Vaqef Behruzi last week said that statistics developed by the United Nations Conference on Trade and Development (UNCTAD) show that Iran drew $3.016 billion in foreign investment in 2009. more than all but five other countries in the entire world.
UNCTAD’s tabulation does, indeed, show Iran attracting $3.016 billion in foreign investment in 2009. However, that ranks Iran an unimpressive 53rd in the world, not sixth as Behruzi proclaimed.
Foreign investment in Iran in 2009 came to just 0.27 percent or 27/100ths of 1 percent of foreign investment around the world that year.
But UNCTAD’s figures show that Iran attracted more foreign investment last year than in any other year but one and ended a drought that began after President Ahmadi-nejad took office in 2005.
By UNCTAD’s figures, Iran attracted the most foreign investment in 2002, a total of $3.7 billion. In 2005, the total was $3.1 billion. But it then halved to $1.6 billion in each of the next three years before almost doubling to $3.0 billion in 2009. Iranian officials, in the meantime, were claiming foreign investment exceeding $10 billion in each of those years.
The UNCTAD numbers need to be compared with the figures recently given by Oil Minister Masud Mir-Kazemi, who says Iran needs $25 billion a year in investment—both from foreign and Iranian investors—just to keep the oil and gas industry at current production levels and $40 billion a year to carry out development plans.
Mir-Kazemi last week indicated his dismay with foreign investment by announcing that the development of the South Pars gasfield would be completed exclusively with domestic financial resources. He said about $50 billion is required to complete the South Pars development.
According to the UNCTAD statistics, Iran was outshone in attracting investment not only by major powers but also by Sudan ($3.034 billion), Vietnam ($4.5 billion), Lebanon ($4.8 billion), Egypt ($9.5 billion) and even the Cayman Islands ($12.9 billion) and the British Virginia Islands ($25.3 billion).
In the region, Iran was outdone by Turkey ($7.6 billion), Qatar ($8.7 billion) and Saudi Arabia ($35.5 billion).
The most popular country for foreign investors to send their money to remains the United States, whose economy, according to President Ahmadi-nejad, is collapsing. The United States absorbed $129.9 billion in foreign investment in 2009 or 12 percent of all the foreign investment in the world that year.
The Iranian government telegraphed its concerns about flagging foreign investment in June when the Central Bank said it would give all foreign investors a guaranteed return of 10 percent on their investments.
The offer appeared to be an especially desperate attempt to attract foreign capital, which has been slow to come. In fact, statistics from the European Union show that its 27 member states have recorded a net disinvestment from Iran, that is, selling off existing investments and leaving the country in excess of the volume of new investment entering the country.
American residents, citizen and non-citizen alike, have been barred by US law from investing in Iran since 1995. What investment is entering Iran appears to be coming largely from Asia.
Back in June, Central Bank Governor Mahmud Bahmani said, “Iran will pay a guaranteed 10 percent interest on foreign investment.… The Central Bank and Ministry of the Economy will guarantee the return of the principal and a capital profit.” Nothing further has been heard about this plan since then.
As described by Bahmani, that is an offer no investor could resist. It would be risk-free. If the principal is guaranteed, no investor could lose his capital, although that violates the basic principal of capitalism—that one has the possibility of a great profit, but also the risk of a great loss.
The report on Bahmani’s statement did not make clear if the guaranteed return of 10 percent would be calculated on the rial value of the investment or on a foreign currency. If the rial is the basis, a 10 percent guarantee would not assure any real profit since the rate of inflation has only rarely dipped below 10 percent in the last three decades and was briefly as high as 30 percent under President Ahmadi-nejad. It is currently around 10 percent.