Iran is a fast growing economy ...
The Iranian economy is currently enjoying
a very stable condition. Despite crude
oil price fluctuations in the world markets
in aftermath of the September 11 tragic
events, the considerable surplus in the
oil stabilization fund and government
adherence to implementing non-expansionary
fiscal policies brought about public confidence
in economic policies and helped realize
a 4.8 percent growth of the economy.
In the external fiscal sector, efficient
foreign reserve management was pursued
with relaxation of foreign trade regulations,
extension of rial and foreign exchange
facilities to export sector, exemption
of exports from taxes and charges, and
gradual elimination of non-tariff barriers.
Increasing the number of foreign currencies
traded on the TSE and bringing a relatively
mild stability in foreign exchange market
led to the reformation of inflationary
expectations and enhancement of trade
performance. Giving more freedom to banks
in allocating resources, considerable
reduction in the reserve requirement ratios
aiming at raising the potential capability
of extending facilities, and reduction
in the banks’ rate of deposits were among
the important monetary and credit policies.
In order to mop up excess liquidity, Central
Bank issued participation papers in this
year as a short-term instrument of liquidity
management.
The Third Five year Development plan is
formulated with a view top various aspects
of the existed realities of the country,
the challenges that the economy faces
and the emphasis on having a comprehensive
and balanced plan. The3rd FYDP is a package
of articles, policies, and guideline covering
26 sectoral and intrasectoral areas and
provides a comprehensive frameworks for
resolving structural impediments and economic
difficulties during the plan period. The
Railway network is particularly expected
to play a crucial role in Railways earnings
as it links Central Asian States to the
Persian Gulf and consequently to Europe.
Thus the European nations can now transit
their goods in less than 10 days to the
Central Asian nations through this reliable
and economical railway system, while being
able to know of their whereabouts at any
given time via advanced telecommunication
facilities.
During the recent years, the convenience,
comfort, punctuality and dependability
of the three railway companies have increasingly
been urging passengers to prefer railway
to road travel. The railway is also linking
Tabriz to Istanbul in Turkey through Sharafkhaneh,
making land traveling convenient from
Europe to Pakistan. Total length of the
Iranian railway network is 9,800 km, 5,800
km of which comprise the main route, over
2,000 km industrial, business and subsidiary,
146 km (Tabriz-Julfa) is electricity powered
and the remainder are maneuvering lines.
In 1375 approximately 9 million passengers
and 23 million tons of cargo were transported
by railway (against the 9,306,000 passengers
flown by air). The first law on foreign
investment was ratified in 1955, which,
is still honored, and in 1993 the law
for the administration of Free Trade and
Industrial Zones(FTZ), and Special Zones
was approved by the parliament. According
to the law "Attraction and Protection
of Foreign Investment" ratified in
1955, foreign investors can invest in
all the economic sections, in which private
sector in Iran is permitted to have activities,
in the form of "joint venture"
with iranian partner.
The British perspective
Iran is an important market for UK goods
and services. It could also have the potential
for significant growth driven by the expanding
population, the wealth of natural resources,
and the need to modernise and update.
Trade and economic relations between the
UK and Iran have developed and increased
in recent years and in 2005 UK direct
exports to Iran were valued at £464m.
If re-exports from eg: Dubai were to be
included this figure could almost double.
Please note that where you know Iran is
the final destination of your goods export
control obligations potentially apply
regardless of the shipping route.
For more details on export controls please
see the UK Government Export Control Organisation
website:-
http://www2.dti.gov.uk/export.control/
The British Embassy in Tehran received
a number of reports last October that
Iranian authorities placed undeclared
restrictions on some (but not all) UK
imports. Although there are indications
that these may have been lifted UK companies
are advised to re examine how they plan
to ship goods to Iran.
Opportunities
Iran is one of the most exciting countries
in the region for business development.
After years of economic self-sufficiency,
Iran now recognises the need for the
transfer of technology and management
skills across a wide range of sectors.
Iran is a difficult market for UK companies
to penetrate, although if done successfully
it can be very rewarding. The main opportunity
for UK business is in providing capital
and equipment to Iran's priority sectors:
Oil, gas
and petrochemicals
Mining
Power
Agriculture
Packaging
Automotive
Import Licensing,
Tariffs and Taxes
The Iranian government can levy a number
of license fees, tariffs and taxes on
importers. Most goods are subject to some
kind of charge. It is important to check
with your embassy in Iran for specific
information, as the particulars of import
regulations change often. A general license
issued by the Ministry of Commerce is
required for imports into Iran. As well,
the importer requires the approval of
the relevant Ministry (e.g. Ministry of
Health for pharmaceuticals). Most duties
are imposed on an ad valorem basis. Capital
goods and raw materials imported for foreign
investments may be exempted from normal
duties; similarly medicines, wheat and
other strategic goods are exempt from
duties. However, most imports are subject
not only to licensing fees and tariffs,
but to taxes as well.
Foreign
Exchange
Imports are traded at US $1 = Rials 8,000.
Exchange control authority is vested in
the Central Bank (Bank Markazi). All foreign
exchange transactions must take place
through the Central Bank or authorized
banks. However, there is a black market
in currency in Iran. As of February 1
998, the black market rate for US$l was
rials 4800. The black market is illegal
and subject to occasional crackdowns.
Methods
of Payment
Confirmed irrevocable letters of credit
terms are preferred. Terms for business
transactions were once primarily 360-day
confirmed irrevocable letter of credit
but sight letters of credit are presently
the norm. Barter trade arrangements, especially
those involving oil, are also becoming
increasingly popular. In recent years,
Iran has developed a good reputation for
repaying its debts. CWC Gulf are experts
in this particular type of trade financing
and also specialise in discounting and
forfaiting Iranian letters of credit.
Pre-shipment
Inspection and Documentation
Imports valued at more than IR 500,000
must be inspected for quantity and quality
in the country of origin by an inspection
Organization recognized internationally.
Goods shipped to Iran must be supported
by invoices legalized by the Iranian consulate
office and the chamber of commerce of
the supplier's country, certificate of
origin, bill of lading and certificate
of inspection, in the case of major imports.
Samples
and Advertising Matter
Samples may be imported free of custom
charges if they are of little or no commercial
value, or if they have been made unfit
for use. Small quantities of advertising
matter are admitted duty free. Samples
of value may be entered against bond or
by guarantee of a reputable Iranian merchant
that they will be re-exported within a
specified time. Iran is a signatory to
the International Convention to Facilitate
the Importation of Commercial Samples
and Advertising Materials.
UK ECGD
Export financing and insurance ECGD medium
term cover is available to help UK exporters
compete for contracts in Iran. UK Trade
& Investment Export Finance encourages
the availability of competitive export
finance to all UK companies seeking to
export goods, rendering services or carrying
out projects in overseas markets. Export
Credits Guarantee Department (ECGD) can
provide risk insurance or arrange medium/long-term
finance packages in a wide range of markets
worldwide for UK exporters of capital
goods and project developers. CWC Gulf
can also arrange risk underwriting at
Lloyds of London for all exporters and
project developers. For more information
on how ECGD may be able to help you please
visit the official
ECGD
website or contact their
helpline:
help@ecgd.gov.uk
or
contact
us.
CWC
Gulf opened its office in Tehran
in September 2004 and is working
with a number of Iranian Government
Ministries.