Pricing should happen inside the bourse and it should have the ability to absorb the shareholders.

Supreme Leader Ayatollah Seyed Ali Khamenei recently notified the heads of the three branches of power and SEC Chairman Akbar Hashemi Rafsanjani about the general policies related to Note C of Article 44 of the Constitution on ceding state institutions to the private and cooperative sectors.
In this respect, the first ’Bourse in Iran’ seminar was held in the capital at the Management College of Tehran University with the aim to create a proper forum for exchanging specialized views on the bourse.
According to ISNA, State Expediency Council Secretary Mohsen Rezaei said the council would oversee the implementation of the general policies of Article 44.
Speaking on the sidelines of the seminar at Tehran University’s College of Management, Rezaei noted that in line with Article 44, the government has set up a taskforce and prepared bylaws for the purpose. The Majlis has also set up a special commission and will begin implementation of general policies related to the article soon.
Rezaei pointed out that the implementation of Article 44 would strengthen the country’s national economy, including the bourse. “If general policies are implemented properly, the bourse will be strengthened, economic conditions will improve, and prices will become transparent. Better economic decisions will be also taken, the private sector will be positive and foreigners would be willing to invest in Iran,“ he noted.
The government has sought that 40 percent of the 80 percent of shares earmarked should be ceded on installment basis. The justice shares scheme is aimed at giving a share of the oil wealth to the people, starting with the vulnerable segments of the society.

Relations
Rezaei also touched upon relations between the bourse and insurance and financial markets and audit and said that insurance in Iran is not up to the mark. Therefore, by implementing the policies in a proper manner the ground would be paved for the efficient performance of the stock market.
He said one of the chief requirements of Article 44 is strengthening the bourse. Transparent laws and learning from the experiences of other countries in this respect will play a crucial role.
He also said that pricing should happen inside the bourse and it should have the ability to absorb the shareholders. “A weak bourse plagued with pitfalls will translate into weaker implementation of policies. However, an efficient bourse will mean a continuous growth rate.“

Empowerment
Also speaking at the seminar, Saeid Shirkavan, member of the scientific board at the College of Management, said under Note C of Article 44 it is necessary to empower the private sector by means of policies. Failing to do so will undermine the overall performance of other sectors.
He said the chief aim of privatization is not earning income. “The chief aim of the government is to create a productive and efficient private sector. Therefore without paying attention to productivity and efficiency the plan is likely to fail. The only way to have a powerful private sector is by having a transparent and accurate justice and legal system in place.“
In conclusion Shirkavan argued that Iran can find its proper place in the international economy by constructing positive, productive and multilateral relations with the rest of the world. “It is also crucial to revise the structure of the private sector if state-owned companies are to cede their activities to the private and cooperative sectors.“
Another participant Kazem Delkhosh, member of Majlis Economic Commission, said ratification of the stock market law will trigger greater development in the financial market. It would help allocate the necessary funds to create new job opportunities and even pave the way for absorbing foreign investments.
He said, “We are prepared to change certain parts of the law within the next few months. There might be criticisms about the new law and the way it will be implemented. Therefore, it is vital for all to support the bourse.“

Despite several privatization schemes all over the country only one percent privatization takes place in practice.

Criticisms
According to him, limited time, hasty ratification of the stock market law, which is not in line with the needs of the bourse, delays in registering the organization and starting its work are some of the criticisms of the new law.
“Besides the stock market law, it is also necessary to make amendments to other laws such as the trade law. Also the anti-monopoly law in the state-owned and the private sectors is being reviewed and discussed in parliament. It is designed to help the new stock market law,“ he said.
Delkhosh also said a 15-member special commission has been set up to write down rules for strategic policies under Article 44 and would start its work soon.
He argued that support for the bourse under Article 44 would be the key to its success. “Economic priorities from the standpoint of the Supreme Leader will be effective in the bourse and the financial market, as it will lead to economic growth and tackle unemployment, improve the economy, reduce oil dependency, make economic activities transparent, and encourage the officials not to make hasty decisions.“
Alinaqi Khamoushi, head of Iran’s Chamber of Commerce, Industries and Mines, addressing the seminar said the government is prepared “to get along with the private sector.“ The government is also prepared to stop new investments in order to create balance in favor of the private sector. “If this is implemented, then an 80-year-old system will be changed for ever, otherwise, the new scheme is certain to fail.“

Unmet Targets
He complained that despite several privatization schemes all over the country only one percent privatization takes place in practice. “Only between 10 and 20 percent of the investments take place under such schemes, and that is why we have been unable to hit the targets. It goes without saying that most of the goals which failed to give the expected results during the past three five-year development plans had something to do with the privatization scheme.“
Khamoushi blamed pricing on stock market shares as the main reason behind the failure of privatization schemes during the implementation of the three development plans. “When pricing, government incomes used to be taken into consideration in the annual budgets. In return, to mobilize income for the budget the government used to sell state-owned companies to the private sector, thus making the situation more complex both for the buyer and the units which transacted the sales. Such a pricing policy for the banking system will not even be enough to purchase ten buildings.“
The private sector is still lost “in the currents of the past policies“ and it would have to get out of the situation at the earliest. “They need to be bold because if policies are implemented in a proper manner, the Iranian economy will see some major changes in its overall structure within five years.“
Gholamreza Salami, head of the High Council for the Iranian Charter of Accountants Association, said the stock market was not performing well, adding that stock market transactions are claimed to be valued at around $35 to $40 billion whereas “I am convinced that the value is not more than $5 to $6 billion.“
He added that 80 percent of the existing shares are owned by the state-owned and semi-governmental organizations, and the situation is even worse than it seems, simply because nowadays it takes up to five years to trade a share!

Transparency
He said the existing information on the stock market has to be made available to the general public as well as the shareholders. If these duties are performed accordingly, it will make market activities transparent and fair. The information also has to be on the basis of standard criteria before being made available to the general public and the shareholders.
In this respect, he urged the Majlis and the government as well as other affiliated organizations to do their best to implement the general policies of Note C of Article 44, arguing that it was good news that ratification of the stock market law was concurrent with the directive issued by the Supreme Leader regarding implementation of the general policies of the article.
In conclusion, Shahin Shayan-Arani, an expert on the financial market, pointed to the existing challenges in the way of implementing the new stock market law. He said the spirit of the law is far more important than the law itself. “However, when implementing it, certain issues are largely ignored. Also the liquidity risk in the bourse is very high and this is one of its main weaknesses, which might prove costly in the future. The best thing to do would be to pave the way for implementing the law in a supportive, managerial, structural and informative manner.“
Shayan-Arani noted that some of the challenges in the way of implementing the new law are: lack of official support from managers in charge of implementing the law and skepticism about the law. “We still face problems in setting up the bourse company. Its articles of association have certain mistakes and restrictions. The subject matter of interference and supervision has also been confused. Also, the main challenges in the way of implementing the directive of Note C in Article 44 consist of paving the way for introducing the bourse, identifying transferable assets, as well as privatization and pricing methods.“