The interest for Islamic finance spreads across the world.

The interest for Islamic finance spreads across the world. What can be the role of Iran in this international process?

Not a long time after the Islamic Revolution in 1978, the economic structures were established on the basis of Islam and Shi'a religion criteria and following it, the necessary laws were compiled and ratified in order to make the Islamic economy mandatory. Ratifying laws such as "interest-free banking law" which have come into force from 30 years ago, regardless of the level of their compliance with the indisputable religious criteria, has paved the way for comprehensive implementation of Islamic economy, and attraction and employment of capital in the Islamic way. In fact, Iran's economy – because of domination of Islamic laws – follows the Islamic model. In the other words, Iran has well completed his role in preparing the prerequisites for Islamic investment and its promotion. Therefore, it is not far-fetched that Iran has the first rank in past two years in GIFR (Global Islamic Finance Report).

On the other hand, Iran has been consistently interacting with international Islamic organizations. Becoming a member of Islamic Development Bank- as the biggest Islamic Financial Organization – and stock subscription up to 1400 million Islamic Dinars, Iran is considered as the third ranked share holder of this bank according to its annual report in 2013. Moreover, all the international transactions of Iran, either in private or governmental sections are done within the Islamic economics borders.

While nearly 80 countries are trying to expand their activity by presence in the Islamic capital market, the Islamic Republic of Iran has the highest participation in this market and it seems that, considering the legal bases and 30 years of experience in practicing this method, Iran can attract the attention of many of capital owners to investment and yet, have an effective cooperation with other role-players in harmonization of capital market regulations and shaping the needed instruments.

What are the opportunities for Islamic finance to spread in Iran? 

Iran has a great potential for investment in all infrastructural sections. Every wide-spread production and services activity is a suitable opportunity for investment. But, with current conditions and considering the local demand, some fields have gained more attraction. For example, in the tourism industry, because of numerous tourist attractions of Iran and originality of this market at the same time, it is evaluated to be high benefit-making even in a short-term period. In petro chemistry and telecommunication fields, also, in spite of the investments already done, the investors will have access to a lot of opportunities. In all of these fields, the possibility of international transactions is provided with the least limitations.

As a country with a long experience in establishing and managing Islamic banking, Iran can also play a great role in compiling the rules, contracts, and legal financial regulations related to Islamic banking.

How do you see the developments of foreign Islamic investments? In which sector particularly? What is the support offered by local authorities ?

Total foreign direct investments in Iran, in the 10 year period from 2002 until 2011, has made a 1923 pct growth in comparison with the same preceding period. In its 2002 report named “International Debts Statistic Report”, the World Bank has announced that the FDI in Iran has increased up to 19 times in the 10 year period from 2002 until 2011. As all the investments in Iran are done under Islamic criteria, this statistic also shows exactly the Islamic foreign investment growth in Iran. The statistic presented by the World Bank shows that from 2001 and few years after the imposed war, FDI in Iran has had a considerable jump and from that year on, this amount has continued to be more than 1 billion dollars. According to this report, FDI in Iran has increased by 14 pct in 2011 in comparison with the preceding year and has reached 4.15 billion dollars. The foreign investment growth in 2011 has been made in spite the fact that the European Union banned the activity of its oil companies in Iran in mid-2010 by imposing some sanctions. Foreign investment in Iran had experienced a 19 pct growth on 2010 compared to the preceding year.

The growing trend of foreign investment has been mostly done in petro chemistry, industries and mines, hosing and road construction. With presence of investors, this trend can progress in other sections like tourism, telecommunication; and – with international interactions conditions being provided – it can spread to other fields as transportation, automobile, oil and gas.

In addition to the fact that the overall policy of Iran welcomes any kind of foreign investment only with Islamic practices, considering the current conditions, investment in stock market has advised more because of being more productive. On the other hand, the governmental supports are made under FIPPA (Foreign Investment Promotion and Protection Act) and doing business in free and special economic zones.