Economy, Business And Markets

Foreign Investment Roadmap Ready

Foreign Investment Roadmap Ready
Foreign Investment Roadmap Ready

A roadmap for foreign economic cooperation has been developed and organizations in the country will soon present investment opportunities to foreign delegates, the Economy Minister Ali Tayyebnia said Monday.

"The role of every country and domestic organization has been specified in the roadmap and it is hoped that by realizing the objectives we too can have access to and benefic from global business opportunities," he said at the National Conference on Bolstering the Business Environment on Monday.

According to the World Bank, Iran's business environment ranking has improved from 152 to 118 "but the government is aiming for a double-digit position," the minister said.

Tayyebnia said promoting economic stability, taming inflation, structural reforms and enhancing the business environment of the country has been on top of the government's policies.

"Following monetary and fiscal regulations has helped revive stability in the country's economy," he said.

The minister noted that utilizing international opportunities to foster economic self-reliance would be in line with tenets of the 'resistance economy' - a set of economic principles proposed by the Leader, Ayatollah Seyyed Ali Khamenei to reduce reliance on oil revenues and boost domestic production

"We should be cautious not to repeat past mistakes," he said "Foreign investment should be anchored to enhance domestic manufacturing."

Tayyebnia referred to Ayatollah Khamenei's call for an 8% economic growth saying such rates will ensure public welfare and create jobs

Masoud Karbasian, head of Iran Customs Administration, told the conferees that customs clearance for imported goods has decreased dramatically from 26 to 2 days.

"Customs Administration has done its fair share in enhancing the business environment," he said.

Unscathed by Oil Revenue Fluctuations

The economy is less vulnerable to fluctuations in foreign exchange revenues thanks to the national economic resilience. "Even though the country's oil income has nosedived this year, overall volatility in the forex market has declined," IRNA quoted Tayyebnia as saying.

According to Tayyebnia oil revenues have dropped to $20 billion this year from a whopping $100 billion a year ago due to the oil price crash.  Last week crude prices hit their lowest level for nearly seven years amid OPEC's disarray, limping demand and buoyant production.


Middle-of-the-Road Approach

Mohammad Baqer Nowbakht, the government spokesman also weighed in on the issue of forex rates late Sunday, saying the administration seeks a middle way to manage foreign exchange rates which is neither interventionary nor a hands-off approach.     

"Forex rates are important in Iran even for those who are not directly involved in the market; therefore continued fixed and/or free market rates would create deeper problems for the economy," he said.

"Going with the free market rates would cause upheavals in the foreign exchange market."

Nowbakht discussed the role of private sector investment in the next five year plan (2016-2021), saying that the government would perform largely as a regulator paving the way for a more visible and effective role for private enterprise.

"The private sector accounts for a substantial portion of the country's liquidity which is mostly parked in banks as they (banks) are less risky," he said adding that "Improving the business environment would enlarge private sector role in the economy."

Forex Rates to Retreat

Meanwhile, Samad Karimi, head of the Exports Department of the Central Bank of Iran said foreign exchange rates will ease considerably in the last quarter of the current year (ending March 21, 2016). He said the CBI is "monitoring the foreign exchange market to minimize volatilities," IRNA reported.

Karimi pointed to the CBI plan for lowering forex rates and said the regulating body will gradually increase the supply of hard currency into the market.  

"Moreover the demand for foreign currencies will also decline as factors fueling demand over the past few months will fade away. Forex rates will not increase or undergo another rally this year," he said, a claim many observers dismiss.

He added that several "economic and psychological factors were responsible for the greenback's recent rally." He rejected the oft-mentioned charges that the government is deliberately devaluing the national currency to plug deep holes in its budget born out of the decline in international crude oil prices.

"The share of non-oil revenues in the budget and in financing big projects has increased considerably. This is while we see a steep decline in the share of oil revenues .Therefore the volatilities in the forex market have no effect on the government budget or revenues whatsoever," he said.

Karimi stressed that the government's foreign exchange revenues are spent for importing basic commodities and services at the official exchange rate. He firmly rejected claims that the government sells its foreign exchange revenues at the parallel market rate to make up for the budget deficit.

"Fluctuations in the forex market largely affect those in non-oil export and importers who acquire hard currency from the market."

The CBI has warned uncertified bureaux de change to register with the regulating body or face consequences. In signs that the CBI is tightening measures to control the forex market, the police last week carried out raids on street currency dealers and middlemen in Tehran.  In one case they detained almost 50 middlemen and charged them with illegal currency transactions.