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Iran Economy Update
Issue 20/2017 MONDAY FEBRUARY 13TH
Industry minister urges Korea to transfer capital/technology to Iran’s auto sector Minister of Industry, Mine & Trade Mohammadreza Nematzadeh expressed dissatisfaction with what he described as Koreans’ reluctance to transfer capital and technology to Iran’s auto industry and said
“if they listen to us and come to their sense, our new phase of cooperation with this country will be further extended,” according to Tasnim news agency. The minister made the remarks on Sunday in an address to the international automotive conference. “We have haled talks with the Korean companies to urge them to be committed to investment in Iran,” said the minister, adding that “I have told explicitly to the Koreans that if you want the Iranian market, come and make investment just like what the French companies have done.” “They have recently extended their cooperation with the Kerman Motor but this is not satisfactory to me and they have to move towards transferring capital and technology,” added Nematzadeh. He asked why the Koreans don’t bring their research centers to Iran.
IRNA, ILNA and Fars were the three official news agencies that have covered the remarks of Nematzadeh.
4th Iran Int’l Auto Conference in brief On Monday, the daily Donyay-e Eghtesad published a report on the first day of the 4th International Automobile conference in Tehran and underscored that contrary to the previous three conferences, most of the participants were from European countries without the presence of Chinese firms. As the first speaker at the conference, IDRO managing director Mansour Moazzami said that six contracts have been finalized in this sector, details of which have been summarized in the following table:
Joint venture Details
IKCO-Peugeot Joint product coming in a month Saipa-Citroen joint product coming in 1st half of
1396
IDRO-Renault Talks in final stage. Contract to be signed before Nowruz. Joint car to be released by 2017 end Volkswagen-an
Iranian firm
on the verge of signing deal
Mercedes Benz- an Iranian firm
No details given
Hyundai- an Iranian firm
No details given
The four conditions that IDRO Managing Director Mansour Moazzami mentioned during his speech for cooperation with foreign companies included exporting joint products, maximum utilization of domestic capacities and resources, paying attention to R&D, and paying attention to the after- sale services.
As another speaker, Iran Khodro (IKCO) Managing Director Hashem Yekke-Zare said a contract for producing a new platform will be signed in the next 25 days with an Italian consortium. “This contract considers technology transfer and localization and the 1st engine will be designed by the Iranian and German engineers, the 2nd one will be designed by Iranian engineers under the supervision of German experts, and the 3rd one will merely be designed by the Iranian engineers,” he added. Yekke-Zare said that by 2025, automobile demand in Iran and the regional countries will increase to 6.7 million units. He said that the number of cars produced by these countries by then would be 5.8 million units, which means that they would still need importing 900,000 cars. He said that IKCO accounts for 52% of Iranian
2 car production in Iran and that the share will soar to 60% by 2025.
As another speaker, Saipa Car Manufacturing Group Managing Director Mehdi Jamali said that joint production will be carried out between Saipa Kashan and Citroen and that 50% of the factory has been transferred to this French company.
30% of the products of Saipa Kashan are slated for exports, he said.
François Sénémaud, France Ambassador to Iran was another speaker at the conference.
He said that his country is committed to the JCPOA and that under sanctions, France maintained its relations with Iran. “In the past 2-3 years, French companies have shown their interest in cooperation with Iran,” ILNA quoted Ambassador Sénémaud as saying. He termed the auto sector cooperation as “a win-win agreement” that leads to the creation of jobs in the countries.
After years of lagging behind, Iran finally caught up Qatar in gas production from shared field
The managing director of Pars Oil and Gas Company (POGC) said that with producing 570 million cubic meters/ day of gas from the South Pars, Iran will take equal share from Qatar in producing gas from this joint field in the next 35 days, Mehr news agency reported on Monday. Mohammad Meshkin- Fam said that currently, Iran’s production of natural gas from the field has reached 480 million cubic meters/ day but the volume will increase to 570 million cubic meters a day in the next few weeks.
South Pars is a gas field shared between Iran and Qatar. The field is known as North Dome or North Field in Qatar’s maritime boundary. Under the Ahmadinejad’s administration and due to the combination of the two problems of mismanagement and sanctions, Iran lagged behind Qatar in producing gas from this field which had resulted in migration of gas to the Qatari part and huge loss for Iran.
On 1 June 2013 and during the last months of Ahmadinejad’s term in presidential office, Mohammad Zahiri, the then POGC managing director had declared that Qatar extracts as much as 2 times gas more than Iran from the field. He said that Iran would be able to take its share provided that proper investment is made in this region.
In a TV interview aired on Friday, Petroleum minister Bijan Zangeneh said that in the Persian month of Esfand (19 Feb-20 March), President Rouhani will inaugurate the five South Pars phases of 17-18-19 and 20-21 that will increase the country’s gas production by 50 million cubic meters a day and generate some $10 billion in revenue.
CBI official briefed Swedish delegation on status of Iran’s banking sector
The deputy CBI Governor for foreign exchange affairs said that the World Bank’s estimation for Iran’s economic growth in 2016 and 2017 have been 4.3% and 4.8%, respectively. According to Mehr news agency, Gholam-Ali Kaamyab said that Iran is among the top 20 largest economies, which enjoys extensive capacities to attract investment. “With a population of 80 million people, Iran has one of the largest economies in the Middle East, and the educated youth and advanced infrastructure and abundant natural resources have provided proper opportunity for investment in this country. Besides, Iran possesses the
3 world’s fourth largest oil reserves and the world’s biggest natural gas reserves,” said Kaamyab, according to Mehr news agency.
He said that the country has managed to boost its foreign exchange reserves and reduce the ratio of foreign debt to GDP.
“The inappropriate policies [pursued by the former administration] had caused continuous inflationary pressures on the economy. In the past three years, the government and CBI have pursued policies to establish stability in the economy according to which they have implemented transparent and disciplined financial and fiscal policies to control inflation and achieve economic growth rate,” said Kaamyab. Therefore, inflation rate has dropped from above 45% in October 2012 to a single digit real now, he added. As such, this decline in inflation rate has helped establishing stability in the foreign currency market, he added.
Explaining the CBI’s initiatives to pave the way for the post-sanctions foreign investment, Kaamyab said “in the banking sector the CBI has started undertaking reforms to improve fiscal stability, effectiveness of monetary policies and efficiency of allocating resources. Such reforms include efforts to improve balance sheets of the banks, eliminating credit limitations, taking measures to reduce bad (deferred) debts, and expanding the CBI’s umbrella supervision.” He said that in the wake of the nuclear deal implementation, Iranian banks have so far managed to establish correspondent relations with foreign banks through opening accounts whereby conditions have been prepared for transferring money, issuing hawala and opening line of credit. Moreover, he said, all the Iranian banks have been reconnected to the SWIFT system via which oil sale proceeds along with the revenues generated from exporting non-oil goods are now accessible.
“Currently, we are holding effective negotiations with the export insurance
institutions which have led to the settlement of all of the matured debts. Also, thanks to the nuclear deal, the oil export revenues are receivable now,” said Kaamyab.
The CBI deputy said that the branches of Iranian banks abroad, including the Persia Bank in London and EIH in Germany have connected to the TARGET21 system.
Besides, h said, some foreign banks have declared desire to establish branches and representative offices in Iran.
Kaamyab said that in order to have the Iranian banking system compliant with the international regulations and norms, the CBI has already installed all the necessary software, hardware and related instruments and equipment related to the anti-money- laundering rules and terrorism funding and identifying the customer.
Kaamyab made the remarks on Sunday during his meeting with a Swedish visiting delegation. During the meeting, Karin Olofsdotter, director general for international trade at the Swedish Ministry of Foreign Affairs said that her country is determined to enter the Iranian market because “the figures and statistics suggest the progress and development of this country.”
1 Wikipedia: TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System) is the real-time gross settlement system for the Eurozone, and is available to non-Eurozone countries.
