INSIGHT IRAN

2016

1

Table of Contents

Strategic Position ................................................................................................................................. 2

Status in MENA .................................................................................................................................... 2

Why invest in Iran ................................................................................................................................. 2

Human Capital ..................................................................................................................................... 3

Economic Advantages ......................................................................................................................... 3

Iran Ranking ........................................................................................................................................ 4

Iran - Export and Import ...................................................................................................................... 5

Economy of Iran ................................................................................................................................... 6

Oil and Gas ....................................................................................................................................... 6

Mining ................................................................................................................................................. 7

Petrochemicals ................................................................................................................................. 8

Iran Macro Overview 2014 .................................................................................................................. 9

How can we help? .............................................................................................................................. 10

Sources ................................................................................................................................................ 11

2

Strategic Position

Islamic Republic of Iran with an area of 1،648،196 sq.km has been located in South- West Asia. The

country neighbours with Turkey and Iraq in west, Afghanistan and Pakistan in East, Armenia,

Azerbaijan, Russia, Kazakhstan and Turkmenistan in North and Kuwait, Saudi Arabia, Qatar, Bahrain,

United Arab Emirates and Oman in South through Persian Gulf and Oman Sea. The country is regarded

as one of the richest countries in hydrocarbon reserves, so that it ranks the second for gas reserve and

its export as well as the second for exporting crude oil in the world.

Status in MENA

Why invest in Iran

Iran is a new export market in the content of its foreign investment promotion program following lifting

of sanction in 2016.

After a 9 percent contraction over the previous two years, interim sanctions relief and prudent policies

eased constraints on trade and financial transactions, improved economic activity, and lowered inflation

in 2014/15.

Although the decline in oil prices has negatively affected economic activity in 2015/16, the

comprehensive agreement between Iran and the P5+1, if implemented successfully, should improve

Iran’s external environment and economic performance substantially going forward. i

2nd largest economy in the MENA after Saudi Arabia

2nd largest population in the region after Egypt with an estimate 78.14 million individuals in 2014

3

Human Capital The number of students has increased from 170,000 students in 1979 to 4,350,000 million in 2014.

About 700,000 students graduate from universities annually. Total of Iranian students in universities are

4,400,000 that 1,920,000 of them are women.

With the presence of 40 industrial sectors in its stock exchange, Iran has one of the most diversified

industries in the Middle East and North Africa. High diversity in mining and hydrocarbon reserves, large

oil and gas reserves and capacity to exploit wind and solar power, have given Iran a unique position.

According to the 2015 World Bank statistics, the GDP of Iran will increase to more than 6.5% in 2017

and will remain higher than 6% till 2018.

Economic Advantages

Iran is the 18h largest economy in the world by Purchasing Power Parity (PPP).

Iran holds some of the world's largest deposits of proved oil and natural gas reserves, ranking as the

world's fourth-largest and second-largest reserve holder of oil and natural gas, respectively. Iran also

ranks among the world's top 10 oil producers and top 5 natural gas producers

-1.9

4.3

1.9

5.86.7

6

-4

-2

0

2

4

6

8

2013 2014 2015e 2016f 2017f 2018f

Real GDP Growth (%)

Developing Middle East and N. Africa World Iran, Islamic Rep.

Human Capabilities

Strategic Position

Developed Infrastructure

Economic Advantages

Market Potentials and Proximity

Investment Incentives and Advantages in Free and Special Economic Zones

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Petroleum, Gas, Petrochemical, 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 Ranking

7th main producer of total Petroleum & other liquid

4th largest Zinc resources in the world

4th largest Copper resources (5% of the world’s total)

3rd OPEC Crude Oil producer

2nd largest Natural Gas reserves (16% of the world’s total)

5

Iran - Export and Import

In 2014 exports from Iran amounted to US$64.2 billion, down 23.4% since 2010. Iran’s top 10 exports

accounted for 96.9% of the overall value of its global shipments. Based on statistics from the

International Monetary Fund’s World Economic Outlook Database, Iran’s total Gross Domestic Product

was $1.354 trillion in 2014. Therefore, exports accounted for about 4.7% of total Iranian economic

output.

Prior to the nuclear sanctions Iran had a great partnership with strong industries such as Germany,

France and Italy. Since 2011 and following the increase of sanctions impacts, Iran concentrated on

China as a business partner. The economists predict that with the after-sanction boost in the economy

Iran will be back into the path of doing business with its European partners. As the local market was

abundant in the last few years, there is a great potential for the global manufacturers and investors to

play a key role in the new chapter of the business relationship between Iran and West.

Considering the impacts of the recent resection, the high inflation rate and Iranian low purchase power,

specialists see a higher potential for investment in infrastructures and strategic industries rather than

importing consuming goods. Therefore, Oil and Gas, Mining and Petrochemicals are the main targets

for the foreign investors in order to enter the local market of Iran.

28%

24%11%

10%

9%

6%

6%

2%2% 2%

TOP 10 IMPORTING COUNTRIES 2014

United Arab Emirates China India

Korea Turkey Germany

Switzerland Netherland United Kingdome

Italy

29%

23%14%

9%

9%

6%

3%3% 2%

2%

TOP 10 EXPORTING COUNTRIES 2014

China Iraq United Arab Emirates

Netherland Afghanistan TurkeyTurkmenistan Pakistan EgyptAzerbaihan

17%

15%

10%

10%10%

8%

8%

8%

7%

7%

TOP 10 IMPORTING COUNTRIES 2001

Germany United Arab Emirates Italy

Russia France Brazil

South Korea China Japan

United Kingdom

25%

14%

11%9%

9%

8%

7%

7%

6%4%

TOP 10 EXPORTING COUNTRIES 2001

United Arab Emirates Germany

Japan Azerbajan

Italy India

China Ukraine

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Economy of Iran

Oil and Gas

Iran's crude oil sales to Europe after the lifting of international sanctions on Tehran had already reached

above 300,000 barrels per day (bpd).ii

Iran holds the world’s fourth largest oil reserves, with 157 billion barrels of crude oil. It also holds the

world’s second largest natural gas reserves, behind Russia, with 1,193 trillion cubic feet of natural gas.

It is home to the South Pars field, the largest natural gas field in the world.

Iran produced around 2.8 million barrels of oil per day in March 2015. Oil production averaged 3.379

million barrels per day throughout 2014.Iran exported around 1.1 million barrels per day in March 2015,

down from 2.2 million at the beginning of 2012. China, India, Japan, Korea, and Turkey are the

top importers of Iranian liquid fuels.

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Mining

There are approximately 5,000 mines in operation in Iran, with 12 metals and 36 non-metal ores

currently being exploited. Increase in foreign investment and private sector involvement will lead to an

increase in mineral production 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 .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. Iran has some of the world’s richest copper and aluminum 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.

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.

1450

850

750 750

300

1300

0

200

400

600

800

1000

1200

1400

1600

Sand a& Gravel Decorative Stone Riprap Limestone Gypsum Stone Other Minerals

Number of Mines under Utilization 2013

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Petrochemicals

Of all the country’s export sectors, petrochemicals is expected to get the quickest boost in 2016. Iran is

looking for US$85 billion in investment for its petrochemicals sector and aims to increase production by

a third in the following year.

The government’s National Development Fund of Iran has already committed $5bn to the sector, and

a further $2.5bn is needed to boost production from 45 million tons annually to 60 million tons, according

to the National Petrochemical Company (NPC).

According to the reports, in first-quarter 2015, Petroleum Oils forms 68% of the country’s top

petrochemicals exports with the value of $270,900. Iran ranks polyethylene (HS 390110 and HS

390120) second by value among the country’s exports, accounting for about 5 % of all Iranian exports.

Petroleum Oils (crude)68%

Polyethylene w/specific gravity

≥0.945%

Methanol (methyl alcohole)

3%

Iron Ore Concentrates (ex roasted pyrites)

3%

Polyethylene w/specific gravity

<0.942%

All others19%

Iran's top Exports in first quarter 2015

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Iran Macro Overview 2014

GDP $406.3 bn

GDP real growth rate 4.3%

GDP per capita (PPP) $15.610 (2013)

GDP (composition by sector) Services 45%

Industry 44%

Manufacturing 11%

Agriculture 10%

Labour force 49.0%

Labour force by occupation Services 34.0%

Manufacturing 17.0%

Agriculture 11.4%

Merchandise Exports FOB $ 88.8 bn

Merchandise Imports CIF $ 51 bn

Value of Petroleum Export $ 53.6 bn

Population 78.14 m

Income Level (by per capita) Upper Middle Income

Unemployment rate 12.8%

Life expectancy at birth 76

Inflation Rate 17.2%

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How can we help?

Already in its first month, the year 2016 has brought enormous economic and political changes that will

of course influence the political and economic environment we work and operate in.

Our country has been entrusted with an enormous responsibility as the guarantor of peace and

economic development in the Middle East region.

We pledge to do our best to promote and increase mutual understanding across the nations through

our trade relations everywhere.

Pars Sky Investment Trading PJSC

Pars Sky Investment Trading PJSC a privately owned independent Investment Trading specializing in

offering custom tailored services to manufacturers, entrepreneurs, private and institutional international

investors to assist them start a business with Iran.

As an affiliation of Swiss based TransInvest Group, we have established this company with the purpose

of helping manufacturers get into Iran’s emerging- frontier market. We are working with a team of

professionals whom are internationally trained. Our partners are financiers, industrialists and

transporters. They not only have international finance and business experiences but are also expert in

Iran's dynamic market and its sectors (Oil and Gas, Industry and Mining, Petrochemicals and

Transportation).

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Sources

Word Bank Data

International Monetary Fund Data (IMF)

Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIM)

The Islamic Republic of Iran Customs Administration (IRICA)

Trade Promotion Organization of Iran

National Iranian Oil Company (NIOC)

Mines and Mining Industries Development and Renovation Organization (IMIDRO)

The National Petrochemical Company (NPC)

i IMF International Monetary Fund ii http://www.reuters.com/article/us-oil-iran-sales-idUSKCN0VF0NE