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Iran Economy Update
Issue 45/2017 WEDNESDAY APRIL12TH
Content
CBI puts limit on amount of hard currency people can hold in cash
TPO denies bankruptcy of Darougar
ATR to deliver four aircrafts to Iran in two weeks
Korean Hyosung to establish poly propylene plant in Iran
IDRO establishes JV with local companies to move away from reliance on foreign shipbuilding industry
Iran oil contract model still under review: MEED Foreign Currency
CBI puts limit on amount of hard currency people can hold in cash
In a directive issued on Monday, the CBI has put restriction on the amount of hard currencies people can possess at home. The amount of allowed foreign currency that people are allowed by the CBI to hold in cash is up 10,000 euros or its equivalent, or else they should have proper explanation and documents for it the daily Shargh wrote. If the people fail to provide sufficient explanation and proof, they are given three months to open a foreign exchange account in banks, or sell the currencies to the authorized exchange offices at the open market rates.
“It seems that with this new instruction, the CBI has take new step to organize supply/demand mechanism and prevent any sort of illegal hard currency transaction which is deemed as smuggling,” wrote Shargh on Wednesday. The daily believes that the main reason for people to hoard foreign currency is using it as a hedge against inflation and preventing erosion of their savings at a time when bank deposit interest rates are not attractive to them. Hence, argued the daily, instead of putting limitation on the amount of possessed hard currencies, the government needs to reduce the people’s inflationary expectations and ensure economic stability. Shargh also warns that issuing such instructions at a time when the country is not facing a foreign exchange crisis is not necessary and can cause the people worried that it is a precautionary measure taken to prevent an imminent crisis in the market. “Moreover, the CBI is not able, neither from a legal point nor a performing act to investigate every single people in the society and identify the law offenders. Hence, issuing such an instruction not only will threaten the society’s psychological security, but will hurt credibility of the CBI,” added Shargh.
TPO denies bankruptcy of Darougar; reformist daily sees it as political tool against Govt.
Just one day after news swirled by hardline Tasnim news on the bankruptcy and shutdown of Darougar, an old-age Iranian detergent & hygiene factory, the head of the Tehran Province Industry, Mine & Trade Organization debunked the rumor. Shargh daily wrote today that Mohammadreza Mes-Foroush has underscored that the factory’s business and operations continues as usual. Also, Bijan Esmaeili, the managing director of the Darougar complex implicitly accused the rumor-busting websites and telegram channels of trying to generate the sense of despair and frustration among the society. “How is that possible that a complex that accounts for producing 60 percent of detergent and hygiene products be closed down?” asked Esmaeili, according to IRNA.
2 Foreign companies/organizations in Iran
Country Sector details
France-Italy Aircraft Iran Air signed a contract on Monday to buy 20 turboprops from ATR manufacturer totally worth $400 million. According to IRNA, four planes will be delivered in two weeks, nine by the end of 2017, and the rest in 2018. Explaining the advantages that such double-engine planes offer, ISNA wrote on Tuesday that they are designed for regional flights and can be used in small airports in Iran. The planes are also fuel efficient when compared with the large scale ones, added ISNA.
Korea Petrochemical HYOSUNG Company is going to establish a poly propylene plant in Iran as part of an agreement it has reached with the National Petrochemical Industry Company. The Korean company has declared that it is in negotiations with the Iranian party to decide about expanding poly-propylene activities in Iran. (Donyay-e Eghtesad, Shana and Tasnim)
Netherlands Road
transportation
An official from the Iranian Road Maintenance & Transportation Organization met in Tehran with two visiting senior officials from ministry of Infrastructure & Environment of Netherlands and showed interest in inking an agreement in developing cooperation in road transportation to exchange goods and products, Mehr reported on Monday.
Germany Knowledge Transfer
An agreement was signed between the minister of Labor, Cooperative & Welfare’s deputy for entrepreneurship affairs and the head of the German Saving Bank Association. The agreement is on transferring knowledge and experience on ways for developing and expanding SMEs’ finance by the Iranian financial institutions. According Eessa Mansouri, the Iranian deputy minister who signed the agreement, the German Saving Bank Association will hold training courses on financing methods as part of Iran’s plans to create job opportunities, Mehr news reported on Tuesday.
Shipbuilding
IDRO establishes JV with local companies to move away from reliance on foreign shipbuilding industry
According to a ratification proposed and approved by the ministry of Industry, Mine & Trade in the shipbuilding sector and within a 10-year strategic plan, IDRO is going to prevent ordering the construction of large vessels to foreign companies, ISNA wrote on Wednesday. To realize this objective, IDRO is establishing a joint venture with the Islamic Republic of Iran Shipping Line (IRISL) and the National Tanker Company (NTC) and they will get help from a “number one foreign partner”, added ISNA. This long-term strategic plan has also taken into consideration the issue of maintenance and construction of ship equipment in Iran in order to wean the country away from reliance on foreigners in shipbuilding industry.
MEED Watch
3 Iran oil contract model still under review MEED – April 10
Oil minister says national security body is still assessing law, pointing to delays in oil field tenders
The Iran Petroleum Contract (IPC) model is still being reviewed by the Supreme National Security Council, according to the country’s petroleum minister, pointing to further delays in tendering oil field projects. ISNA quoted Petroleum Minister Bijan Zangeneh as saying the contracts, drawn up to attract overseas companies to Iran’s oil and gas sector, are still being assessed by Iran’s highest security body. In January, NIOC qualified 29 Internaitonal Oil Companies to bid on upcoming project but the date of the first tenders has been delayed since February. Tehran is keen to get Western and other international oil companies to participate in the Iranian energy sector in order to update infrastructure, develop new fields and expand capacity. Last year, oil majors TOTAL and CNPC signed a preliminary $4.8 billion agreement to develop South Pars phase 11 gas field but few binding long-term deals have been signed since sanctions were lifted in January 2016.
President Hassan Rouhani faces opposition to the IPC from hard-line conservatives in Iran’s political establishment, while fighting a campaign for a second term in office. It is unclear whether the IPC will be approved before the election on 19 May. Hard-line cleric Ebrahim Raisi announced on 9 April he would run against Rouhani, challenging the president’s economic record. The election of a conservative as president in May could impact the terms of the IPC, which some conservatives believes give too much control over Iran’s oil assets to overseas companies.
