Investment protection deals signed Between Iran and 6 countries
In the aftermath of sanctions removal as a result of Iran's nuclear deal with world powers –formally known as the Joint Comprehensive Plan of Action–the administration of President Hassan Rouhani has signed bilateral investment protection agreements with six countries, including Russia and Japan.
With the goal of attracting more foreign investments, undertaking risk coverage and lowering the risk of investment in the country, the Ministry of Economic Affairs and Finance has signed bilateral agreements "to incentivize and mutually support investment with Japan, Russia, Singapore, Iraq, Slovakia and Luxembourg", reports Shada, the economy ministry's official news service.
According to the report, another investment protection agreement with the Czech Republic has also been finalized. It adds that all these agreements have been signed after September 23, 2015–only months after the landmark accord was signed.
Iran will also hold talks with a number of other countries, namely India, Hong Kong, Mexico, Hungary, Albania and Lithuania, to clinch similar agreements.
The Organization for Investment, Economic and Technical Assistance of Iran, affiliated with the Economy Ministry, is in charge of negotiating, enacting and legally following up on such agreements, which are the most important legal instruments designed to safeguard foreign investors' assets in the host country.
These agreements protect investors from non-trade risks, including risks related to actions undertaken by governments. They ensure that investors can move their investment returns in cash, are treated equitably as foreign nationals and shielded from any risks emanating from a potential breach of contract by the host country.
Such agreements are also one of the main factors influencing the country risk ratings listed by the Organization for Economic Cooperation and Development.
According to OECD, in recent years, the value of investment guarantees has averaged about 3% of total FDI flows, while some 30% of FDI flows into developing countries.
Thus, investment guarantees and the public and private institutions that provide them influence investment flows into developing countries.
Investment guarantees cover a broad range of products and can be defined as any guarantee and or insurance product that is relevant for international investment. Political risk insurance is one of these guarantees.
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