TEHRAN, May 25: Iran gave final approval on Saturday to a new foreign investment law aimed at luring oversees funds to help stimulate its sluggish economy.

But some economists said the law, which eases restrictions on foreign investment, was too complicated and lacking in transparency.

The controversial law, passed by the Expediency Council, Iran’s highest arbitration body, ends a long-running dispute on the issue between the reformist parliament and the Guardian Council, a legislative watchdog run by conservative clerics.

The law protects foreign funds from possible seizure and entitles foreign investors to the same rights and services available to local private and public investors.

It also guarantees the right of foreign investors to repatriate their capital and interests in hard currency. And it requires the government to compensate losses suffered by foreign investors due to legal complications.

But the new law limits foreign investment to 25 per cent in each sector and 35 per cent in a particular branch in any sector.

Such restrictions were not part of the initial bill passed by parliament last year and some economist say these would only complicate matters and create more red tape.

“When they set a percentage limit, it is not clear what they mean — percentage in terms of weight, money or what? It is too bureaucratic,” economist Saeed Leylaz told Reuters.

Ahmad Mirzadeh, another economist, made a similar point:

“This will only make foreign investors more confused. For years we have prevented them from investing in Iran, now all of a sudden we come up with this complicated stuff.”

Long wary of foreign investment and fearful of Western influence, Iran now actively seeks funds from abroad to stimulate its stagnant economy and create jobs.

Foreign investors have pumped about $10 billion into Iran over the past five years, mostly into the key energy sector.

But the country needs more to help it achieve an average economic growth of seven per cent a year and create between 800,000 to one million jobs for its booming population.

As part of an economic liberalization programme, President Mohammad Khatami’s government has already eased price controls and currency exchange restrictions for foreign investors.

It has also sharply cut tax rates for investors and abolished a multi-tier currency exchange system.

Still, economic progress appears to be hostage to a bitter internal fighting between reformers allied with Khatami and hardline conservatives.

There are still relics of ideological resistance to market reforms and foreign investment 23 years after the 1979 Islamic revolution which sought to fight “foreign domination”.

The Guardian Council, dominated by hardline clerics, had held up the investment bill for months, arguing that it was un-Islamic and beneficial to foreigners.—Reuters