Rising bank rates sent nearly 50,000 Britons into bankruptcy last year.

Insolvency and bankruptcy laws vary widely from country to country, and a company with subsidiaries or affiliates in different countries can face seemingly insurmountable problems trying to deal with financial issues.
These problems affect not just the insolvent company, but also its customers, suppliers and investors.
According to the Iranian Student News Agency (ISNA), many countries in the world have a “punishment mentality“ in their bankruptcy proceedings, as opposed to a rehabilitation mentality. They are coming to realize that if they want to be part of the technology revolution and encourage people to take risks, the key component of that is to create an efficient means to deal with an insolvent company.
Bankruptcies are oft-cited news in most countries but in Iran they hardly ever make into newspaper columns not because bankruptcies are a non-occurrence here but because almost all industrial and production factories in Iran are run by the government and therefore enjoy its unconditional support; and so news about loss-making companies goes unheard.
By definition, filing for bankruptcy is a public announcement of a company’s insolvency which occurs when the firm is unable to pay its financial arrears and faces the threat of closure.
Some bankruptcies are kept undisclosed for political reasons.
Even the few reports mentioned in the media make it clear that frequent financial arrears faced by economic units in Iran has compelled the government to inject huge amounts of cash into their coffers, stripping the state of considerable amounts of funds that could otherwise go for development projects.

Alarming
Experts have for some time been sounding the alarm about the government’s credit troubles, saying that the “credit crisis“ faced by the state is in fact a third type of bankruptcy that is politically driven and might undermine the government.
Sharp discrepancies in incomes and expenses could lead the entire system to go bankrupt unless the government comes up with ways to strike a meaningful balance between its revenues and expenditures, experts warn.
There have been infrequent reports over a large number of trade units in Iran having stopped operation or being on the verge of insolvency and can only operate by devouring state budget.
Many warn that covert bankruptcies are rapidly spreading within the business community.
Some economists are of the opinion that the rising value of the dollar is another reason for government’s financial austerities. When the Central Bank of Iran injects all its foreign exchange reserves into the market to actualize the parity rate, the value of the national currency goes up, but leads to great financial trouble for the state body.
Technological advancements have played their share in sending many trade companies in the developing world to bankruptcy with only those enterprises surviving that are able to stay put in the face of stiff rivalry from their foreign counterparts.

Lagging
Last year, bankruptcy of the shrimp industry grabbed newspaper headlines for some time for what the shrimp producers said was due to the irresponsible behavior of the Agriculture Jihad Ministry and the State Fishery Organization. The steel and sugar industry are said to be facing the same fate.
High bank rates are cited as a factor behind financial troubles of many sectors of the economy.
Many say Iran lags behind in the vital prerequisites of socio-economic development including: a proper economic, social, political and cultural atmosphere, suitable work environment for economic activities and strategic vision in organizations and companies.
There are thousands of inefficient, unproductive and economically unfeasible industrial factories in Iran that lose millions of dollars annually. Under conditions where the Iranian economy is said to be mired in perpetual economic recession bordering depression, large-scale unemployment, inadequate investments, sub-standard products, unproductive manufacturing sector, astounding levels of debt, high profit rates, and last but not the least, the inability of domestic products to compete globally, it is no wonder that a substantial number of state-owned and operated plants and factories are on the verge of bankruptcy.
None but Iran’s beleaguered private sector is the biggest loser in this, considering that the public sector is provided with subsidies and other facilities such as short-term and long-term loans to help continue their unprofitable existence.

Technological advancements have played their share in sending many trade companies in the developing world to bankruptcy.

Partnership
Industry and government partnership is a key factor for building investor confidence in the economy, which could translate to phenomenal business growth. The issues and problems of the industrial sector cannot be sorted out with one stroke. As long as there is a mutual understanding of the problems and willingness to address them, most of the major issues can be resolved.
For quality improvement, there is need to update the processes involved. Most industries are outdated and inefficient.
Despite obstacles, adversaries, ordeals and set backs, the potentials available point to a great future for the industrial sector if the right policies and environment are created to avoid further insolvencies.
Iran has the potential to become an important player in the global economy. To achieve this goal the government obviously needs a consistent and robust growth rate.
For some companies bankruptcy is nothing more than a fresh financial start. It is designed to help those who are in debt beyond a reasonable means to repay.
Company insolvencies are not a rare sight.
Rising bank rates pushed nearly 50,000 Britons into bankruptcy last year, setting a record.
A report by the UK Department of Trade and Industry early in the year showed personal insolvencies jumped to 46,651, up 30 percent over 2003’s approximately 36,000.
There were 13,013 bankruptcies in England and Wales during 2004’s final quarter, up 8 percent from the third quarter and 34.6 percent from the same three months a year earlier.
It is hoped that as entrepreneurs learn to take “responsible risks“, the financial establishment will move with them.

Annual growth rate of electricity consumption will be five percent by the end of the Fourth Five-Year Economic Development Plan in 2010.

The power sector is a key industry in the economy. The uninterrupted supply of electricity to infrastructural facilities is a necessity to speed up the process of industrialization.
Focusing attention on the development of the electricity industry and attracting sufficient investments is a top priority for developing nations.
In Iran, the power industry, despite positive developments in recent years, is still suffering from inadequate financial resources and inefficient executive plans. Resolving these problems could help attract more domestic and foreign investments and pave the way for introduction of energy trade and transit in the region.
A key characteristic of the power sector during the past few decades, has been the ever-increasing rise in consumption levels, and as a result, development of facilities for generation, transfer and distribution, so much so that the total electricity demand in 1979, which was 3,500 MW, reached well over 23,000 MW in 2001.
Based on official forecasts, the annual growth rate of electricity consumption will be five percent by the end of the Fourth Five-Year Development Plan in 2010 - with an annual consumption of 40,000 MW. Therefore, it has been predicted that the country would need new energy power plants during the next ten years to generate an additional 28,000 MW.
In addition, it is also necessary to save 20 percent of the generated electricity every year during the same period in order to exploit about 1,600 MW annually.
A quick comparison between financial resources from selling electricity and services to subscribers and financial resources needed for development of facilities, shows that the basic challenge would be the lack of sufficient financial resources for future investment schemes.
On the other hand, as long as there is no confidence in the return of investments, the non-government and private sectors will be less interested to participate or invest in this particular sector.
During the past few years, apart from public investments, the only way of absorbing private investments has been through sale of bonds by the Energy Ministry, most of which have been for infrastructural projects in the water sector. This means more future commitments from the government, also necessitating that it accepts the risk of insufficient productivity or delayed implementation of projects.
Therefore, it would be wrong to devise policies that increase the level of government’s financial commitments without taking into account the future inflationary effects.
But despite the attention given to absorbing foreign investments in the first and second plans in oil and gas projects and in the form of buyback deals, the officials have never taken very seriously the notion of attracting financial resources for the power industry from the private and foreign sectors. However, only from the third plan onwards did the officials start to pay more attention to programs involving reconstruction and privatization of the power sector.
On the other hand, participation of the private and foreign sectors in the form of B.O.T (Build, Operate and Transport) contracts, likewise, has been on top of the agenda of the Energy Ministry in recent years. However, there have been certain doubts and problems in the way of executing B.O.T contracts, as a result of the absence of rules and regulations, problems involving the relations of contractors with other organizations, as well as issues concerning lack of experience, adequate information or trust for executing the contracts.
The government now plans to attract investments in the electricity sector in the form of B.O.T contracts, providing assistance in obtaining necessary permits, giving guarantees for purchasing electricity from power plants in the form of “buy and sell“ contracts, special guarantees to encourage and support investors, and securing guarantees from the Ministry of Finance and Economic Affairs if the Energy Ministry fails to implement its commitments.
The power industry is currently short of some 16,000 billion rials in finance. To make things worse, half of the transmission lines are old and need repair.
The ministry officials have on several occasions raised their concerns over the existing problems and the lack of revenues.
The new energy minister has also sought financial assistance from the government.
A balanced price for electricity could further help implement many other objectives and provide proper investment returns for the private sector. Otherwise, it will be very difficult, if not impossible, to attract and include private investors in the power industry.