Iran's domestic economic issues, marked by fragmented growth and the dominance of powerful "mafias," are deterring investment, according to Sirous Talari, a board member of the Iranian & Foreign Joint Venture Investments Association (IFJIA).
"The economic mafia in this country swallows all resources, infiltrating every industry," Talari told the state-affiliated ILNA news agency, emphasizing that these internal challenges, alongside international sanctions, are significant barriers to private sector investment.
Talari also pointed out that while some Afghan nationals are making relatively small investments between $200,000 and $15 million, "they are doing so primarily to secure residence permits in Iran." He added, "Beyond these cases, we have not seen significant demand for larger or more substantial foreign investments in Iran.”
Up to 80 percent of Iran's economy is controlled by the state, in conjunction with the religious establishment. This has bred nepotism, inefficiencies and corruption at all levels. At the same time US economic sanctions have handicapped oil exports and international banking relations, drastically reducing the government's revenues from foreign trade.
In recent years, the Financial Action Task Force (FATF), an international financial watchdog, has blacklisted Iran for failing to meet transparency standards and prevent money laundering and terrorism financing.
However, in May, Mohammad Khazaei, Secretary-General of the Iranian Committee of the International Chamber of Commerce (ICC), acknowledged that while issues like FATF are important, they are not the only obstacles to foreign investment in Iran.
According to the United Nations Conference on Trade and Development (UNCTAD), Iran attracted only $1.5 billion in foreign direct investment in 2022.
During Iran’s presidential debates in June, President Masoud Pezeshkian argued that Iran's international isolation must end and that foreign investment is essential for economic improvement.
Pezeshkian emphasized that Iran needed $200 billion in foreign investment to pull its battered economy out of a crisis that has worsened in the past six years.
However, according to Talari, Pezeshkian's administration may face significant challenges in achieving these goals, noting that they "cannot be implemented in the short term."
