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Iran Economy Update
Issue 92/2016 – Monday August 29th
Content
Iran-Korea Technology Exchange Center was launched in Tehran
Industry minister says he issued instruction for operations of LG and Samsung in Iran
Minister of Finance says this government has restored calm in Iran’s economy
A Russian delegation in Iran to pursue goals for bolstering economic ties
Iran and France develop environment and energy cooperation
Iran-Korea Technology Exchange Center was launched in Tehran
The Iran-Korea Technology Exchange Center, the framework of which was outlined in an agreement signed in May during the visit of Korean president to Tehran, was launched on Sunday, IRNA reported. The center was launched in the presence of Ali Yazdani, the deputy minister of Road & Urban Development and managing director of the Iran Small Industries &
Industrial Park Organization (ISIPO), and Young-SUP Joo, the president of Korea’s Small & Medium Business Administration (SMBA).
Ali Yazdani told reporters that the center’s operations will cover areas including training, marketing,
technology transfer, and establishing links between the two countries’ experts in small and medium industries. He said the two countries’ annual trade volume stands at $5 billion which is planned to grow to $25 billion in ten years.
Industry minister says he issued instruction for operations of LG and Samsung in Iran
The minister of Industry, Mine & Trade said in his meeting with Korean President Ms. Park Geun-hye in May, he had noted that this country not only can carry out production, but also can undertake parts of its research programs in Iran whereby use Iran’s capacities in such sectors. According to IRNA, Mohammadreza Nematzadeh who was speaking on the occasion of ‘Government Week’ at a ceremony
to inaugurate the Samsung refrigerator freezers and Side-by-Side refrigerators manufacturing line said Samsung and LG brands have been instructed on what activities they are supposed to do *in Iran+. “We emphasize that first, manufacturing activities should be carried out in Iran; Second, the importation of machinery and equipment should be compounded with the delivery of designing and engineering services; and third, we have underscored that such cooperation should lead to the export of the products manufactured in Iran.”
Three conditions set for Korean companies in Iran: manufacture in Iran, transfer
engineering services, and export products It seems that the Iranian Labor News Agency (ILNA) has a better and more precise and accurate coverage of the inauguration ceremony of Samsung factory compared to IRNA: ILNA has quoted Nematzadeh as saying during the inauguration ceremony that “in the instruction that I have personally issued for Samsung and LG, I have defined new rules and approaches that the companies are obliged to adhere. We have no problem with their desire to use their own brand but their products should be manufactured in Iran. [Just like] we manufacture Peugeot in Iran though it still carries its French name, or Toyota is manufactured in the US but carries its Japanese name.”
“Another point is that designing and engineering operations should also be carried out in Iran because
2 we are capable in this regard both in terms of
scientific and workforce abilities,” added
Nematzadeh. One more precondition we’ve set is the export of products, he said. “These companies cannot proclaim having good products unless they manage to export 30 percent of their products. It is then that the people will realize that such
manufacturers produce high quality products, and it is only then that even the ministry encourages the people to purchase such products.”
Nematzadeh said South Korea owes much of its progress to the dedication of its people and said “in a meeting I had with the former Korean ambassador, he told me that our people trust their coutnry’s products and the government prevented the importation of Japanese goods and levied taxes to promote exports. That was the case that today Korea has turned into one of the largest export countries in the world.”
Speaking at the inauguration ceremony, Hamidreza Hashem-Nia, chairman of the board of Takvin
Electronic Company said “Today we are experiencing tough conditions and despite having faced many problems, from sanctions to threats and
unprofessional competitions, we managed to launch this manufacturing line.” He said that this company has now achieved a “special success” as we witness the launch of the largest and most modern home appliance factory in the [Middle Eastern] region. He said this company manufactures 2 million
refrigerators, TV sets and other home appliances.
Hashem-Nia said negotiations have been held with Samsung for exporting products to the neighboring countries and we are hopeful to be able to meet a major part of the region’s demands. See pictures here: goo.gl/fDGY5l
On August 7th, Mohammad Tahan-Pour, head of the Iranian Home Appliance Sellers Union had said that Iranian people are after LG and Samsung products and that “these two brands should also be considered as the Iranian manufacturers.” At that time, Tahan-
Pour had declared that the new Samsung factory will be inaugurated during the Government Week (23-29 Aug) and said the factory will turn into the region’s hub in which products would be manufactured with the “Made in Iran” label. He said 170 containers carrying manufacturing line machineries have been imported for this purpose.
Minister of Finance says this government has restored calm in Iran’s economy
Minister of Economic Affairs & Finance Ali Tayyebnia appeared as a TV guest last night on the occasion of the ‘Government Week’ and took a brief look at the Iranian economy in the past years. According to ILNA, Tayyebnia said we have been facing an economy that was suffering from structural imbalances caused by inappropriate policies formerly implemented. He said in 2012, we faced a negative economic growth rate of (-6.8%) combined with an inflation rate of nearly 40 percent. This, added the minister, took place while from a political standpoint, the country was facing a growing tension and infighting among the three power branches. Tayyebnia however proclaimed the since assuming office three years ago, this
government has stirred calm and tranquility back to the economy as the inflation rate in the Persian month of Mordad (21 July-21 August) dropped to 8.9% and an economic growth rate of 4.4% was achieved in spring 2016. The minister said the misery index (measuring a combination of inflation and unemployment rates) had reached a high level in 2012 and 2013, but thanks to the “appropriate
policies” implemented by this government, it has now declined to below its average level in the past years.
(graph below shows the inflation rate trend in the past three years.
3 According to ILNA, Tayyebnia said the Economy of
Resistance policies –outlined and instructed by the Supreme Leader-- seek reducing the economy’s reliance on oil revenues, and explained that in 1394 (ended 20 March 2016), the budget’s reliance on oil revenues was 31% and this figure will hopefully be further declined this year.
He admitted that the effects of the economic growth rate haven’t been felt by the society and explained that that the 4.4% economic growth was indeed achieved by development in major industries and this year we try to pursue economic development in small scale sectors so as the effects be more tangible to the people. He said 7,000 small and medium-scale
enterprises have been identified by the government that have either been totally closed or were working below their full installed capacities and we try to revive them by giving banking loan facilities. He said in the provincial trips he has had during the
Government Week, he feels an improvement in the state of the small and media enterprises and can see that calmness has been restored in SMEs.
A Russian delegation in Iran to pursue goals for bolstering economic ties
The Islamic Republic News Agency (IRNA) reported that a 25-member Russian delegation representing the country’s private and production companies has travelled to Iran on a four-day mission to develop platforms for bolstering cooperation. The visit in is line with realizing the MoUs and documents already
signed between the two countries to enhance
bilateral trade volume. The delegation is scheduled to attend a conference titled “Iran’s sustainable
presence in Russian market” which will be held on Tuesday with the participation of more than 500 representatives and business executives of Iranian companies. The Russian delegation will also visit a number of Iranian companies and hold bilateral negotiations with their Iranian counterparts.
According to IRNA, in autumn 2015, Iran and Russia signed outlines of a roadmap for implementing several economic, commercial, industrial, and power plant sector projects totally worth $40 billion.
According to the declaration of Russian Energy
Minister Alexander Novak, the value of bilateral trade volume during the first six months of 2016 grew by 69 percent compared to the similar period in 2015.
Iran and France develop environment and energy cooperation
After meeting with French Minister of Ecology, Sustainable Development & Energy, Iran’s
Energy Minister said in the electricity sector, Iran has
“very good” potentials for cooperation. According to Mehr News, Hamid Chitchian said the first contract for installing a geothermal plant with the power generation capacity of 5 MW has been signed and added that Iran is ready to cooperate with France in this respect. “Iran is ready to cooperate with France either in the form of investment or through utilizing modern systems.” The Energy minister said “very good” contracts have been sealed between the Swedish and French companies and the Iranian Water & Wastewater Company (affiliated to the Energy ministry), and said the Islamic Republic is ready to cooperate with French firms in the fields of exploration of deep waters, restoring groundwater, using modern desalination technologies and so on.
Chitchian however said one of the impediments in cooperation with European companies is banking transactions.
7 12 17 22 27 32 37 42 47
July 2016 8.9%
Jan 2016 15.8%
Aug 2013 40.1%
4 Meanwhile, after meeting with Iran’s vice president
and head of the Iranian Department of Environment Massoume Ebtekar, Ségolène Royal said Iran and France will carry out joint environment projects to counter water shortage and pollution challenges.
Iran’s capacity to export oil products stands at 500k bpd
The deputy Petroleum minister and managing
director of National Iranian Oil Refining & Distribution Company (NIORDC) said the volume of the country’s export of oil products has reached 400,000 bpd which can be extended to 500,000 bpd but the limited capacity of southern ports doesn’t allow the figure to raise further, IRNA wrote on Sunday. Abbas Kazemi said he is hopeful that with developing structures at the southern ports, new capacities are generated for exporting additional oil products.
He said that so far, license for building refineries with the total refining capacity of 1.4 million barrels per day have been issued, and named Siraf (480,000 bpd), Persian Gulf Star (300,000 bpd), Anahita (150,000 bpd), and Pars (120,000 bpd) as the new refineries that are being developed with the involvement of the private sector. He said the
refineries will help turning Iran into one of the largest exporters of oil products in the world. He also
confirmed that for undertaking the construction operations in Pars refinery, negotiations are being held with Italy’s Eni without giving more details.
Kazemi said in the past 160 days, the country on average has imported 12 million liters per day of gasoline but promised that with the launch of the new gasoline processing unit at the Bandar Abbas Refinery, the country’s need to import this fuel will be declined to 6 million liters per day.
