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Iran Economy Update
Issue 85/2017
TUESDAY SEPTEMBER 19TH
President Rouhani issues priority assignments for 16 ministries
The front-page of the Tuesday edition of the daily Shargh was devoted on the priorities President Rouhani has defined for his 16 ministers. “President Rouhani has rung alarm bells and in order to prevent the existing crises turn into super-crises, he has given a two month time to his ministers to define their general and specific priorities in line with the priorities and targets set by Mr. Rouhani” wrote Shargh. The common priorities that should be pursued by all the ministries include:
1. Improving the administrative health system, promoting transparence, making information available to the public, providing equal opportunities for all people, protecting the public properties, and recognizing the supremacy of law in all affairs;
2. Implementing meritocracy in employments;
3. Pursuing the objectives defined within the Iranian „Charter of Citizens Rights‟ unveiled a few months ago by the President;
4. Observing the environment protection requirements;
5. Enhancing the role of the private sector;
6. Establishing competitiveness and abolishing monopolies;
7. Establishing electronic government policy
8. Enhancing the role of the youth and women from different ethnicities and religions.
Shargh has quoted Hadi Hagh-Shenas, an economic expert and former member of the parliament as saying that defining general and specific priorities for all the ministries has been an unprecedented development in post-Revolution Iran and indicates the “critical” status the country is in. “Some problems facing the country can no longer be termed a problem and rather, they’ve turned into a crisis,” said Hagh-Shenas.
The pension fund crisis, water, environment, and joblessness of the youth are among such crises, that cannot be easily tackled using the objectives defined under the Development Plans or under the 20-Year Perspective Document, and need some “emergency plans” to be defined to solve them, added the lawmaker. “The unemployment, for example, today requires an immediate pain-killer. Or although the inflation rate has fallen to a single digit, it is still twice the global average. Or the operational balance of the budget has become negative, which means that the government’s revenue from tax and other sources is less than its current expenditures.”
“Hence, the country is moving towards a crisis,” said the former lawmaker.
Shargh has also published the specific mission the president has defined for each ministry, a summary of which will be described below for the economic-related ministries.
2 Ministry Priorities
Ministry of Economic Affairs
& Finance
R=Reforming the banking system and enhancing its efficiency;
Improving tax payment system;
eliminating barriers in attracting foreign investment with priority given to export-oriented FDI;
Pursuing privatization policy and revisiting the deviations previously took place in implementing this policy;
countering money-laundry and observing international regulations in this regard in order to develop relations with the global banking systems;
improving the coutnry‟s ranking in international business indicators;
making an overhaul in the treasury‟s software in order to enhance efficiency and establishing more coordination between the treasury and the Management & Planning Organization (MPO)
Enhancing role of the private sector, increasing competitiveness and brining monopolies under regulation and control.
Ministry of Labor,
Cooperative &
Social Welfare
implementing “active job market policies”, offering insurance incentives, improving skills and focusing on potentials and capacities the different regions in Iran have;
Implementing structural reforms in the financial status of pension funds to reduce their reliance on public budget
enhancing transparency in revenues, expenditures, investments and other activities of the Social Security Organization
improving living standards of the workers
addressing inefficiencies plaguing cooperative enterprises, merges of the cooperatives, and establishing regional and national cooperatives
eliminating absolute poverty and reducing social harms
implementing the multi-layer social security system
Ministry of Agricultural Jihad
enhancing water usage efficiency in producing agricultural products and cooperation with Energy ministry in balancing underground water
boosting greenhouse cultivation
reducing energy intensity in producing agricultural products
sustainable production of strategic products, increase products per surface unit
protecting forests, soil, pastures and preventing dust and desertification
reducing usage of fertilizers and pesticides
Conducting feasibility studies for extraterrestrial farming
Encouraging cultivation of organic products
Ministry of Road
& Urban Development
Making overhaul in investment in rail transport industry
Electrifying railways
Attracting private sector and foreign investment in transport infrastructure projects
Renewing the aviation fleet
Developing ports
Initiating mechanisms to secure finance for housing sector
Ministry of Industry, Mine &
Trade
increasing capabilities of the private sector, creating an competitive environment, and enhancing investment security in the business environment
revisiting rules and regulations in attracting foreign investment
reducing monopolies in the public and private sectors
protecting domestic production
deregulations in order to facilitate operations of private businesses
implementing energy saving policies
Developing SMEs
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Realizing a 15 percent increase in non-oil exports in the next four years
Developing mineral industries
Developing advanced technologies and improving relations between Iranian and international companies
Encouraging and developing involvement of Iranian companies in supply chain of foreign companies
Ministry of Petroleum
Making overhaul in the upstream petroleum sector through developing foreign investment in order to develop oil and gas fields and increase their recovery rates
Making overhaul in the downstream petroleum sector and increasing added value in this sector
Attracting investment of the private sector and foreign companies in petrochemical industry
Reducing natural gas consumption through enhancing efficiency in order to free up more gas for exports
Activating the port of Jask for oil exports
Playing role in global LNG industry
Representatives of German entrepreneurs visit Tehran to evaluate economic status Iranian local media have had a limited coverage of a “joint session” held in Tehran‟s Homa Hotel on Monday, participated by a delegation of German entrepreneurs and industrialists, Iran‟s minister of Labor, and representatives of the Labor ministry‟s affiliate holdings and companies.
Iran‟s minister of Labor, Cooperative & Social Welfare, his deputy, and the head of the Social Security Organization were among the keynote speakers at the seminar. Labor Minister Ali Rabiei said the holdings and companies affiliate with this ministry are ready to cooperate with foreign companies, and elaborating on the underlying influence of this ministry in the Iranian economy, he said two large banks and ten percent of the value of the Tehran Stock Exchange is under its control and possession.
Rabiei said that four funds are operated privately but supported by the ministry of Labor, Cooperative & Social Welfare. He said as opposed to the German government that does not get involved in negotiations with the foreign companies that do business with German private sector, the Iranian government does so. “In Iran, due to the advantage of investment in such funds, the government holds negotiations with the private sector of foreign countries,” added Rabiei, according to the IRIB. The advantages of such funds are that they act privately, enjoy government‟s support, and can guarantee investments, Rabiei said.
The energy, construction, banking, maritime transportation, and commerce are among the areas that the aforementioned Labor ministry-affiliate funds and companies are active in, with a capital totaling $33 billion or 100 trillion tomans, Rabiei said. “We are ready for establishing relations between foreign and Iranian companies and the Iranian 80-million populated market along with the regional 300-million populated market provide a secure environment for investment,” added the minister. IRIB news (state TV webpage) wrote that the head of the German delegation expressed satisfaction with his six-day stay in Iran and said “good capacities” exist for bilateral cooperation. He said the purpose of this trip was evaluating the economic status of Iran.
Deputy Minister of Labor Eassa Mansouri told the seminar that the ministry pursues establishing link between domestic and international companies and in line with this objective, it plans launching a “trade and subsidiary contracting center” in Iran that provides services to the domestic and foreign companies and facilitate commercial transactions between them.
Mansouri said if the number of German companies demanding cooperation with Iran exceeds a
4 minimum level, we are ready to establish a specific trade and subsidiary contracting service office to facilitate trade relations between the two countries.
Iran and France held joint trade seminar
The president of Iranian Chamber of Commerce, Industry, Mine & Trade (ICCIMA) said the value of trade volume between Iran and France will increase to $4.8 billion in 2018, Mehr news agency reported on Tuesday. Gholam-Hossein Shafeie made the comment during the Iran- France trade seminar held at the ICCIMA Hall. Members of the Movement of the Enterprises of France (MEDEF), which is the largest employer federation in France, along with representative of a number of Iranian companies attended this seminar and according to the IRIB News Agency, the Iranian and French companies held B2B meetings after the seminar.
During his speech at the seminar, Mr. Shafeie called for developing economic relations and said in the past few years, several MoUs have been signed between the two countries‟ private and public sectors a major of which have turned into contracts, including the deal for buying Airbus, the deal on joint car manufacturing, and the gas field development with Total. According to Mehr news agency, Shafeie said Iran can play the role of a bridge between France and the Central Asian, Middle Eastern and the Caucasus countries. With an annual GDP of $425 billion, Iran has the second largest economy in the region and has less investment risk with higher return in comparison with other countries in this region, he said. “proper facilities exist for developing joint investment in energy, transport, infrastructure, environment, IT, health, agriculture, tourism, and service sectors, and joint investment for manufacturing joint brands and their exports to the 450- million populated regional markets is of high importance,” said Shafeie.
The ICCIMA president however admitted the existence banking, customs and visa application barriers are the problems that should be addressed by the two sides.
