Economist: Expats’ investment vital to spur economy

Financial Tribune – Untying the Gordian Knot of unemployment is no easy task. That’s what all officials and analysts say.

As 700,000 jobs are created in the Iranian economy annually, around 500,000 job-seekers enter the market on a yearly basis, undermining the government’s job-creation efforts.

Experts believe it is beyond the capabilities of Iranian economy to create more than 700,000 jobs a year. Yet, the solution arguably lies in attracting foreign capital.

The advantages and disadvantages of making an investment in Iran are galore. Despite all the untapped potential and pent-up demand in Iran, foreign investors grow disheartened when they encounter unprepared infrastructures, outdated rules and strict regulations.

Under the circumstances, Zahra Karimi, university professor and economist, says renewing the confidence of Iranian expatriates to channel their money into the country would be a solution to economic woes, including unemployment.

“Some Iranian emigrants are among the wealthiest people in the world. Their aggregate wealth ranges between four and 10 times Iran’s gross domestic product, which is $450 billion,” she told the Persian daily Shargh.

Referring to the study she is conducting in conjunction with the Majlis Research Center on the role of investments by Iranian expatriates, Karimi said the findings have proved that emigrants play a decisive role in boosting foreign direct investment.

“Up to six million skillful Iranians, including many entrepreneurs, are working in various technological fields in European and North America countries as well as other advanced nations. What Iran needs is their experience. In addition, their wealth is estimated to hover between $2 trillion and $4 trillion,” she said.

“This is while most of them feel a strong attachment toward their home country and would invest in Iran if they feel secure and confident. Their investment would pave the way for foreign direct investment of others.”

Advantages of Expats’ Investment

On the necessity of attracting investments by Iranian emigrants, the economist cites different reasons.

“First, they know Farsi and can establish communication easily. Second, they have relatives and friends who can create valuable communication channels for them. Third, they have their finger on the pulse of European markets and know what technologies should be adapted in Iran,” she said.

“Many of them are business owners and have the knowledge of rules and regulation in Iran and the ways to solve legal or illegal problems. Therefore, investment risks are fewer for them than for foreign companies. In addition, when a foreign company starts business in Iran, they prefer to enjoy the expertise of Iranians who have lived and worked abroad. Finally, Iranians will act as the bridge linking the economy of their origin country and the world.”

The university professor noted that there is a serious leaning toward attracting financial and intellectual capital of Iranians residing abroad.

A parliamentary group, including 100 representatives, has been formed to help facilitate the inflow of expats’ investments.

The Ministry of Foreign Affairs has also established an office to improve interactions between Iranians living home and abroad.

Today, Iran needs a transparent, reassuring business environment to embrace foreign capital. But the executive branch of the government alone cannot create such an environment.

“All three branches of power, namely executive, judicial and legislative, as well as organizations and decision-making institutions of the country should join hands to change the condition. All executive and judiciary organizations should work in harmony to create a secure situation for the economic involvement of Iranian emigrants,” she said.

Karimi provided an example of Chinese policy toward Taiwan, which separated from mainland China once the communists took power and advised Iranian officials to take a page from other countries’ book.

China adopted a conciliatory approach toward Taiwan and pushed through a number of cooperative policies once it understood that the country should attract foreign capital to prosper.

“Those in power should not allow the negative growth of investment to continue any further. Other countries, which were lagging behind Iran in the 1970s, are making major advancement,” she said.

Asked about the reasons behind objections with the involvement of expats, Karimi said groups that have a lucrative monopoly on the economy are against engagement of independent individuals and the private sector.

She noted that decision-makers need to come to the understanding that economic development is unlikely to occur in the absence of private sector’s investments.

“China’s experience shows that instead of undermining the establishment, opening up an economy to foreign capital will work to empower the country,” she said.