Head of the Organization for Investment, Economic and Technical Assistance of Iran affiliated to the Ministry of Economic Affairs and Finance has said that the national economy can and should become transparent over the long-term.
In a meeting with a parliamentary delegation from Germany, Behrouz Alishiri explained that creating transparent economic atmosphere is a long-term process which cannot materialize within one or two years, reported the Persian daily ’Donya-e Eqtesad’.
He referred to identifying investment opportunities for projects based on international standards, making projects strategic and revising working conditions as three major steps being undertaken in domestic economy.
Once these become transparent, the private sector would be more inclined to invest in the economy, the official assured.

Technical Assistance of Iran based on which the highest amount of foreign investment was in the industrial sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, oil derivates, etc.

Alishiri continued that the country has absorbed over $11 billion in foreign investment in the year to March 2008, 75 percent of which went to the industrial sector. Most of the investments were made by European and Asian countries, he noted.
Commenting on studies which indicate that the volume of foreign investments in Iran has been assessed at less than one billion dollars, he said “When a factory is planned, it would take three to five years for it to go on stream as per international standards. Also, the inauguration of an industrial project takes similar period.“
Therefore, it is predicted that the $11 billion worth of investment made in the year to March 2008, would bear fruit in the next three to five years, he underlined.
On the presence of foreign banks in Iran, he said that banking system has received applications from European, Asian and Persian Gulf states. “We are studying them and we could witness the presence of these banks in Iran in the near future.“
Alishiri acknowledged the news about the possible establishment of a branch of a foreign bank in Iran by June 20 but he refused to disclose the name of the proposed bank until the contract is finalized.
Turning to trade with Germany, he said that Iran exported goods worth 600 million euros to Germany in 2007 showing a rise of 27 percent compared to the figure for 2006.
This is while, the import from the European state during the period stood at 3.6 billion euros which shows that the trade balance is in favor of Germany, he concluded.
Foreign investment in Iran hit a record $10.2 billion in the year to March 2007 from $4.2 billion in 2005 and $2 billion in 1994, the Persian daily ’Iran’ reported.
Asian entrepreneurs made most of the investments in the Islamic state by committing capital to 40 out of 80 projects.
The daily quoted figures by the Organization for Investment, Economic and Technical Assistance of Iran based on which the highest amount of foreign investment was in the industrial sector, including food and beverage, tobacco, textiles, clothing, leather, chemical, oil derivates, etc. The figure exceeded $8.76 billion. Water, electricity and gas sector ranked second, attracting $874.83 million, it added.
In the third place, the real state sector absorbed more than $406 million.
Investments in service, telecom and transportation as well as mines reached $193 million, $14.3 million and $14.2 million respectively.
Asian countries invested $7.666 billion in various projects followed by several multinational consortia.
Investments by these multinational companies exceeded $1.39 billion (in four projects).
Although European entrepreneurs were involved in 34 projects, they invested only in the range of $1.2 billion in the Islamic Republic.
Countries in the Americas also committed $12.329-million in the country; while investments by African states registered close to four million dollars.
Investment figures indicate that as the UN Security Council debates options to deal with Tehran’s nuclear program, sanctions have not had a damaging effect on the economy and the 30-year sanctions imposed by the US has not blunted the national economy.

Ugandan Ambassador to Tehran Mohammad Ahmad Kissule said here Sunday that the Iranian government is determined to expand economic relations with African states.
According to IRNA, Kissule made the remark in a meeting with a number of businessmen from Zanjan province during which he recalled the 14 years of friendly relations between the Islamic Republic of Iran and the Republic of Uganda. Underlining that President Mahmoud Ahmadinejad has satisfactory plans to expand cooperation with African states, he pointed out that Iran and Uganda had signed 11 memoranda of understanding (MoUs) and hoped that they would be operational soon.
The climate is prepared for implementing the MoUs, he said, adding that his visit to Zanjan province is aimed at establishing commercial ties between the region and Uganda.
He further noted that lack of precise information about the requirements of African nations is among the shortcomings of Iranian exhibitions in African countries.
Head of Zanjan Chamber of Commerce, Industries and Mines Ebrahim Jamili, for his part, said that identifying opportunities for investment in the northwestern province as well as overseas was one of the most important programs of the chamber in the current year.

International Conference on Chabahar, Transit and Development of the Eastern Corridor’ opened in Tehran in a ceremony on Saturday attended by Minister of Road and Transportation Mohammad Rahmati at the IRIB International Conference Center.
According to the IRIB, speaking at the event, managing director of Chabahar Free Zone Organization said that the port plays a key role in international trade and economic transactions.
Mohammad Taher Baqeri-zadeh noted that the strategic location of Chabahar port has doubled its importance. “Chabahar port has prepared the ground for regional and national development.“
Referring to the potentials of Chabahar Free Zone including its location on the North-South and West-East transit corridors, he underlined that such a strategically important position provides suitable opportunity for investments in commerce and industry sectors.
Given that Chabahar port is a safe place for transit of commodities, Baqeri-zadeh stated that owners of goods can transit their freight at very low costs and quickly in comparison with other Iranian ports.

Ministry of Economic Affairs and Finance is drawing up a draft plan to merge eight state-owned banks.
According to Fars News Agency, the proposed plan will involve eight state-owned banks and establish a new usury-free Islamic bank known as ’Gharz-al-Hassanah bank’.
The draft plan has not yet been approved and finalized by the government, but the Central Bank of Iran has been assisting the Economic Ministry to prepare the plan.

The proposed plan will merge eight state-owned banks and set up a new usury-free Islamic bank known as ÔGharz-al-Hassanah bankÕ.

Under the draft articles of association for setting up usury-free and investment banks (which is yet to be approved by the first vice president), the eight state-run banks will be merged to form a usury-free Islamic bank and the rest of the banks will become specialized for investment purposes.
In this respect, a number of experts argue that if the plan gets the go-ahead and the banks are merged to form a new bank that is not privately-run and owned, then it will go against the very purpose of Article 44 in the Iranian Constitution pertaining to the privatization of state-owned sector.
For instance, banks will no longer be able to sell their shares in the stock market within the framework of Article 44. They also argue that Saderat, Tejarat and Refah banks will remain state-owned and it will be impossible to privatize them.
Moreover, they argue that once these banks are merged into a usury-free bank, no one will be willing to purchase the new Islamic bank’s shares in the stock market.
However, under the draft plan devised by the Economic Ministry, grounds have been created to allow the transfer of long-term saving accounts from the new Islamic banks to investment banks--although the new Islamic banks will no longer be authorized to offer interest on these accounts. The new Islamic banks, instead, can transfer these accounts to investment banks. Long-term investment accounts in Iran stand at around 420 trillion rials.
As things stand, since the inception of Islamic banking system about three decades ago, the number and reach of Islamic financial institutions worldwide has risen from one institution in one country in 1975, to more than 300 institutions operating in more than 75 countries.
That explains why the Iranian government is so keen on implementing the new banking merger plan.
The entire banking systems of Iran are based on Islamic finance principles. Islamic banking assets and assets under management reached $750 billion in 2006, and the Islamic finance sector is expected to reach $1 trillion by 2010 in the world.
Islamic or Shariah-compliant banking in Iran can provide and use financial services and products that conform to Islamic religious practices and laws, which, in particular, prohibit the payment and receipt of interest at a fixed or predetermined rate. In practice, this means that instead of loans, the new Islamic banks will use profit-and-loss sharing arrangements (PLS), purchase and resale of goods and services, and the provision of services for fees on the basis of contracts.
The new Islamic banks will determine return on deposits differently though. In a commercial bank, the rate of return is set contractually (fixed in advance or tied to a reference rate) and does not depend on the bank’s lending performance. In new Islamic banks, the rate of return on a deposit will be directly dependent on the quality of the bank’s investment decisions.
If the bank records losses as a result of bad investments, depositors may lose some of their deposits. The contractual agreement between depositors and Islamic banks will not predetermine any rates of return and will only set the ratio according to which profits and losses are shared by the parties to the contract.

Wheat exports have been suspended since March due to drought conditions and short domestic supplies, announced commerce minister on Monday.
The price of wheat purchased from farmers which stood at 2,000 rials per kilogram in the year to March 2008, has increased to 2,800 rials in the current year, Iran Daily’s Sadeq Dehqan quoted Masoud Mirkazemi as saying.
Also, subsidies of about 2-2.5 trillion rials for detergents have been removed, the minister disclosed, explaining that the government has decided to channel this amount to essential goods such as milk.
He put sugar production during 2006-2007 at 2.2 million tons while consumption stood at 2.1 million tons.
In addition, about one million tons of fruit concentrates, cookies and chocolates were exported during the period, he elaborated.
Elsewhere in his remarks, he revealed that the first industrial bread production unit would go on stream within two weeks.
Mirkazemi expected bread subsidy to reach 39 trillion rials in the year to March 2009. This is while, the figure was 25 trillion rials in the year to March 2008, he concluded.

Minister of Industries and Mines Ali Akbar Mehrabian has said that the industrial sector has significant export potentials.
Speaking to Presstv at the opening ceremony of the 15th International Agricultural Trade Fair of Iran (Iran Agro 2008) on Sunday, Mehrabian said that Iran’s annual industrial exports are valued at about $900 million. “Given the sector’s high potential, there are good opportunities to increase export of industrial products.“
Iran, he said, needs to be more active in marketing since it plays an important role in promoting exports.
“Iran-made industrial goods are generally well received overseas, which implies the need for further efforts to promote them in global market,“ he added, underlining that the private producers need to develop reputable brand names to help them raise their exports.
He noted that participation in international expositions facilitates exchange of ideas between domestic and foreign companies as well as obtaining information about the world markets.
Providing manufacturing units with state-of-the-art technologies and equipment would contribute to further improvement of products, he said, pointing particularly to the importance of agricultural machinery.
Iran Agro Trade Show for Agricultural Machinery has been the largest of its kind in the Middle East since its inception in 1994.

Free trade zones are set up to increase exports and re-exports, the presidential advisor for FTZs told Mehr News Agency.
“One of the most important goals of establishing free trade zones is to increase exports and re-exports, meaning that goods imported is exported to another location or country,“ Mahmoud Salahi explained.
“The other objective of FTZs is to attract foreign investment by eliminating complex rules and regulations that may exist on the mainland due to bureaucracy. By definition, there should be less red tape in these zones to absorb foreign investment,“ he said.
“Foreign investors are currently investing in other countries and attracting these investors should become a priority.“