BUSINESS & ECONOMIC NEWS

Iran’s Authorisation for Investment by Five European Enterprises

Investment authorizations were issued by the Investment High Council (IHC) for five European enterprises according to a communiqué by the Ministry of Economy and Finance.

According to the said communiqué, the British company Techno-craft Motors is to invest US$44,684 million in Iran's automobile industry having a share of 71% in the project concerned while 29% of the required capital shall be procured by Iran. Germany's Hansa Chemie AG, Chematur Engineering AB and the UK's NPC International have been authorised to invest as much as 44,200 million euros and 22,190 million euros and 168 million euros respectively in Iran's petrochemical projects.

In addition, the IHC has given the French company Technip Coflexip SA, the authorisation to invest US$4.250 million to design, engineer, manufacture and provide oil, gas and petrochemical facilities.

The total flow of capital into Iran's post-Islamic-revolution era economy was only US$2.232 billion which, compared to other countries denotes a small share of Iran in global capital markets.

The law of Attracting and Protecting Foreign Investments was amended this year after 47 years, and the executive regulation of the said law is currently under reviewing and examination to be approved soon.

Foreign Nationals Residing in Iran will Receive Banking Facilities

Foreign nationals residing in Iran may utilize credit facilities given by Iran Exports Development Bank (IEDB) for the export of Iranian goods and commodities.

A report released by Public Relations Department of IEDB quotes the Managing Director of IEDB, Mr. N. Kehzadi, as saying, "The foreign nationals holding a permit for residence in Iran are authorized to take advantage of various credit facilities given by IEDB for the export of non-oil products, in conformity with the Law on Usury-Free Banking Operations. The relevant directives have already been communicated to IEDB's branches nation-wide to which qualified applicants may seek recourse to apply for the said credit facilities."

23 Projects Receive $3 Billion of Foreign Investment

The Deputy Minister of Economic Affairs and Finance, and the chairman of the Organisation for Investment, Economic and Technical Assistance of Iran recently announced that “offers amounting USD 3 billion for foreign investment in 23 projects has been under consideration, which will be decided upon during the first upcoming meeting of the Foreign Investment Board, chaired by the respective authorities’ fully-authorised representatives, after being studied from the technical point of view.” “If all accepted,” he continued, “it could be considered a revolution regarding the foreign investment in Iran, because in recent years the level of foreign investment has been steady, making it an average USD 400 million foreign investment in Iran. According to this official, the largest share of investment in Iran belonged to the European countries, especially Germany, as well as India, and Arab countries. The greatest part has gone to the chemical industries, including cleaning agents production industries, and then to cement and vehicle industries.

He added that in recent years, only about half of the planned projects had been implemented, meaning that only around USD 200 million out of the perceived USD 400 million materialised, but in view of the amendment of the tax law, and especially considering the new foreign investment act, there has been a marked increase in the foreign investors’ willingness towards Iran. The head of the Organisation for Investment, Economic and Technical Assistance of Iran announced that his office had established a ‘Centre for Investment Services,’ which included two departments: one tasked with providing the information required by foreign investors, from the Foreign Investment Promotion and Protection Act (FIPPA) and its executive-by-laws, to other pertaining information; and the other being manned by representatives from every investment-related organisation – all doing their best in order to facilitate foreign investment in Iran.

In the end, he added that this centre would start operation in two months time.

8 Million Dollars of Foreign Investment During the First Quarter

During the first quarter of the current Iranian year 1381 (March 21- June 21, 2002), over US$8 million worth foreign investments have been made in Iran.

According to published reports, the statistical data released by Iran Technical and Economic Aids and Investment Organisation indicate that during the said three-month period, some US$8,110,000 of foreign capitals have directly been invested in Iran, to boost the total amount of foreign investments made in Iran during the past 23 years to the level of US$2,372,568,000. This figure represents the direct foreign investments made for the implementation of 117 production and industrial projects.

The foreign investment projects have been approved in this current Iranian year in conformity with the Law on Attraction and Protection of Foreign Investment endorsed almost 47 years ago in 1955. However, in early May 2002, the Expediency Council thoroughly revised and amended the said Law.

The executive by-laws of the said Law have recently been submitted to the Minister of Economy and Finance for his comments, and are expected to be approved by the Council of Ministers soon.

Included among the states which have been granted authorisations for investment in Iran are England, Germany, Turkey and Slovenia.

Although the attraction of foreign investments has been resumed since the beginning of the Iranian year 1372 (March 21, 1993) with the approval by the Council of Ministers, the measures taken so far by President Khatami's Administration have not yet resulted in boosting Iran's share of foreign capitals.

South Pars Gas Field will Generate US$5.4 Billion of Income – Experts Say

Upon implementation and completion of 8 phases of South Pars Gas Field Development Project, some US$5.4 billion will be added to Iran's annual income.

The Managing Director of the National Iranian Oil Company, M. Mirmoezi, said, "The investments made in aggregate in South Pars Gas Field will soon amount to US$16 billion. Further, NIOC is due to conclude contracts for the development of phases 9, 10, 11 and 12 of the said Field, and for the four pipelines needed to transfer the liquefied natural gas (LNG). Upon implementation of these projects, the would-be capacity of South Pars Gas Field will be four-fold. From the point of view of energy, South Pars is a unique region as it holds some 11.3% of the global gas reserves."

According to a report released by NIOC, "The project for the development of South Pars Gas Field practically commenced in autumn 1376, with conclusion of a contract by and between a consortium comprising Total, Petronas and Gasprom for the development of phases 2 and 3."

With respect to Pars Energy Special Economic Zone, Mirmoezi commented, "The development and mobilization of Pars Energy Special Economic Zone, which covers an area of some 10,000 hectares, will not only prove the best and most efficient option for" implementation of various phases of development projects, but also it will accelerate the growth and development of downstream industries established in the said Zone. Added to this will be 10,000 job opportunities, which will be created during the next 10 years to come.

The services required by all industrial production plants will be rendered in the said Special Zone in a centralised fashion. To this end, jetties have been built, four-band roads have been constructed, lands have been prepared, and water and electricity for public consumption have been supplied by the NIOC which has undertaken the responsibility of rendering services to the entities and organisations set up in the region.

UK Posts Fastest Growth for 2 Years

Reuters London. Britain's economy grew at its fastest pace in more than two years in the third quarter, revised data showed.

Britain's economy grew by a stronger than expected 0.8%, in the third quarter, the economy's best performance since the second quarter of 2000 and slightly better than its long-term trend rate. The Office for National statistics attributed the upward revision from a provisional reading of 0.7% to robust service sector output. The annual rate of gross domestic product growth was also revised up, to 1.8% from 1.7%.

In light of the sluggish global recovery, the British finance minister Gordon Brown is widely expected to pare back full-year economic growth forecasts for this year and next in his report to the parliament. Even after the strong GDP reading for the third quarter, economists said Brown would struggle to achieve the bottom of his 2.0–2.5% growth range for the year 2002.

Banking Facilities and Deposit Interest Rates in 1381

The interest rates of deposit accounts and banking facilities to be granted by government banks in 1381 have now been notified.

According to newspaper reports, in conformity with a decree by the Monetary and Credit Council, the lowest interest rate will be paid to short-term investment deposit accounts, while the highest rate will go to 5-year deposit accounts. These rates will be practiced until the end of current Iranian year 1381 (March 20, 2003) as follows:

The same report further adds that the rate of interest to be paid to special short-term investment accounts will be equal to 9% per annum.

However, it should be noted that the current year's interest rates have experienced no changes whatsoever, compared with those of the proceeding year. This comes at a time when the mechanisms and processes for calculation of interest rates to be paid to bank deposit accounts were expected to be revised by the Monetary and Credit Council.

In case of finalization of an initiative which is due to be examined and considered by the Monetary and Credit Council, the indices such as "stock exchange capital yield", "inflation rate", and "value on average of investments in various economic sectors" will be taken into account when calculating and specifying bank interest rates. If the said initiative receives approval for implementation, the interest rates will be revised and accordingly adjusted by the Monetary and Credit Council at the beginning of every year.

The same report further says that the banking facilities interest rates practiced in the current year, which were cut by 1% compared with those of preceding year, were calculated and set in such a manner that the lowest and highest interest rates will respectively apply to the agriculture sector and commerce-services sector.

The interest rates of banking facilities are as follows:

Ministry of Industries Authorises Import of Cellular Phones

The import of mobile phones and faxes shall be subject to an authorization to be issued by the Ministry of Industries and Mines.

According to news reports, the Ministry of Industries and Mines recently communicated a circular to the effect that the import of cellular phones and fax machines would be considered as the import of "special commodities." Accordingly, it would be prohibited to import them without a prior authorization by the said Ministry. The circular was issued pursuant to an approval by the Council of Ministers on a proposal submitted earlier by the said Ministry.

The mobile phone tariff was cut by some 60% with effect since the beginning of Iranian year 1381 (March 21, 2002). However the recent investigations are indicative of the fact that since no forum has been specified as being in charge of issuance of authorizations to this end, no orders have been registered for the import of mobile phones. The Ministry of Defence (as the sole manufacturer of cellular phones in Iran) has already transferred its powers in this regard to the Ministry of Industries and Mines. Under the present circumstances, a substantial portion of foreign-made mobile phones is illegally smuggled into Iran, the reason being the legal impediments and high tariffs imposed on the import of such equipment and gadgetry. Even reduction in the tariff applicable to import of mobile phones did not change the course of illegal import of cellular phones due to the reluctance of the Ministry of Industries and Mines to issue authorizations for such imports.

Presently, the Ministry of Commerce proceeds to register orders for import of fax machines, only if the Ministry of Industries and Mines approves their importation into
Iran.

Graeme Thomas: the New First Secretary and Head of Commercial & Economic Section of the British Embassy in Tehran

Following the completion of the mission of Eric Jenkinson, the former First Secretary and Head of Commercial & Economic Section of the British Embassy in Tehran, Graeme Thomas replaced him at the post and has started his work in Tehran.

Graeme Thomas joined the British Diplomatic Service in 1968. He was educated at Rowlinson School and Richmond College in Yorkshire, England. Following several postings to Africa and the Far East, he then came to the Middle East with a posting to Sana'a and then Jedda. He was posted in the early 1980s to Victoria in the Seychelles Islands, Warsaw, Poland and Riyadh; Saudi Arabia, where he had responsibility for tile civil aviation, oil, gas, petrochemical and environmental sectors.

His most recent postings have been to Singapore and Athens where he was Head of Commercial Section with a wide portfolio of subjects, which included infrastructural development, civil aviation, the 2004 Olympics Games and sustainable tourism development.

Graeme is a member of the Institute of Export, an associate member of the Chartered Institute of Personnel and Developn1ent and a fellow of the Royal Society of Arts, Manufacturing and Commerce in the United Kingdom.

British Embassy Announces its Holidays for 2003

According to the announcement by the British Embassy in Tehran, for the year 2003 the embassy will be closed in the following days, in addition to the Fridays and Saturdays.

LEGAL NEWS

Iranian/Foreign Private Sectors Invest in Iran’s Electricity Industry

The executive directives on the attraction and. protection of domestic and foreign investments in Iran's electricity generation industry were communicated by the Minister of Power, H. Bitaraf. In conformity with the said directives, the Ministry of Power will he authorised to issue authorisations for the construction and erection of power plants, upon submission of applications by Iran 's private or cooperatives sectors with or without participation of foreign partners, provided they produce technical, economic and bio-environmental feasibility reports. However, the said Ministry will severally determine and specify the particular conditions relevant to each power plant. Based on these directives which were approved in implementation of clause "b" of Article 122 of the Law on the Third Development Plan, the authorizations required for the erection and exploitation of new rower plants will be granted by the Ministry of Power. However, in case of occurrence of delay affecting the executive operations relevant to erection of such power plants compared with time scheduling prescribed in the authorisation, the authorisation will he either extended or nullified, depending on the circumstances prevailing under such circumstances including delay causes and factors and degree of confidence in completion of the work. TAVANIR, an organisation which is charged with executing the said directives, examining the applications made in this connection and verifying the financial capabilities of the applicants as well as technical, economic and bio-environmental feasibility of would be power plants, is to prepare a list and draw up the general specifications of the power plants potentially capable to be constructed by competent applicants. The list and general specification are to be communicated by TAVANIR.

Further, the investors will be entitled to receive banking facilities, to take advantage of the land and natural resources. In addition to this, such investors will be recommended, by the Ministry of Power and TAVANIR, to the forums and authorities in charge, in compliance with contractual terms and conditions, in order for them to receive facilities for the export of electricity generated by them in excess of the amount laid down and prescribed in the said directives. Based on these directives, TAVANIR will obtain and secure the preliminary licenses required for bio-environmental safety, as well as supply of water, energy and fuel, and will subsequently recommend the potential investor to the authorities and forums in charge, which will grant the required licenses and authorisations.

Exemption for Industrial Investments in Khoramshahr Special Economic Zone

Those investors who will proceed to make investments in the industries sector in Khoramshahr Special Economic Zone will be exempt from payment of duties applicable to the import of materials and machinery as well as the export of commodities manufactured in the mentioned zone.

The Managing Director of Khuzestan Special Economic Zone further added, "With such facilities enforced since the beginning of current Iranian year 1381, a major development is hoped to take place in connection with revival and flourishing of economic activities in Khuzestan Special Economic Zone. Added to such facilities is the 30% exemption for payment of customs duties and commercial benefit tax for the businessman active in this Zone, which is expected to turn Khoramshahr Special Economic Zone into a hub for employment and industrial production activities.

IBCCIM NEWS

New UK Visa Facilities for IBCCIM Members

The British Embassy Visa Section in co-operation with the IBCCIM is now able to offer IBCCIM members a new visa application facility under which IBCCIM members may pass their visa applications to the IBCCIM for forwarding to the Embassy without the member having to attend the Embassy in person, All applications must include a completed and signed application form (available from the Embassy, the IBCCIM or www.ukvisas.gov.uk), two recent passport-sized photographs, a valid passport, the relevant application fee, an invitation letter from the company to be visited in the UK, as well as a letter from the applicant's company in Iran confirming details of the applicant's employment and the purpose and duration of the visit. Spouses and children under the age of sixteen may also apply under these new arrangements

The British Embassy will only consider applications for business visit visas under this scheme. Members wishing to apply for other type of visa should apply directly to the Embassy

The British Embassy advises that they frequently require referring applications to the UK for approval and advise that all applications should be lodged at least one month, but not more than three months in advance of the intended date of travel

Submission of an application through the IBCCIM does not constitute a guarantee that the visa will be issued and the British Embassy may still need to interview individual applicants according to their requirements.