Exploring the Challenges of Financing Iran’s Construction Projects from China and Providing Improvement Solutions

Musa Hajiani, Mojtaba Azizi, Ehsanollah Eshtehardian, Kazem Naseh


In recent years, the tense regional conditions of the Middle East and international sanctions against Iran have led to Iran's construction projects being financed by foreign sources of complexity and limited to certain countries such as China. In spite of China's desire and signing several agreements, the opportunity and capacity of these packages are not optimized. In an effort to improve the situation, the present study focuses on the financing challenges based on the reality of a sensitive issue on Iran-China relations by presenting a common interface between the pillars of the project. The results of this study is highly likely to increase the efficiency of the financing system of the Iranian construction projects, which are to be financed by China. The statistical population of this research includes the contractors, agent, employer, foreign financer, financial consultant, and contractor of the central headquarters. Three construction projects, with non-existent conditions capable of aggregating their deep and varied data were selected as case studies according to the experts' opinion. Then out of a 25-long list of challenges, 5 challenges were chosen based on the weight as the main challenges, including domestic and foreign challenges, with some appropriate improvement solutions being presented. Based on the results of this research, a closer look at the relationships, the significance of impact and the arrangement of the strategies, produces the conceptual model.


Construction Project; Project Financing; Financial Engineering; International Financing; Investment Attraction


Askarifar, Kazem, Zohreh Motaffef, and Saman Aazaami. "An investment development framework in Iran's seashores using TOPSIS and best-worst multi-criteria decision making methods." Decision Science Letters 7, no. 1 (2018): 55-64. https://doi.org/10.5267/j.dsl.2017.4.004

Thangavelu, Shandre M., and Dionisius Narjoko. "Human capital, FTAs and foreign direct investment flows into ASEAN." Journal of Asian Economics 35 (2014): 65-76.https://doi.org/10.1016/j.asieco.2014.11.002

Rafat, Monireh. "The Interactive Relationship between Economic Growth and Foreign Direct Investments (FDI): A VAR Analysis in Iran." Iranian Economic Review 22, no. 1 (2018): 163-185. https://doi.org/10.22059/ier.2018.65355

Habibi, Fateh, and Mohammad Sharif Karimi. "Foreign Direct Investment and Economic Growth: Evidence from Iran and GCC." Iranian Economic Review 21, no. 3 (2017): 601-620. https://doi.org/10.22059/ier.2017.62942

Farzanegan, H, investigating the role of public contractors in optimizing the financing of Iran's oil projects, Master thesis. Project and construction management of Tehran University, (2007).

Feyzi Chekab, GN, Taghi Zadeh, I, Fahimi, A, and Khodadadi Dashtaki, Kh. ,"investigating the barriers and shortcomings of foreign financing in Iranian law", Quarterly Journal of Private Law, Issue 11(2015), pp. 149-178

Islamic Parliament Research Center Of The Islamic Republic Of IRAN, "Review of government budget performance in 2016". (2017). http://rc.majlis.ir/fa/report/show/1021290

Torbat, Akbar E. "Impacts of the US trade and financial sanctions on Iran." The World Economy 28, no. 3 (2005): 407-434. https://doi.org/10.1111/j.1467-9701.2005.00671.x

Jalali Naeini, Seyyed Gholamreza., Shahanaghi, Kamran., Emamiyan, Soheil ,"The financial model for solving disputes in public-private partnership contracts using game theory", Pedrith in Iran, Volume 18(2014), Number 3 , Pp. 1-24.

Rajan Annamalai, Thillai, and Nikhil Jain. "Project finance and investments in risky environments: evidence from the infrastructure sector." Journal of Financial Management of Property and Construction 18, no. 3 (2013): 251-267. http://dx.doi.org/10.1108/JFMPC-08-2012-0033

Liu, Weiwei, Xiandong Xu, Zhile Yang, Jianyu Zhao, and Jing Xing. "Impacts of FDI renewable energy technology spillover on China’s energy industry performance." Sustainability 8, no. 9 (2016): 846. https://doi.org/10.3390/su8090846

UNCTAD/WIR/, "Word investment report 2016", (2017), http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=1555.

Titman, Sheridan, Arthur J. Keown, and John D. Martin. Financial management: Principles and applications. Pearson,( 2017).

Shabani, M, "International financial and monetary markets". Tehran: Samt publications , (2007).

Fight, Andrew. Introduction to Project Finance (Essential capital markets). Butterworth-Heinemann, (2006).

Nasab, Yosef Ebrahimi. "A legal analysis of regulations dominant an economic competition and foreign investor management law." In e-Commerce in Developing Countries: With focus on e-Business (ECDC), 2015 9th International Conference on, pp. 1-5. IEEE, (2015). https://doi.org/10.1109/ECDC.2015.7156315

Gunaydin, Ihsan, and Ekrem Tatoglu. "Does foreign direct investment promote economic growth? Evidence from Turkey." Multinational Business Review 13, no. 2 (2005): 89-106. https://doi.org/10.1108/1525383X200500010

Asheghian, Parviz. "GDP growth determinants and foreign direct investment causality: the case of Iran." The Journal of International Trade & Economic Development 25, no. 6 (2016): 897-913. https://doi.org/10.1080/09638199.2016.1145249

Moniruzzaman, M., Masuma Khatun Kazi, Hala Mohammad Al-Atiyat, and Rana Mahmood. "Determinants of Foreign Direct Investment in Iran: assessing the standard factors." Journal for Global Business Advancement 7, no. 1 (2014): 38-54. https://doi.org/10.1504/JGBA.2014.058882

Khoshnevis Yazdi, Soheila, Khadijeh Homa Salehi, and Mahshid Soheilzad. "The relationship between tourism, foreign direct investment and economic growth: evidence from Iran." Current Issues in Tourism 20, no. 1 (2017): 15-26. https://doi.org/10.1080/13683500.2015.1046820

Tir, Norouz Aghajani, Farshad Momeni, and Ganiev Tavarali Boboevich. "Exploring the effects of water sector investment in economic development in Iran." Procedia-Social and Behavioral Sciences 131 (2014): 396-405. https://doi.org/10.1016/j.sbspro.2014.04.137

Rogmans, Tim, and Haico Ebbers. "The determinants of foreign direct investment in the Middle East North Africa region." International Journal of Emerging Markets 8, no. 3 (2013): 240-257. https://doi.org/10.1108/17468801311330310

Yazdani-Chamzini, Abdolreza, Shahram Shariati, Siamak Haji Yakhchali, and Edmundas Kazimieras Zavadskas. "Proposing a new methodology for prioritising the investment strategies in the private sector of Iran." Economic research-Ekonomska istraživanja 27, no. 1 (2014): 320-345. https://doi.org/10.1080/1331677X.2014.947150

Yousefi, Vahidreza, Aida Rahimi Golkhandan, Sarmad Kiani, Siamak Haji Yakhchali, and Ehsan Mehrabanfar. "Ranking of Financing Methods in Iran Construction Renovation Projects: A Sensitivity Analysis Approach." Mediterranean Journal of Social Sciences .6(2015), no. 5: 303. https://doi.org/10.5901/mjss.2015.v6n5s2p303

Aslani, Alireza, and Bo Feng. "Investment prioritization in renewable energy resources with consideration to the investment criteria in Iran." Distributed Generation & Alternative Energy Journal 29, no. 1 (2014): 7-26. https://doi.org/10.1080/21563306.2014.10781513

Tabaraee, Elham, Sadoullah Ebrahimnejad, and Shahrooz Bamdad. "Evaluation of power plants to prioritise the investment projects using fuzzy PROMETHEE method." International Journal of Sustainable Energy (2017): 1-15. https://doi.org/10.1080/14786451.2017.1366489

Jalili, M, Fallah Shams, MF, Zinaldin, M, Mohammadiha, S. " Ranking of foreign financing methods for investing in the oil industry of the Islamic Republic of Iran using Analytical Hierarchy Process". Quarterly Journal of Quantitative Studies in Management, Quantitative studies in management, Issue 2(2010):53-79

Nielsen, Bo Bernhard, Christian Geisler Asmussen, and Cecilie Dohlmann Weatherall. "The location choice of foreign direct investments: Empirical evidence and methodological challenges." Journal of World Business 52, no. 1 (2017): 62-82. https://doi.org/10.1016/j.jwb.2016.10.006

Soofi, Abdol S. "A comparative study of Chinese and Iranian Science & Technology, and techno-industrial development policies." Technological Forecasting and Social Change 122 (2017): 107-118. https://doi.org/10.1016/j.techfore.2016.06.017

Shiravi, Abdolhossein, and Fatameh Amin Majd. "Foreign investment in Iran’s upstream oil and gas operations: a legal perspective." The Journal of World Energy Law & Business 8, no. 3 (2015): 269-287. https://doi.org/10.1093/jwelb/jwv005

Igor, Krishtal, and Lisovskaya Ekaterina. "Attraction of foreign capital, investment projects and mechanism of production sharing agreements." Procedia-Social and Behavioral Sciences 166 (2015): 127-130. https://doi.org/10.1016/j.sbspro.2014.12.496

Ershova, Nina. "Investment climate in Russia and challenges for foreign business: The case of Japanese companies." Journal of Eurasian studies 8, no. 2 (2017): 151-160. https://doi.org/10.1016/j.euras.2017.03.001

Subramanian, Krishnamurthy V., and Frederick Tung. "Law and project finance." Journal of Financial Intermediation 25 (2016): 154-177. https://doi.org/10.1016/j.jfi.2014.01.001

Byoun, Soku, and Zhaoxia Xu. "Contracts, governance, and country risk in project finance: Theory and evidence." Journal of Corporate Finance 26 (2014): 124-144. https://doi.org/10.1016/j.jcorpfin.2014.03.003

Gorshkov, Roman, and Viktor Epifanov. "The Mechanism of the Project Financing in the Construction of Underground Structures." Procedia Engineering 165 (2016): 1211-1215. https://doi.org/10.1016/j.proeng.2016.11.841

Rajan Annamalai, Thillai, and Nikhil Jain. "Project finance and investments in risky environments: evidence from the infrastructure sector." Journal of Financial Management of Property and Construction 18, no. 3 (2013): 251-267. https://doi.org/10.1108/JFMPC-08-2012-0033

Yalfani, A, Reza Kazemi, F, Mosadegh, F, " Investigating the effects and consequences of sanctions on foreign investment in Iran and the relationship between resistance economy and reducing the negative effects of sanctions", shobak, Volume 2 (2016), Issue 2: 1-10"

Shiri, A; Shams; B; Araqi, Sh, "foreign financing and investment: Basics, requirements, measures, and achievements". Financial and economic policies, Volume 2(2013), Issue 2 : 43-84

Hibati, F, Nikomaram, H, Ahmadi, M, "Evaluation of the new financing system in the transfer of infrastructure projects of governments to the private sector and providing a model for Iran", Financial knowledge analysis of securities (Financial Studies). No. 14(2012) :113-142

Chirkunova, Ekaterina K., Ekaterina E. Kireeva, Anna D. Kornilova, and Julia S. Pschenichnikova. "Research of instruments for financing of innovation and investment construction projects." Procedia Engineering 153 (2016): 112-117. https://doi.org/10.1016/j.proeng.2016.08.089

Baxter, Pamela, and Susan Jack. "Qualitative case study methodology: Study design and implementation for novice researchers." The qualitative report 13, no. 4 (2008): 544-559.

Danaeifard, Hassan, Seyyed M. Alvani, and Adel Azar. "Quantitative research methodology in management: a comprehensive approach." First Printing, Publishing Saffar, Tehran. (2004).‎

Azizi, M, "Inter-organizational learning model of project management capabilities in joint projects of construction industry", PhD thesis, project and construction management, Tehran, Tarbiat Modares University , (2009).

Yin, Robert K. "Applications of case study research. Applied social research methods series." Thousand Oaks: Sage Publications. Yu, KH (2013). Institutionalization in the context of institutional pluralism: Politics as a generative process, Organization wqqStudies 34, no. 1 (2003): 105-131.

Central Bank of the Islamic Republic of Iran, "Guidelines for implementation of financing projects", third edition(2007): 3.

Full Text: PDF

DOI: 10.28991/cej-03091105


  • There are currently no refbacks.

Copyright (c) 2018 musa hajiani, mojtaba azizi, Ehsanollah Eshtehardian, Kazem Naseh

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.