IRAN BACKGROUND

By virtue of its size, location, and distinctive cultural orientation, Iran qualifies for a special position among the nations of Southwest Asia. Iran market is huge and considering Iran investment opportunities, it is the largest after Saudi Arabia, and second only to Turkey in population. As an imperial power since the 16th century, it has been an important factor in the Middle East, and with increased involvement of the western powers in the Persian Gulf, it is likely to play a significant role in the politics of the region.

Iran situation is unique in many ways, and quite distinct from the Arab nations. The adopted official language of the nation is Farsi or Persian.

Iran (formerly known as Persia) has a long and rich history. Traces of the world’s most ancient settlements have been found in the Caspian littoral and in the interior plateaus; village life probably existed there before 4000 B.C. The Aryans came into Iran about 2500 B.C. and split into two main groups, the Medes and the Persians.

The first known period of glory goes back to the 6th century B.C. when Cyrus the Great founded a large well-organized empire that included much of modern Turkey, Iraq, Syria, Jordan, and Afghani­stan. The 2,500th anniversary of his empire was celebrated with great pomp in 1971 at Persepolis. After Cyrus, a succession of Greeks, Parthians, and the Sassanids ruled the country.

The Arab invaders occupied the capital, Ctesiphon, in 641 and brought Islam to Persia, and it was in Persia that the Shiite sect was developed. The Turks included Persia as one of the Turkish states in the 10th century, and were followed by the Mongols in the 13th century. Persia again reached great heights under Shah Abbas who ruled from 1588 to 1627.

Under him the society prospered through commerce and trade, and political
ties were developed with several countries of Europe and Asia. He built several public buildings, gardens, mosques, bridges, and roads throughout the country. The capital city of Isfahan under him was adorned with Persia’s finest and most graceful buildings and gardens, and became one of the most splendid cities of the world. Later, during the Zand dynasty in the 18th century, Shiraz was made the capital, and several fine buildings were constructed there.

Following the Zand dynasty, the country steadily lost territory to neighboring countries and fell under the increasing pressure of European nations, particularly Czarist Russia. Iran was forced to give up its Caucasian region in the northwest to Russia, and the city of Herat in the east to Afghanistan. A series of campaigns to reclaim the lost territory in the east ended with the intervention of the British and re­sulted in the recognition of Afghan independence in 1857.

The discovery of oil in the early 1900s intensified the British- Russian rivalry for power over the nation that culminated in an Anglo-Russian agree­ment (revoked later by Iran) dividing Iran into spheres of influence. The designs of Czarist Russia and the British Empire thus clashed in Iran.

Iran market was always important and growing as a major oil producer in the 20th century further highlighted the significance of its geographical position. Although Iran’s importance as a vital link in the east-west land route had by then substantially de­clined, Russia’s desire to move into the warm waters of the Persian Gulf and the Gulf of Oman remained a primary concern, at least until World War I, and Russia continued to interfere in the internal af­fairs of the country.

In the aftermath of World War I, the administration of the chaotic Iranian nation was overthrown by Reza Khan (later, Reza Shah) Pahlavi who abrogated the previous treaties with the British, reorganized the army, and introduced many reforms, somewhat similar to those carried out in Turkey under Ataturk.

By the early 1940s, the Reza Pahlevi’s administration had grown dictatorial, and Britain again intervened (with the assis­tance of the U.S.) in the administration, partly to deny German access to the east, and partly to handle the delivery of war supplies to its ally, Russia. In 1943, the Declaration of Tehran which was signed by the U.S., Britain, and the U.S.S.R., guaranteed the territorial integrity of Iran.

However, the U.S.S.R., dissatisfied with the refusal of the Iranian government to grant oil concessions, fomented a revolt in the northwest, which led to the estab­lishment of the People’s Republic of Azerbaijan, and the Kurdish People’s Re­public. In 1951, the oil industry was nationalized, and the National Iranian Oil Company was formed.

By the 1960s, the U.S. had become actively involved and Iran received substantial economic and military aid from the United States, and undertook a broad program designed to improve the economic and social condi­tions of the masses. Substantial industrial and commercial development followed during the 1960s and 1970s until the over­throw of the Shah government in 1979.

By the late 1970s, the masses were seething with discontent under the harsh rule of the government. Millions had flocked to the cities and oilfields for em­ployment, but failed to find adequate housing and service, and were cut off from family, friends and the traditional lifestyle of their villages. The Shah held absolute power, and paid little attention to widen­ing political participation and democratiz­ing the administration.

Many were dissatisfied with the erosion of spiritual values, and the religious leaders whose role in society had been sharply reduced in the emerging Western­ized social order, finally demanded an abolition of the monarchy and a return to spiritual traditions. Support for the Shah quickly vanished.

Due to Iran situation, the Shah, no longer able to rule effectively and under mounting pressure, left the country in 1979 paving the way for establishment of a new ad­ministration. Iran now sought to identify with the fundamentalist tradition of Islam, and quickly revamped the civil and legal codes of the administration to conform to strict scriptural injunctions of the Muslim faith.

Economy Of Iran

About 10% of the land in Iran is arable; agriculture contributes just over 11% to the GDP and employs a third of the labor force. If we look into different businesses in Iran, especially in the food; the main food-producing areas are in the Caspian region and in the valleys of the northwest. Wheat, the most important crop, is grown mainly in the west and northwest; rice is the major crop in the Caspian region. Barley, corn, sugar beets, fruits (including citrus), nuts, cotton, dates, tea, hemp, and tobacco are also grown, and livestock is raised. Illicit cultivation of the opium poppy is fairly common.

The principal obstacles to agricultural production are primitive farming methods, overworked and under fertilized soil, poor seed, and scarcity of water. About one third of the cultivated land is irrigated; the construction of multipurpose dams and reservoirs along the rivers in the Zagros and Elburz mountains has increased the amount of water available for irrigation. Agricultural programs of modernization, mechanization, and crop and livestock improvement, and programs for the redistribution of land are increasing agricultural production.

The northern slopes of the Elburz Mountains are heavily wooded, and forestry products are economically important; the cutting of trees is rigidly controlled by the government, which also has a reforestation program. In the rivers entering the Caspian Sea are salmon, carp, trout, and pike; the prized sturgeon (and caviar) of the Caspian Sea have been hurt by pollution and overfishing.

Of the variety of natural resources found in Iran, petroleum (discovered in 1908 in Khuzestan province) and natural gas are by far the most important fields to Iran market and this is considered as biggest investment opportunity in Iran. Oil accounts for 80% of export revenues. The chief oil fields are found in the central and southwestern parts of the Zagros Mts. in W Iran. Oil also is found in N Iran and in the offshore waters of the Persian Gulf. Major refineries are located at Abadan (site of the country’s first refinery, built 1913), Kermanshah, and Tehran. Pipelines move oil from the fields to the refineries and to such exporting ports as Abadan, Bandar-e Mahshahr, and Khark Island. Domestic oil and gas, along with hydroelectric power facilities, provide the country with power.

Iran market is huge and hence Iran marketing is important. Textiles are the second most important industrial product; Tehran and Esfahan are the chief textile-producing centers. Iran business is not limited to above listed fields, other major industries are sugar refining, food processing, and the production of petrochemicals, cement and other building materials, and machinery. Iron and steel and fertilizer are also produced. Traditional handicrafts such as carpet weaving and the manufacture of ceramics, silk, and jewelry are important to the economy as well. All above items are considered as Iran investment opportunities.

Besides crude and refined petroleum, Iran’s chief exports are chemical and petrochemical products, fruits, nuts, carpets, hides, and iron and steel; its chief imports are industrial raw materials, capital goods, foodstuffs, consumer goods, technical services, and military supplies. Iran’s chief trading partners are China, Japan, Germany, Italy, and South Korea. Khorramshahr is the country’s chief general cargo port; Bandar-e Anzali is the chief Caspian port.

Industry & Mining Of  Iran

Overview
Steel, weaving, food processing, car, electrical and Electronics Industries are among the key industries in the country.Iran now produces a wide range of manufactured commodities, such as telecommunications equipment, industrial machinery, paper, rubber products, steel, food products, wood and leather products, textiles, and pharmaceuticals. Iran is also known throughout the world for its hand-woven carpets. The traditional craft of making these Persian rugs contributes substantially to rural incomes and is one of Irans’ most important export industries

The pharmaceuticals, paper, sugar, packaging, and textile segments have been identified as key growth areas of the industrial sector by the Industrial Development & Renovation Organization of Iran.
Industrial output continued to grow into 2012, buoyed by the strong mining and steel sectors. Advances in aerospace and agri-business are also firming up the manufacturing sector.

Automotive
• Iran produced 1.4 million cars from 2Q2011 to 1Q2012. Total sales, including imported and domestically produced vehicles, totaled $18.8 billion.
• A booming auto industry requires a booming auto parts industry. Iran has just that. Now supplying much of the industry’s needs, producers are ramping up exports.

Mining
Iran is rich not only in oil and gas, but in mineral deposits’, as well. Iran has the world’s largest zinc reserves and second-largest reserves of copper. It also has important reserves of iron. Uranium, lead, chromate ,manganese, coal and gold .In addition to the major coal mines found in khorasan razavi,kerman,semnan,mazandaran,and gilan, a number of smaller mines are located north of Tehran and in Azarbayjan and Esfahan provinces.
Deposits of lead, zinc and other minerals are widely scattered throughout the country. The mines at sar cheshmeh in Kerman province contain the world’s second largest lode of copper ore. The government owns %90 of all mines and related large industries in Iran and would like To attract foreign investment for the development of the mining sector. As per Article 44 of Constitution of Iran, the government has been actively promoting the privatization of all mines.

 Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) is the major state-owned holding company.
Although 90% of the country’s mines and related large industries are in state hands; the government has stated its intention to further develop the sector through private and foreign investment. Minerals targeted for investment include aluminum, copper, and iron ore. By the end of the current Five-Year Development Plan (FYDP), which began in 2010, the government expects to boost the mining sector’s contribution to GDP to 1.2% as well as boost total mineral production to 500 million tons. With 12% of the Persian Gulf region’s aluminum reserves, the implementation of development projects could boost production to 1.5 million tons by 2025 and turn Iran into one of the top 10 producers in the world. The private sector is also being mobilized to get the mining sector to work with modern equipment.

• There are approximately 5,000 mines in operation in Iran, with 12 metals and 36 non-metal ores currently being exploited.
  • Increased investment and private sector involvement will see mineral production increase in the coming years as modern machinery and equipment are put to use.
  • Iran is one of the top 10 global producers of iron ore, with over 35 million tons of output per year.
  • Iran’s precious stones have become an object of admiration for onlookers as well as a profitable industry for the country as it aims to diversify its economic strengths.
  • As one of the 15 most mineral-rich countries in the world, Iran enjoys export links with 159 countries, including Iraq, China, the UAE, India, and Afghanistan. Mining products represent over 30% of the country’s non-oil exports, and the sector also employs 100,000 people directly and up to half a million indirectly.
  • Developments in the country’s base metals segment, including copper, aluminum, zinc, and lead, also continued over the last 12 months. Iran has the world’s biggest zinc reserves, second largest copper reserves, and ninth largest iron reserves.
  • Iran is also rich in zinc and lead, with over 220 million tons of proven reserves. Production remains below 200,000 tons for zinc and lead, with just under half exported.

Investment Facilities
%80 of the income from producing and mining activities ,which is derived and declared by producing  and mining enterprises of cooperatives of private sectors of whom exploitation licenses are issued , or with whom extraction and sale contracts are concluded, from the beginning of the year 2002,on words by relevant ministries ,shall be exempt from the tax set forth in the article 105 here of for a term of 4 years beginning from the date of exploitation or extraction the less developed regions ,the exemption shall apply to %100 of the income for a term of years.