The 2025 strategic economic plan aimed at doubling the economy from the current USD 415 billion in the next decade necessitates investments to the tune of USD 1.5 Trillion. The country thus epitomizes an untapped and fully resplendent goldmine that is fast attracting the attention of global opportunity miners. The Iranian Government’s ambitious efforts to make the country globally competitive are directed towards creating a favourable business climate for companies to enter and invest in developing its core focus sectors.
Several initiatives are being ushered in to achieve the 2025 strategic growth objective and chief among them is to discourage the dependency on oil and focus on enhancing manufacturing in non-oil sectors. The Iranian Government is planning on progressively increasing its net investment in manufacturing to USD 25.5 Billion by early 2018, USD 35 Billion by 2020, and USD 62 Billion by 2025. The Iranian Government is keen on attracting foreign investment through BOO, BOT and/or PPP modes primarily in sectors of infrastructure, downstream segments of oil & gas, mining and petrochemical projects and is encouraging joint ventures with local partners in the aforementioned sectors.
“Even as surrounding states in the Middle East witness turbulent economic conditions, Iran is mobilizing its efforts targeted at economic proliferation and this is opening up immense growth opportunities for local and foreign companies alike”, opines Y.S. Shashidhar, Managing Director, Middle East, North Africa and South Asia, Frost & Sullivan. “Value added manufacturing growth has been identified as the key to the country’s economic transformation resulting in the Iranian Government undertaking measures to facilitate inflow of investments and technology while industries strive to metamorphose their capabilities and processes to achieve the set goal", added Shashidhar.
The 2025 strategic development plan identifies core industries that the Iranian Government shall focus on for development given their potential to be significant contributors to the GDP. These core sectors are Petrochemical Products, Mining and Minerals along the industry value chain including plastics, metals and minerals, Foods and Beverages, Pharmaceuticals, Industrial Machinery and equipment, Home Appliances, Textile and Apparel, Ground Vehicles, Rail, and Maritime, Rubber, and Power Generation and Transmission.
The Iranian Government plans to increase the capacity of its core industries within the next 10 years through a slew of measures which include:
- Enhancing productivity through adoption of advanced and world-class technologies
- Focus on innovation-driven manufacturing
- Diversifying its economy from O&G to focus on high value-adding downstream segments
- Increase the contribution of medium and high technology manufacturing to overall manufacturing and
- Enhance export contribution to over 30% of domestic production.
- Set up joint venture manufacturing plants in the region to decrease the cost of export and make an easier access to the global market
This emphasis on manufacturing growth has opened avenues for global companies and investors to participate in Iran’s economic momentum as providers of technology, finance and manufacturing process enhancement support.
Frost & Sullivan’s research indicates that across all of the core sectors, technology up-gradation is observed to be of utmost priority. To achieve this, the Iranian Government is encouraging global companies to partner with local companies through technology sharing and support in developing design and engineering in industrial facilities and the infrastructure sector. Access to finance is another equally critical requirement. The Iranian Government and local industry understand the imperative in inviting investments to kick-start stalled projects and also spur activity through new project announcements to meet the 2025 development plan targets. Besides technology and finance support, the local industry also evinces need for process enhancements to their manufacturing facilities and this is another huge opportunity area for global majors to enter through partnership.
Frost & Sullivan with its global industry expertise and suite of strategic consulting services encompassing technology advisory, market intelligence, investment strategy consulting, manufacturing and supply chain assessment and advisory, technical and market due diligence assessment including implementation services is well positioned to assist foreign companies keen on understanding and tapping opportunities in Iran as well as being the growth partner for local companies.
Besides the boost to manufacturing, the Iranian Government has also increased the share of tax revenues in its annual budget to decrease dependence on the O&G sector. Currently, tax revenue accounts for 6% of the total GDP; it is forecast to reach more than 16-18% by 2025. Further efforts are underway to create and adopt sustainable employment policies and environmental practices for conducive investments and work environment. The country is also endorsing its International trade developments through liaising with foreign companies by leveraging WTO membership to increase the share of global trade and FDI into the country.
In over 45 offices across the globe with more than 1,800 analysts and consultants on ground, Frost & Sullivan brings in expertise on the most extensive range of industries like Automotive and Transportation, Chemicals, Materials and Foods, Electronics and Security, Energy and Environment, Healthcare, Information and Communication Technologies, Industrial Automation and Process Control, Manufacturing and Process Consulting, Metals and Minerals, Customer Research Management and the Public Sector.
To know more about Frost & Sullivan Perspective on Iran’s Macroeconomy and Opportunities across Industries for Global Companies – A Goldmine of Opportunities click on the link http://corpcom.frost.com/forms/Iran_GoldMine_Opportunities or how Frost & Sullivan can be the partner for your Iran plans, please get in touch with our Corporate Communications Team, send an email to Ravinder Kaur/ Anita Chandhoke at firstname.lastname@example.org/ email@example.com with your full name, company name, title, telephone number, company e-mail address, company website, city, state, and country.
The study was undertaken by the Innovation and Knowledge Center (IKC), which is the fundamental intelligence hub of Frost & Sullivan’s consulting and strategy consulting business in the Middle East, North Africa, and South Asia. It consolidates all forms of analysis including technical, application-related, economic, financial, and market under a single umbrella. In addition to creating comparative studies for countries such as the attractiveness index, the economic research arm of IKC has a portfolio of products, which can aid a market player to understand the impact of various macroeconomic forces and make the best of them in a business environment. Some of these enablers are country profiles, multi-country comparative studies, PESTLE analysis, and impact analysis of global economic and political developments, investment trackers, and economic pulse monitors.
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