The Iranian government is planning to increase its investment in manufacturing to $62bn by 2025 as it looks to diversify its economy and reduce dependence on oil, according to a report by Frost & Sullivan.
A report, Iran – A Goldmine of Opportunities, said the government would increase net investment in manufacturing to $25.5bn by early 2018 and $35bn by 2020.
The 2025 strategic development plan identifies several core industries that have been named as development priorities.
These are: petrochemical products, mining, plastics, metals and minerals, foods and beverages, pharmaceuticals, industrial machinery, home appliances, textiles and apparel, vehicles, rail, and maritime, rubber, power generation and transmission.
“Iran is mobilising its efforts targeted at economic proliferation and this is opening up immense growth opportunities for local and foreign companies alike”, said Y.S. Shashidhar, managing director, Middle East, North Africa and South Asia at the research firm.
This was happening even as surrounding states in the Middle East experienced economic turbulence, he said.
Value-added manufacturing growth had been identified as the key to the country’s economic transformation, Shashidhar said.
“(This resulted) in the Iranian government undertaking measures to facilitate in-flow of investments and technology while industries strive to metamorphose their capabilities and processes to achieve the set goal," he added.
The Iranian government plans to increase the capacity of core industries by adopting advanced technologies, focusing on high value-adding downstream economic segments, and setting up joint venture manufacturing plants in the region.
This would decrease the cost of exports and make an access to the global market easier.
“To achieve this, the Iranian government is encouraging global companies to partner with local companies through technology sharing and support in developing design and engineering in industrial facilities and the infrastructure sector,” said the report.
Access to finance is an equally critical requirement, it said. The Iranian government plans to increase the share of tax revenues in its annual budget from 6% of total GDP to 16-18% by 2025 to further reduce dependence on the oil and gas sector.
Another Frost & Sullivan report, the Strategic Overview of Commercial Vehicle Market in Iran, said the country will require 300,000 commercial vehicles by 2022 as it is expected to become a major trade and logistics hub.
French and German original equipment manufacturers (OEMs) are in talks with local commercial vehicle manufacturers now that sanctions having been lifted, it said.