Saleh Abadi: Our investment market is in a better shape than its regional counterparts. One reason is that we have a wide range of industries with a lower PBE rate, which makes it less vulnerable to likely crises. Moreover, our investment market is yet to be integrated with the global market, and perhaps that also explains why it has to some extent remained immune to the financial crisis.
In addition, Iran is an emerging market with great potentials for growth and greater investment potentials. No wonder the developed markets are now investing in the emerging markets. As an emerging market, this should also be yet another plus point for Iran. As mentioned earlier, the privatization of state-owned companies also offers new opportunities for foreign investors.

Press TV: Can you give us some figures on Iranian stock market?

Saleh Abadi: Last Iranian calendar year (ended March 20), the value of capital market was around $20 billion. Some 3 million trade exchanges were made, pushing up the index to 12,500 units from the previous 8,000 units. In other words, the market made 58 percent in profits last year. In the first month of this year (March 20-April 21), the index hit the 14,000 unit mark from the previous 12,500 units, showing a 12-percent growth. The value of last month trading transactions exceeded $1 billion against last year's corresponding period of $95 million! This further indicates that our $75-billion capital market is growing and developing fast.

Press TV: What is your market forecast for this year?

Saleh Abadi: We believe that the value of our indexes will continue to grow. Therefore, we will continue to privatize the state-owned sector to ensure that such a growing trend remains that way for the rest of the year.

Press TV: How is privatization going to affect the stock market and the securities market?

Saleh Abadi: It is set to boost the value and the volume of investment market, diversify industrial players, lower risks, and increase the capital of investment market.

Press TV: What would you like to say to potential foreign investors who might want to invest in Iran?

Saleh Abadi: Foreign investors should take the present opportunity and invest in Iran's lucrative emerging market. They are more than welcome to come and examine the accuracy and transparency of the Iranian stock market transactions for themselves. This way they will have trust in our financial system and conduct. They can trade in our stock market through the Internet or get all the necessary information before travelling to Iran. There are 87 online service providers which offer round-the-clock information and services about the country and its stock market. All they need to do is register on the website of the organization and get down to the business of trading right away from anywhere in the world.

Press TV: How do you address the concerns of foreign investors who are still not convinced that Iran is a stable market in the Middle East?

Saleh Abadi: The great developments over the past few years serve as further proof that the Islamic Republic of Iran is indeed a safe place to invest. Moreover, under the law, foreign investors are protected and insured against possible losses and damages caused by future political turmoil or regional conflicts. In other words, they have nothing to lose, only to gain, from investing in Iran.

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