ECONOMIC NEWS

Non-Petroleum Exports Exempted from OCC

The High Council of Export Development of Iran decided upon the following revisions in its 19 March 2002 session:

From 21 March 2002, all non-petroleum exports would be exempted from any Obligatory Currency Commitment (OCC).

Revision 1: Figure-holding of non-petroleum exports of Iran is performed based on the opinion of exporters, and the evaluation and endorsement of the Customs Department will be done according to the current Customs Law.

Revision 2: Those exporters can use grants and privileges for export, that deposit their earned foreign exchange from export, to branches of the Iranian banks only, or to have imported using export revenue, according to pertinent regulations.

Revision 3: Every exporter is entitled to import any authorised good, to the level of currency revenue from export based on the export permit.

Revision 4: Considering the currency unification beginning in 1381 (2002-03), hard currency revenue stemmed from exporting goods and services, will be deposited in or sold to the Iranian banking system, or other authorised financial institutions.

A 35% Increase in EU Exports to Iran for 2001

According to published figures from EU's Bureau of Statistics, during 2001, British export to Iran experienced a 144% increase. This increase, which was high €1.6 billion compared to €478 million from the previous year, stemmed from a purchase of €481 million worth of gold by Iran from the UK in November and December of the last year. In this year, France secured the first place in trading with Iran, replacing Italy, experiencing a 52% increase, to €1.2 billion. But during the same period, however, Iran's exports to France declined by 27%, to €826 million.

For the period, Iran's exports to the EU fell from €8.4 billion in 2000, to €6.5 billion in 2001, with most of the decrease caused by the fall in oil prices. In 2001, Iran's non-petroleum exports to EU reached €1.1 billion.

During this period Iran increased exports from Germany by 23%, reaching €1.9 billion. But Iran's exports to Germany again declined to €394 million, showing a €148 million fall, again caused by decline in oil prices.

Iranian and UK Insurance Companies Agree on Joint Venture

It was announced that a Joint Venture has been established by Charles Taylor Consulting Plc (CTC) of UK and Iran Group of Surveyors (IGS) with the name of CTC/IGS (Kish) Ltd. The contract was signed by the two parties on 7 February 2002.

The contract was signed at Iran Chamber of Commerce with the presences of Rt Hon Alderman Michael Oliver, the Lord Mayor of London, who was heading a high-ranking British trade mission to Iran.

The joint venture could therefore have experts and worldwide facilities with agencies/representation offices across the world. It is supposed to cover all areas of insurance services required by Iran both locally and worldwide, as well as to meet the demands of local insurance companies and international re-insurers for as far as risk management and analysis.

An Int'l Consortium Examines the Grounds for Investment in Iran

A major international consortium, which holds auctions and supplies production lines and machinery worldwide, is due in Iran soon to review the grounds and recognise the opportunities for investment in Iran.

According to a report released by Iran Students News Agency (ISNA), the Executive
Secretary of the Seminar on Renovation of Industries and Short-Term Practical Options,
further added, "The said international consortium is scheduled to participate in the
Seminal, which is to be held as of 9 to 12 March 2002 in Tehran, Esfahan, Eastern Azerbaijan and Khorassan provinces, and intends to study and identify the opportunities for new investments in various sectors including industries, steel, casting, automobile parts and components, food industries, packaging and telecommunications. This consortium is comprised of companies from Italy, Britain, Germany, France, USA, Korea and Taiwan. The consortium is expected to recommend the investment opportunities. Subsequently, the consortium will be invited to participate in making investments in Iran, duly considering the national interests of Iran."

Commenting that renovation of Iranian industries required some US$40-60 billion worth
of investment, the Executive Secretary added, "To achieve this objective, we have to
either take advantage of domestic investments or welcome foreign investment in Iran. The said consortium is to meet the financial requirements of the would-be projects within an unlimited finance scheme."

To conclude his comments, the Executive Secretary underlined the need for adoption of
a proper model of developed countries for economic development and growth in Iran and said, "Technology is a major and basic requirement for Iranian industries, and it should be imported from developed countries."

IBCCIM/BICC NEWS

The Second Annual Gathering of the IBCCIM Members

The second annual gathering and reception of the Irano-British Chamber of Commerce was held on the evening of 30 January 2002, at Hotel Homa, Me'raj Hall, in accordance to the established practice of the chamber.

The reception was attended by over 160 IBCCIM members, IBCCIM President and Board members, Iranian and British guest including Neil Crompton, British Mission's Charges d'Affair, Gavin Baptie, head of the British Embassy's Visa Section, Steven Smith, 2nd Secretary of the Commercial Section, and Andrew Greenstock, the UK Embassy's Press and Cultural Attaché, as well as members of a trade mission to Tehran, from London Chamber of Commerce.

Dr. Amir Houshang Amini opened the event by welcoming the guests and added: "This is the second Annual Reception of the IBCCIM in the first year of the second round of the chamber's activity with more members and a slightly different Board from the first round."

"I should note here that during the past year, the Board - other than performing usual tasks and maintaining a close relationship with the British-Iranian Chamber of Commerce - has been very active to help expand the bilateral economic relations, and hopes to keep this pace for the future," said Dr. Amini. He then introduced Martin Johnston, Director General of the BICC, who had travelled to Tehran to prepare grounds for the upcoming IBCCIM trade mission to London, and had returned several hours earlier from visiting Kerman Province, including Arg-e Jadid, and asked him to say a few words following Mr. Khamoushi's remarks. Then H.E. Mr. Khamoushi, President of Iran Chamber of Commerce, and the IBCCIM was asked to come to the podium and make his statement.

After thanking the members and other Iranian and British guests for coming to the reception, Mr. Khamoushi pointed to the longstanding trade relations between the two countries, and the existing potentials to increase the current volume. He also announced that a new law had been ratified recently that would free the private sector participate in the economic activity, which so far had been monopolised by the government, in oil, petrochemical, energy sector, and telecommunications sectors. Khamoushi said with the level of freedom Iranian baking and insurance sectors enjoy, British companies can easily invest and work in Iran. "I have to tell you that the industrial investment in Iran returns in a matter of two to two and half years, not more than that," said Mr. Khamoushi. He continued:

"In addition Iran has recently adjusted its law of taxation. The ceiling of taxation has dropped to 25%, from 65% before, which is an acceptable figure internationally." He then maintained that compared to other parts of the world, there might have been other countries with lower tax levels, such as several neighbouring countries, but they didn't have a market large enough to absorb the products, while Iran, as well as its surrounding countries, already incorporated a large market.

Engineer Khamoushi also remarked on the issue of Afghanistan and after mentioning some of the hardships Afghanistan had suffered, reiterated the need for British and Iranian companies to join forces for the reconstruction of Afghanistan. He emphasised on the advantages Iranian experts enjoy in this regard, when considering their cultural and language commonalities, and their awareness of the Afghan people's problems, and added that Iran could be the nearest and cheapest provider of material to Afghanistan.

"Having the experience of reconstructing a war ravaged country, Iran intends to spend its pledged $650 million to help reconstruct Afghanistan properly. Therefore proper industrial investment can create much-needed jobs for the Afghan people," said Khamoushi. He concluded his statement by expressing the readiness of ICCIM and IBCCIM to assist British businesses willing to participate in investment and production in Afghanistan.

Next speaker was Martin Johnston from BICC. After thanking the IBCCIM, he mentioned Iran's remarkable tourism potentials, following his trip to Kerman and Bam, arranged by the IBCCIM. Johnston then introduced BICC and its role to encourage trade flow between the two countries.

"As you all know, the balance of trade favours the UK. But I believe in what I might call it contractual relationship, the parties need to be more evenly balanced over time to have the full benefits and enjoyment of a partnership. So part of the function of BICC is, all apart from promoting British exports, is to see to what extent Iran's exports can access the UK, and to see to what extent investment from the UK can be interested in coming to Iran, and finally to see what joint Iran and British initiatives in business and trade can apply outside Iran."

He then spoke of the issues surrounding the reconstruction of Afghanistan, and the help Iran and the UK can provide to each other in this regard, and called Iran as "the gateway for finance, business and humanitarian flows to mainly Herat."

He called for this cooperation/conversations to start sooner rather than later, because although the reconstruction agenda is not clear yet, it'd be important for the companies to establish connections now if they want to take advantage of opportunities as quickly as they come up, he said. He also promised to bring as many companies to meet IBCCIM's outgoing trade mission to London, as possible. He finally expressed confidence about the future of the Iran British trade relations.

Then Michael Thomas began to speak, by introducing his 35-member trade mission, which included three major bankers, and mentioned a forthcoming signing of a memorandum between a British and an Iranian company to jointly manufacture electricity-metering equipment in Iran.

On Afghanistan, he expressed relief that the Taliban's dark chapter was all over now, which created an environment for joint cooperation to reconstruct Afghanistan. He saw great scope for joint venture construction and contracting deals, and a great scope for procurement of the necessary material cheaply here in Iran.

At the conclusion of Michael Thomas' remarks, guests were called to the dinner tables. The reception ended shortly after 23:00.

Lord Mayor Meets ICCIM/IBCCIM Members

Alderman Michael Oliver, Lord Mayor of London, who headed a high-ranking mission to Tehran between 4 and 8 February 2002, consisting of managers from British banks, as well as insurance and investment companies, met with H.E. Eng. Ali Naghi Khamoushi, President of ICCIM and IBCCIM. They talked about bilateral trade issues. Lord Mayor indicated that his visit to Iran was to help strengthen Iran and UK trade relations, and said that British companies had many experience in privatisation, financing, and investment in industrial projects, while they welcome the idea of transferring technical know-how to Iran. "Time is right for more economic cooperation between the two countries," said Lord Mayor.

Eng. Khamoushi stated that in the past, Iranian private sector's credibility with foreign banks was higher than that of the government sector, and reiterated the appeal of the London City's vast financing to Iranian private sector.

He then mentioned ratification of new laws in Iran, which allow more economic openness and more private sector activities. He added: "From now on private sector in Iran has the same privileges of the government sector. Therefore it can compete in every aspect of the market, including oil, gas and petrochemical, which had so far been monopolised by the government. To solve economic and political problems in the way of expanding bilateral cooperation, clear and transparent relations is essential."

In the end Lord Mayor said that presence of London's financial officials in Tehran in only to create investment and economic partnership opportunities. Following the meeting, also attended by Ala Mir Mohamamd Sadeghi, ICCIM Vice Presient, and Dr. Amir Houshang Amini, IBCCIM Vice President, as well as several other board members of ICCIM and IBCCIM, and Dr. Fereidoon Entyezari, ICCIM Vice President for International Affairs, the Lord Mayor and his accompanying mission, including Michael Savory, Sheriff to the City of London, and terry Stone, Senior Middle East Consultant, International Financial Services, London, attended a roundtable meeting with the invited ICCIM/IBCCIM members. In his introductory remarks, Lord Mayor said: "City of London in the largest financial centre in the world, and every major bank in the world has offices there, and many of them have concentrated their entire international financial activities in the City of London."

He continued: "Iran has one of the most important economies of the region, and our aim from this visit is to realise how the City of London can help promote trade opportunities between the two countries."

Then William Knight, Managing Director of Gryphon International Ltd., made a presentation. He tied Iran's economic prosperity to three factors: investment; economic globalisation, and the government's resolve to implement economic development programmes. Terry Stone also spoke of the need to create SMEs, as the key to the economic development, and said: "British economy is dependent on SMEs. These enterprises are more labour-force-intensive than investment-demanding, and as a result create new job opportunities."

He singled out access to the modern technical know-how as vital to SMEs and emphasised that young people and the elderly who decide to establish SMEs should receive assistance."

London Chamber of Commerce Trade Mission at the Chamber

In the last months of the Iranian Year 1380 (2001-02), numerous trade missions from the UK visited Iran. They included a 35-member mission from London Chamber of Commerce, known as "the Voice of London." It included a diverse range of British businesses such as auto-part and machine tool manufacturing companies, and banks and investment organisations.

During their one-week stay in Tehran, the LCC trade mission attended a roundtable business meeting hosted by ICCIM/IBCCIM.

Attended at the meeting were Dr. Amir Houshang Amini; Eric Jenkinson, UK Embassy 1st Commercial Secretary; Steven Smith, UK Embassy 2nd Commercial Secretary; and Martin Johnston, Director General BICC, who was visiting Tehran to help arrange the outgoing IBCCIM trade mission to London.

First, Dr. Amini welcomed the LCC's extensive presence with their current mission, and called for more cooperation between the two countries for the reconstruction of Afghanistan, with Iran enjoying a unique position in that regard. He added that in the long-standing trade relations between Iran and UK, the balance had always been in favour of the Britain, and expressed hope that future bilateral cooperation in the reconstruction of Afghanistan could help level the balance.

Dr. Amini ended his remarks by announcing the readiness of IBCCIM and BICC to help create investment and production SMEs aimed at closer cooperation, other than joint participation in the reconstruction of Afghanistan, in responding to the consumer markets of Central Asian and other neighbouring countries.

After Dr. Amini, Michael Thomas, mission manager and Iran Trade Advisor to the Middle East Association and Trade Partners UK, reiterated the advantages of Iran as the bridge for British companies to establish their presence in Afghanistan, and said that the two-way trade relations between Iran and the UK is growing and private sectors in both countries should exploit the numerous new and promising opportunities.

Then Martin Johnston, Director General BICC who was in Tehran to coordinate the issues related to the outgoing IBCCIM trade mission to London, emphasised BICC's commitment to both the bilateral trade relationship, and any joint effort to participate in the reconstruction of Afghanistan.

After making official remarks, mission members introduced themselves and later guests began private talks with each other on potential trade collaboration. On its last night in Tehran, the LCC mission also attended the IBCCIM's annual gathering and reception at Hotel Homa, and it was a good opportunity for both sides to continue their business talks.

Irish Trade Mission Meeting with IBCCIM Members

The Northern Ireland Trade Mission, sponsored by Trade International Northern Ireland, was another trade mission, which visited Tehran recently. The 24-memebr mission stayed between 15 and 20 February 2002, and consisted of representatives from transport, agricultural machinery manufacturing, and mining, oil and gas companies. They also attended a joint roundtable with IBCCIM members.

This mission, like other missions visiting Tehran in winter, left with considerable success.

British Construction Mission in Tehran

The last British mission to visit Iran before the end of Iranian Year 1380, consisted of 15 construction, engineering and investment companies. Other than having a roundtable with the members of IBCCIM and ICCIM, the mission flew to Mashad and attended a seminar aimed at development of a working cooperation between the two countries in the reconstruction of Afghanistan. They also exchanged views with their Iranian counterparts.

Mission's leader was Ms. Sharon Ward, who together with Eric Jenkinson, British Embassy's Commercial Secretary, met with Dr. Amir Houshang Amini, Vice President of IBCCIM, and several IBCCIM members. They joined voices to reiterate the Iran's unique position in the reconstruction of Afghanistan, especially considering the supply of building material, working force, and skilled contractor/sub-contractor companies familiar to the region.