Cumbersome Foreign Investment Rules Need Reform
EghtesadOnline: The Foreign Investment Promotion and Protection Act (FIPPA) requires major procedural revision, according to a new study carried out on the order of the Tehran Chamber of Commerce, Industries, Mining, and Agriculture.
FIPPA was ratified in 2002 by Parliament with the aim of enhancing and facilitating foreign investment in Iran.
The study, dubbed "an Evaluation of Iran's Foreign Investment Promotion and Protection Act," is the report on the third, and last phase of a bigger project titled "a Comparative Study of Foreign Investment Laws of Iran and Selected Countries," which was undertaken to diagnose, and help cure policy-related shortcomings of foreign investments in the expectation that foreign capital would flow in after g the conclusion of the nuclear deal Iran signed with world powers in 2015.
One of the key issues raised by the study is that easing investment procedures are key to facilitating foreign investments, and it is precisely these factors that have been overlooked in present cumbersome foreign investment regulations, Financial Tribune reported.
The current laws on foreign investment require prospective investors to apply to the Organization for Investment, Economic, and Technical Assistance of Iran (OIETAI) for a license. OIETAI is the only authority with the mandate to promote foreign investments, according to FIPPA.
The organization reviews the applications within 15 days from the date of the reception of the application and submits it to the Foreign Investment Board, which is comprised of deputy minister for economic affairs and finance, as the ex-officio president of the organization, deputy foreign minister , vice president of the state management and planning organization, deputy chief of the central bank, and, in some cases, deputy ministers of other ministries.
The board scrutinizes the applications within a month from the date of the reception of the applications and investment licenses are issued after the written approval of the board and confirmation by the economy minister.
The procedure of procuring a foreign investment license in Iran, although it may seem fine on paper, is in need of revision, among which the following are vital, according to the research.
First, it is said in FIPPA that investors must submit their application, together with the required documents, in writing. It is not clear whether the submission is done online or in person.
Second, it is unclear whether the Foreign Investment Board's rejection of an application, for whatever reason, is explained to the applicant, and whether the explanation is formal and delivered.
Although the comprehensive report points to problems in other parts of the procedure, such as being long-haul, cumbersome, seldom revisited and inefficient, it contends that if the current organizational forms are to be maintained, creating a clear-cut online system and providing rejected applicants with convincing formal explanation are inevitable.