Tel: +98(21) Fax: +98(21) Foreign Investment in Iran: Laws and Regulations, Advantages, and Investment Opportunities Presentation by : Sharagim Shams Deputy Director General, Foreign Investment Office Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) On the occasion of UBCCE Third Business Forum

Tel: +98(21) Fax: +98(21) Presentation Highlight 1.General Information about Iran -Fundamental Macroeconomic Reforms - Privatization 2.Foreign investment in Iran : Policies, Laws and Regulations and advantages

Tel: +98(21) Fax: +98(21) General Information about Iran

Tel: +98(21) Fax: +98(21) Geography Location: -Middle East, bordering Iraq,Turkey, Pakistan, Afghanistan and Turkmenistan t Oman Sea and the Persian Gulf from south and the Caspian Sea from north, -S trategic location on the Persian Gulf and Strait of Hormuz, which are vital maritime pathways for crude oil transport

Tel: +98(21) Fax: +98(21)

Tel: +98(21) Fax: +98(21) Area: 1.67 million km² Population: 71.5 million Literacy ratio: %85 30 Provinces

Tel: +98(21) Fax: +98(21)

Tel: +98(21) Fax: +98(21) Climatic Characteristics: Numerous Diversity Mid Winter Climate Factor North of Iran South of Iran Temperature (c) Min: -28Max: 31 Humidity (%)9020 Rainfall (mm) Mid Summer Climate Factor North of Iran South of Iran Temperature (c) Min: 5Max: 50 Humidity (%)7010 Rainfall (mm)1650

Tel: +98(21) Fax: +98(21) GDP: US$ billion, GDP per capita: US$ 5346 GDP (PPP): US$ 842 billion, GDP per capita (PPP): US$ 12,800 GDP average annual growth rate( ): % 7.5 Trade Balance US$ 45 billion surplus Import (FOB) US$ 55 billion Export US$ 100 billion Export - commodities: petroleum 80%, chemical and petrochemical products, fruits and nuts, carpets Import-Commodities: Industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services, Economy

Tel: +98(21) Fax: +98(21) Export & Import Trends Value: US$ Billion ImportsExports

Tel: +98(21) Fax: +98(21) Main Trading Partners (Top 10) Non-Oil Export Partner Value: $US Million Import Partners Source: I.R. Iran Customs IMPORTSSHARE Capital% 16 Intermediate% 67 Consumer% 13 Other% 4

Tel: +98(21) Fax: +98(21) Iran’s Main Advantages: Diversified, Hydrocarbon-rich Economy 4th largest oil producer in the World 2nd highest gas reserves in the World Largest industrial base in the MENA region 10th Country on Tourism Attractions and 5th on Ecotourism High GDP growth rate 4th to 9th rank in production of Zinc, Lead, Cobalt, Aluminum, Manganese and Copper in the world. 4th rank on diversity of Agriculture products in the world. 6 Free Trade-Industrial Zones 19 Special Economic Zones

Tel: +98(21) Fax: +98(21) Recent Developments: Comprehensive Tax Reform : Fixing corporate income tax at a flat rate of 25%, while under the previous law, companies were subjected to both a 10% corporate tax plus their dividends being taxed at ascending levels up to 54%. Introduction of Many New Tax Holidays and exemptions Creation of a Central Tax Authority.

Tel: +98(21) Fax: +98(21) Floating Single Exchange Rate System : Floating Single Exchange Rate System : Unification: from March Less than 5% Fluctuations. Trade System : Trade System : Replacement of Non-tariff Barriers by Tariffs. Rationalization of the Tariffs (35.6% to 16.5%) Privatization : Privatization : More than 20 billion USD Privatized.

Tel: +98(21) Fax: +98(21) Fundamental Macroeconomic Reforms (privatization) Expediency Council Resolutions: Expediency Council Resolutions: Opening up new areas formerly closed to private local/foreign investors. Opening up new areas formerly closed to private local/foreign investors. The general policies of Article 44 of theThe general policies of Article 44 of the Constitution of the Islamic Republic of Iran

Tel: +98(21) Fax: +98(21) Foreign investment in Iran: policies, laws and regulations and advantages

Tel: +98(21) Fax: +98(21) Foreign Investment Policy Contribution to Economic Development Contribution to Economic Development Financing Projects, Upgrading Technological & Management Skills, Financing Projects, Upgrading Technological & Management Skills, Sharing Benefits and Risks on Equal Term without Discrimination Sharing Benefits and Risks on Equal Term without Discrimination Advantages in Enhancing Products and Output Quality, Increasing Employment & Exports Advantages in Enhancing Products and Output Quality, Increasing Employment & Exports

Tel: +98(21) Fax: +98(21) The Body in Charge Minister of Economic and Finance State Tax Organization Privatization Organization Stock Exchange Organization for Investment TreasuryBanking SystemCustoms First Deputy The Organization for Investment is the sole official authority for the promotion of foreign investments in the country and for the investigation of all issues pertaining to foreign investments. (FIPPA, Article 5)

Tel: +98(21) Fax: +98(21) The Legislation: The Foreign Investment Promotion and Protection Act (FIPPA): The Foreign Investment Promotion and Protection Act (FIPPA): – Substitutes Former LAPFI – Ratified in 2002 By Laws: By Laws: – Implementing Regulations of the FIPPA

Tel: +98(21) Fax: +98(21) Features of FIPPA: Types of Investments: Direct Investment (Equity Participation) in All Areas Open to Iranian Private Sector Investment through Contractual Arrangements (Non-Equity Forms): - Buy Back Arrangements -Civil Partnership -BOT Schemes

Tel: +98(21) Fax: +98(21) Features of FIPPA: Areas of Investment: Areas of Investment: All Areas in Industry, Mining, Agriculture, and Services: -In Greenfield Projects -In Brownfield projects and existing companies

Tel: +98(21) Fax: +98(21) Features of FIPPA: Risks Covered under FIPPA: Risks Covered under FIPPA: All non-Commercial Risks, i.e. Currency Transfer, Nationalization, expropriation, Government Intervention and Breach of Contracts by Government i.e. Currency Transfer, Nationalization, expropriation, Government Intervention and Breach of Contracts by Government

Tel: +98(21) Fax: +98(21) Features of FIPPA: Boundaries of Investment: Boundaries of Investment: No Limit on Equity Percentage, No Limit on Volume of Investments, No Limit on Profit Transfer, No Limit on Capital Repatriation No Limit on Types of Capital Imported No Import / Export Restriction

Tel: +98(21) Fax: +98(21) Features of FIPPA: Settlement of Disputes: Between Investors (Free), Between Investors and Government: Amicable Domestic Courts Ad-hoc Arbitrations ICSID (International Center for Settlement of Investment Disputes): Underway

Tel: +98(21) Fax: +98(21) Features of FIPPA: Organization: Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) Foreign Investment Board Foreign Investment Board

Tel: +98(21) Fax: +98(21) Procedure For Foreign Investor ( Phases 1 to 4 )  1. Identification and Selection of Investment Project  2. Obtaining Preliminary Permit from Relevent Iranian Organization  3. Issuance of Foreign Investment License  4. Implementing of Project

Tel: +98(21) Fax: +98(21) Features of FIPPA  Investment Licensing Procedure : Simplified, Short and Transparent Simplified, Short and Transparent Submission Of Application Submission Of Application Final License Issued Final License Issued Draft License Communicated Draft License Communicated Preparation And Submission Of a Report Preparation And Submission Of a Report Foreign Investment Board Foreign Investment Board OIETAI Max 15 DaysMax 30 Days

Tel: +98(21) Fax: +98(21) Why Invest in Iran? (Advantages): 1.Strategic Location 2. Market Potentials & Proximity 3. Labor Privileges 4. Developed Infrastructure

Tel: +98(21) Fax: +98(21) Advantages (contd.): 5. Low Utility & Production Cost 6. Abundant Natural Resources 7. Climatic Characteristics 8. Fiscal Incentives

Tel: +98(21) Fax: +98(21) Foreign investment Statistices under the Foreign Investment promotion & protection Act (FIPPA)

Tel: +98(21) Fax: +98(21) Foreign Investment under the Foreign Investment Promotion & Protection Act ( FIPPA) US$ million

Tel: +98(21) Fax: +98(21) Sectoral Distribution of Foreign Investment (1993 up to March year 2009) US$ million

Tel: +98(21) Fax: +98(21) ْ Geographical Distribution of Foreign Investments (1993 to March 2009) US$ million

Tel: +98(21) Fax: +98(21) Features of FIPPA: Treaties - Bilateral Investment Treaties (BIT) with 53 Countries, - Regional & Multilateral Treaties with Member States of Organization of Islamic Conference (OIC), Organization of Islamic Conference (OIC), Economic Cooperation Organization (ECO). Economic Cooperation Organization (ECO). - Double Taxation Treaty (DTT) with 44 Countries

Tel: +98(21) Fax: +98(21) Contents of BIT: Promotion of investments: (most-favored –nation treatment) Treatment of investment Expropriation, losses and compensation Repatriations and transfers Subrogation

Tel: +98(21) Fax: +98(21) Contents of BIT: Dispute settlement procedure Validity of the agreement: Admission and establishment, Scope and definition of investment ; …

Tel: +98(21) Fax: +98(21) International Memberships: Multilateral Investment Guarantee Agency (MIGA) since 2003Multilateral Investment Guarantee Agency (MIGA) since 2003 World Association of Investment Promotion Agencies (WAIPA) since 1998World Association of Investment Promotion Agencies (WAIPA) since 1998

Tel: +98(21) Fax: +98(21) International Co-operations: World Bank: Project for Enhancing Institutional Capacity of Foreign Investment Promotion in Iran FIAS: Assessment of Investment Environment in Iran UNIDO: Project for Capacity Building in Industrial Investment Promotion UNCTAD: Preparation and Launch of WIRs and certain other survey studies

Tel: +98(21) Fax: +98(21) Contact Information Organization for Investment, Economic and Technical Assistance of Iran( OIETAI) Address: Davar Ave. Tehran P.O.Box: 11365/4618 President of OIETAI Tel: Fax: Foreign Investment Office Tel: – Fax: Websites: s: ;