May 13, 2016
Davud Khani, the deputy head of Iran’s Privatization Organization, has announced that foreign investors may now buy 100 percent of the shares of state-owned firms, the state news agency reported Sunday.
This is a very dramatic change as foreigners have been limited to 49 percent ownership of Iranian companies since long before the revolution.
Some saw the shift as a rather desperate effort to attract foreign investment, which has not been going well since sanctions were lifted. Foreign firms are showing great interest in selling to Iran, but not in investing in Iran.
Others, however, see the new policy as recognition that investment is severely restrained by the fear foreigners have of getting involved with a company partly owned by the Pasdaran or others under American sanctions.
By purchasing 100 percent of an Iranian company, a foreign investor will be guaranteed the Pasdaran are not involved.
US sanctions can be imposed on any foreign firm that is involved in business with the Pasdaran or any other Iranian entity that is sanctioned for human rights violations, missile work or terrorist involvement.
The lack of transparency about ownership in Iran makes foreigners leery about buying a part of an Iranian business.
The Iranian government envisioned a large privatization program in the Fifth Five-Year National Development Plan (2010-2015), aiming to privatize about 20 percent of the state-owned firms each year. That goal was not achieved and many firms remain to be sold off.
