Investment Opportunities and Privatization Programs of Iran:

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Alisha Payne
10 years ago
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1 In the Name of God Investment Opportunities and Privatization Programs of Iran: an idea whose time has come Dr. H. Kord Zanganeh Head of Iranian Privatization Organization (IPO) & Deputy Minister of Economic Affairs and Finance

2 Investments in Iran: Attractions 1. Strategic location (an easy access to other regional markets); 2. Market potentials (70 m people); 3. Labor privileges (relatively qualified workforce); 4. Developed infrastructure; 5. Low utility and production cost; 6. Abundant natural resources (abundant raw material); 7. Climatic characteristics; 8. Fiscal incentives; 9. Political stability; 10. New investment legislation; and 11. Major privatization programs

Developed infrastructure; 5. Low utility and production cost; 6.

3 New Economic Approach: A Movement from the position of the government as the owner to that of the regulator of the economy; from a mostly closed and traditional economy to a liberalized outward oriented one; downsizing; from exclusion to engagement of the private sector investment in many industries; From uninterested, to interest in a sustained increase in foreign private sector capital formation.

oriented one; downsizing; from exclusion to engagement of the private sector investment in many

4 Facilitations Provided for Private Sector Development: 1. New regulations: exchange rates unified establishment of private banks and insurance companies allowed; 2. Reformed regulations: Direct Taxation ACT Foreign Investment Promotion Act Stock Market Regulations 3. To be approved regulations: Revision of commercial law Antimonopoly law Outsourcing and divesting SOEs to the private sector

5 Facilitations Provided: Most Recent and Significant Decree of General Policies of Article 44 of the Constitution Law, by the supreme leader of the Islamic Republic of Iran, regarding: the Economic Liberalization development of Cooperative Sector in Economy privatizing big governmental entities, which mentioned Article had banned private ownership of these entities. Offering of governmental companies shares by the IPO through exchange market and tender bid sales.

Cooperative Sector in Economy privatizing big governmental entities, which mentioned Article had banned private

6 Article 44 of the Iranian Constitution Based on this Article: All economic activities has been divided into three sections: Governmental, cooperative & private. However, the Law shall specify the share of the State and other economic sectors. It is mentionable that on the strength of Article 110 of the Constitution, the power is delegated to the supreme leader

However, the Law shall specify the share of the State and other economic sectors.

7 Outcomes of the Decree: The state should separate its business activities from sovereignty ones; New investments by government are prohibited in those areas, which the private sector is or can be active; The privatization trend of key industries shall be accelerated: 20 percent annual downsizing; -Total Privatization Scope: 130 b USD at minimum.

the private sector is or can be active; The privatization trend of key industries

8 Privatization Provisioned: Inviting foreign investors to take part in the IRI privatization; Taking major divesting programs to international markets; Providing financial credit systems and supporting purchasers, particularly strategic ones.

programs to international markets; Providing financial

9 Privatization: to be expected The government may divest about 80% of each industry, subject of mentioned Decree, including SOEs mentioned below; and 100% of all other ones: 4 big governmental banks; Three commercial insurance companies (i.e. all except one: Iran Insurance Company); All post and telecommunication companies except mother telecommunication networks, transfer of frequencies (about 40 companies); Power provision and some other companies in the energy industry; All government aviation and shipping organizations, except Civil Aviation Organization, and Ports and Shipping Organization; More than 118 companies in oil, gas and petrochemical industry; and Some other companies in manufacturing and service sectors.

networks, transfer of frequencies (about 40 companies); Power provision and some other companies in the energy industry; All government aviation and shipping organizations, except

10 Privatization: close-up view List of Large-Scale State Owned Enterprises to be Privatized within the next two years Row Name of the SOE Row Name of the SOE 1 2 Mellat Bank Tejarat Bank 9 Iran Telecommunication National Co. plus 33 Provincial Telecommunication Co. 3 Saderat Bank 10 Mobarakeh Steel Co. 4 Refah Bank 11 National Industries of Iran Copper Co. 5 Asia Insurance Co. 12 Khouzestan Steel Co. 6 Alborz Insurance Co. 12 Mapna Co. 7 Dana Insurance Co State Electricity Power Stations (Plants) 8 IRALCO Co Oil Companies

3 Saderat Bank 10 Mobarakeh Steel Co. 4 Refah Bank 11 National Industries of Iran Copper Co. 5 Asia Insurance Co.

11 Important Points for Investors The domestic consensus on the importance of the privatization; The main industries set aside for privatization; Fast privatization process; The legal procedure and institutional framework for foreign investors are facilitated by new regulations of foreign investment and direct taxation; cash and installments based payment methods (60% to 80% in installments); and Transparent privatization procedure: stock market selected as the main channel of the privatization.

facilitated by new regulations of foreign investment and direct taxation; cash and installments based payment methods (60%

12 How to Exploit this Opportunity? Foreign purchasers may present their application to the: IPO for tenders; and Tehran Stock Exchange Organization for public offerings.

13 Contact Information GH. Heidari Kord Zangeneh Deputy Minister of Economic Affairs and Finance, Chairman of the Board of the Iranian Privatization Organization (I.P.O) Add: No. 75, Zarafshan St,. Eyvanak Ave., Shahrak Ghods, Tehran. I.R. Iran. Tel: (+98 21) Fax: (+98 21)

Chairman of the Board of the Iranian Privatization Organization (I.P.O) Add: No.

14 Thank You

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