24 July 2019
IRAN: Visa Perks to Increase FDI and Joins EAEU FTA
Under the strain of US sanctions, the Islamic Republic of Iran has introduced a number of measures intended to promote more foreign investment and boost trade. On 7 July, Iranian President Hassan Rouhani approved Iran’s free trade agreement with the Eurasian Economic Union (EAEU) following its ratification by the Iranian parliament a few weeks earlier. Member countries of the EAEU are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic and the Russian Federation.
Established in 2015, the EAEU had a combined GDP of about US$1.8 trillion last year (about US$4 trillion on purchasing power parity), of which Russia accounts for US$1.66 trillion. The agreement should significantly boost trade between Iran and Russia. The law passed by the Iranian parliament contains provisions on preferential tax regulation for import and export operations, and on compiling a list of goods eligible for reduced customs duties. According to Russia’s Minister for North Caucasus Affairs, Sergei Chebotarev, Russian-Iranian trade exceeded US$1.7 billion in 2018, and the two countries have the potential to increase this significantly.
Furthermore, China indicated back in April that it was keen to sign a trade deal with the EAEU as soon as possible. Vali Teymouri, Iran's Deputy Director for Tourism Affairs, recently told the South China Morning Post that the Iranian government’s new visa waiver program for Chinese visitors – first announced in June – could be implemented as early as the end of July 2019. He said: “We believe that the two countries have had common cultural and trade communications for a long time. So we should facilitate and improve mutual collaboration, especially in the tourism industry.” China is already a significant investor in the country, and Iran hopes to substantially boost visits from Chinese tourists.
A week before the presidential announcement on the EAEU, Iranian authorities also approved five-year residency permits to foreign investors that invest more than €250,000 (US$280,000) in the country. In addition to manufacturing, investment can also be in the form of deposits in Iranian banks, purchase of stocks in the local equities market, or in real estate. The measure is first announced among a number of new regulations approved in an earlier cabinet session, and according to Iran’s Minister of Economy and Finance, Farhad Dejpassand, intended to facilitate foreign investment. More are likely to be announced in the near future.