Iran’s Reintegration With World Economy

The 2016 edition of Kish Invex exhibition kicked off its first two days with a special focus on Iran's reintegration into the world economy with a number of high-ranking Iranian officials addressing the key event.

This year's edition, which commenced on Monday and runs through Thursday, consists of two exhibitions: Eighth Exhibition on Investment Opportunities in Iran and Third International Exhibition on Exchange, Banking, Insurance and Privatization.

The chief organizer of the event pointed to the strong presence of foreign companies this year, which he ascribed to the positive mood created in the aftermath of Iran's nuclear accord with world powers clinched last January.    

"With opportunities created in post-sanctions conditions, we are now witnessing the presence of 30 foreign companies and firms from Germany, Italy, France, Britain, India, Malaysia, Turkey and the United Arab Emirates," Aria Hamidian was also quoted as saying by IRNA.

"This marks a twofold increase compared to last year's event."

Hamidian noted that 170 local companies and firms have turned up at the event, rounding up the number of total participants to 200 companies.

As cited on its official website, Kish Invex pursues a number of key objectives, including introducing the capabilities of local and foreign financial institutions, the achievements of the country’s capital and insurance markets, the potentials of companies listed on Tehran Stock Exchange, modern banking and insurance services and competition in money and capital markets on par with regional countries.

At the event, Ali Ashraf Abdullah Pouri-Hosseini, the head of Iranian Privatization Organization, referred to the rate at which privatization has taken place in Iran, describing it as "less than satisfactory".

"We are not satisfied with the progress made thus far in privatization because the path that is yet to be taken is considerably long and its deeply-rooted hurdles are increasingly becoming evident," he said.

"The government must now dispense with subsidies and price controls in order to think clearly about fostering privatization in the country."

Pouri-Hosseini, who is also a deputy economy minister, noted that there is unfair criticism regarding privatization with some blaming the initiative for a hike in unemployment.

"According to statistics, by the end of the previous fiscal year, more than 30% of the growth in job creation was registered in privatized units, which shows that these claims are not true," he said.

Robust Markets

Kish Invex organizers maintain that the exhibition will be useful for financial institutions, banks, insurance companies, owners of profitable projects and the executives of investment projects in capital, energy, mining, tourism and construction markets.

It would also "help them to pursue their objectives in an environment with an easy access to a large number of managers and officials in the areas mentioned above".

On the banking front, Peyman Qorbani, the Central Bank of Iran's deputy for economic affairs, was on hand to advocate efforts with a goal of alleviating restrictions of financial markets and forming a potent monetary system.

"The general approach of the government and CBI's economic team is to establish stability in the economy and create economic transparency," he said.

"To achieve consistently high economic growth rates, limitations of the financial system must be rectified and we must shape strong and efficient systems."

The official reminded that in previous years, 90% of financing were handled by the money market and only 10% were provided by the capital market and through foreign financing.

"In view of this, Iran's financial system is in dire need of structural reforms and a rise in the share of foreign investment," he said.

"In the current fiscal year, 79.1% of financing have come from the money market, 19.5% from the capital market and 1.4% from foreign investment." Qorbani pointed to a variety of efforts that are currently underway to reorganize the banking system, saying President Hassan Rouhani is looking to expand the capital market and repay the government's debts, which are his most important plans to reform the financial regime.

On Monday, the president officially ordered the implementation of amendments to the Budget Law of 2016-17 to pave the way for the clearance of government debts to public-sector banks.

Amendments to the annual budget, which were passed by lawmakers in late August, allow the government to settle its debts to the banking sector by using CBI's foreign exchange resources. They permit the Rouhani administration to repay up to 450 trillion rials ($14.1 billion) of its debts to the lenders.