Iran Financial institutions and Markets

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this report includes the Iran financial markets and institutions. the report is compiled includind secondary dat from different sources such as articles, website, newspaper, books, etc.

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Iran Financial institutions and Markets

  1. 1. 1
  2. 2. TABLE OF CONTENT ISLAMIC REPUBLIC OF IRAN COUNTRY PROFILE…………………………….1 FINANCIAL MARKETS AND INSTITUTIONS OF IRAN…………………..…….2 TYPES OF FINANCIAL MARKETS AND INSTITUTIONS……………………….2 STOCK EXCHANGE OF IRAN & STOCK MARKET INSTRUMENTS……..……6 TRADING SYSTEM………………………………………………………….………8 STOCK MARKET INSTRUMENTS……………………………………….……….14 FINANCIAL CRISIS…………………………………………………………..……16 INVESTMENT AND INVESTMENT PATTERN………………………..…..……..19 RULES & REGULATIONSGOVERNING FOREIGN INVESTMENT IN IRAN…………………………………….………...21 IRAN’S BANKING SYSTEM………………………………………….…………..23 BANKING ASSETS AND LIABILITIES………………………………………….27 CHANLLENGES FACED BY BANKS OF IRAN…………………………………29 CORPORATE GOVERNANCE IN IRAN…………………………..……………..32 OTHER INFORMATION I WANT TO SHARE…………………………..………34 REFRENCES 2
  3. 3. ISLAMIC REPUBLIC OF IRAN COUNTRY PROFILE Islamic Republic of Iran | Jomhuri-ye Eslami-ye Iran Historically known as Persia, Iran was one of the greatest empires of the ancient world, which was frequently invaded. Iran's hereditary monarch, Shah Mohammad Reza Pahlavi, fled the country in 1979 after decades of corrupt and authoritarian rule, and mounting religious and political unrest. Exiled Ayatollah Ruhollah Khomeini returned to lead an Islamic revolution and formed the world's first Islamic republic the same year. An eightyear war with Iraq followed. In the elections of 1992 and 1996, former president Akbar Hashemi-Rafsanjani's support increased and at the presidential election of 1997 Mohammad Khatami, Rafsanjani's cultural adviser, succeeded him. Khatami promised greater freedom and tolerance and was supported mainly by women, younger voters and intellectuals. In June 2005, Mahmoud Ahmadinejad, former mayor of the capital, Tehran, and famous for his conservative approach and for rolling back reforms put in place by modernists before him was elected president. He has not been shy of confronting the West and has pushed ahead with a national nuclear programme that has brought international condemnation. 3
  4. 4. FINANCIAL MARKETS AND INSTITUTIONS OF IRAN As of 2011, about 80% of the country's wealth was deposited with state banks and the remaining 20% with private banks. Iran's financial institutions are:    Banks Finance & Credit Institutions "Gharz al-Hasaneh" Funds (Islamic non-profit granting funds) TRADING SYSTEM Trading in IME is based on open outcry auction using electronic trading platform, an interaction of bids and offers made by the buying and selling brokers. Orders, already placed by the clients, are entered in the system by the brokers sitting behind their stations in the trading floor. The system processes the orders and executes the transaction upon matching of the bid and offer prices. TYPES OF FINANCIAL MARKETS AND INSTITUTIONS COMMERCIAL BANKS Commercial banks are authorized to accept checking and savings deposits and term investment deposits, and they are allowed to use promotional methods to attract deposits. Term investment deposits may be used by banks in a variety of activities such as joint ventures, direct investments, and limited trade partnerships (except to underwrite imports). However, commercial banks are prohibited from investing in the production of luxury and nonessential consumer goods. Commercial banks also may engage in authorized banking operations with state-owned institutions, governmentaffiliated organizations, and public corporations. The funds received as commissions, fees, and returns constitute bank income and cannot be divided among depositors. BOND MARKET The Central Bank must obtain approval from the Majlis in order to issue participation papers. As at 2012, regulations for fixed income instruments oblige that a market maker always buys back the papers from the sellers in the secondary market at par value if there are no other buyers present. 4
  5. 5. TEHRAN STOCK EXCHANGE The Tehran Stock Exchange (TSE) is Iran's largest stock exchange, which first opened in 1967. The TSE is based in Tehran. As of May 2012, 339 companies with a combined market capitalization of US$104.21 billion were listed on TSE. TSE, which is a founding member of the Federation of Euro-Asian Stock Exchanges, has been one of the world's best performing stock exchanges in the years 2002 through 2011. TSE is an emerging or "frontier" market. DERIVATIVES MARKET As of 2009, the Iranian Oil Bourse was a spot market for petrochemical products mainly, with plans to introduce sharia-compliant futures contracts for crude oil and petrochemicals in the future. Trading takes place through licensed private brokers registered with the Securities and Exchange Organization of Iran. With help of Bahrain-based International Islamic Financial Market and New York-based International Swaps and Derivatives Association, global standards for Islamic derivatives were set in 2010. The ―Hedging Master Agreement‖ provides a structure under which institutions can trade derivatives such as profit-rate and currency swaps. OTC MARKET In 2010, 5.5% of the Mobile Telecommunication Company of Iran shares were offered on the Iranian Over-The-Counter (OTC) market, at a value of $396 million. This was the largest IPO-to-date in the Iranian OTC equity market. In 2011, Pardis Petrochemical Co., the largest producer of urea and ammonia in the Middle East, Amir Kabir Petrochemical Co., Pasargad Bank, Yazd Alloy Steel Co. and Ravan Fanavar Co (a car auto part manufacturing company) went all public. SUKUKS An Islamic Fixed income instrument, which looks similar to an asset-backed debt instrument. As of July 2011 and for the first time since the law was passed 3 years ago, Iranian companies such as Mahan Airlines and Saman Bank have respectively issued $30 million and $100 million worth of this type of bonds. Iran will also issue $15 billion in sukuk (Islamic Sharia-based) bonds in 2012 to be invested in the domestic oil industry 5
  6. 6. INSURANCE INDUSTRY The Central Insurance (Bimeh Markazi Iran) company is in charge of regulating this sector in Iran. Five state-owned insurance firms dominate the sector, four of which are active in commercial insurance. The leading player is the Iran Insurance Company, followed by the Asia Insurance Company, the Alborz Insurance Company and the Dana Insurance Company. Insurance companies Asia, Dana and Alborz will be listed on the stock exchange in 2009 after review and improvement in their financial accounts, internal regulations and organizational structure nationwide. At the end of 2008, there were 20 insurance firms active in the market, only 4 of which were state-owned (with a 75% market share). Alternate 2006-statistics give the market share for private insurance companies at 54% and 46% for governmental insurance companies. Parsian Insurance became the largest privately owned company to be listed on the Tehran Stock Exchange in 2010. Parisan is the third largest insurance provider in Iran. In 2008, the total insurance premiums generated in Iran were $4.3 billion. This is less than 0.1% of the world’s total, while Iran has approximately 1% of the world’s population. The insurance penetration rate is approximately 1.4%, significantly below the global average of 7.5%. This underdevelopment is also evident in product diversity. Approximately 60% of all insurance premiums are generated from car insurance. There are about 14 million vehicles in Iran and 90 percent of them are insured (2012). Of the 10 million motorcycles that operate on Iran's roads only 2 million are insured. Also, 95% of all premiums come from general insurance contracts and only 5% relate to life products (against world average of 58% for life insurance in 2011). One of the defining characteristics of the economy is entrenched high inflation (and expectations) thanks to persistent monetization of fiscal deficits. This produces an environment in which no prudent person would enter into a long-term savings contract. According to Business Monitor International, unless and until economic policies in Iran change radically, the reality of the insurance sector will fall a long way short of its potential. Blood money was $67,500 in 2011, down from $90,000 a year before. Starting in 2012, Iran is also insuring its own fleet of oil tankers. . 6
  7. 7. ISLAMIC BANKING In 2009 Iranian banks account for about 40 percent of total assets of the world's top 100 Islamic banks. Three of the leading four Islamic banks are based there; Bank Melli Iran, with assets of $45.5 billion came first, followed by Saudi Arabia's Al Rajhi Bank, Bank Mellat with $39.7 billion and Bank Saderat Iran with $39.3 billion. ―Iranian banks are still the predominant Islamic banking players, holding seven out of the top 10 ranks and 12 of the 100,‖ the Asian Banker research group reported. According to CIMB Group Holdings, Islamic finance is the fastest-growing segment of the global financial system and sales of Islamic bonds may rise by 24 percent to $25 billion in 2010. IRAN MERCANTILE EXCHANGE Iran Mercantile Exchange (IME) is a commodities exchange located in Tehran, Iran. It was founded in 2006. IME trades in agricultural, industrial and petrochemical products in the spot and futures markets. It is mainly a domestic or regional market with the ambition to become more international in the future . OIL BOURSE The Government of Iran decided to establish the oil and petrochemicals exchange and the responsibility of creating this new exchange was delegated to IME Company. The first phase was launched on February 17, 2008 by executing the transactions of petrochemicals and chemicals which has been running successfully and the second phase is on the verge of launching. With the completion of the second phase, crude and by-products of oil can also be traded on the exchange in both Iranian Rial and major foreign currencies (except USD).Kish Island is the venue for trading the oil contracts. It is a free trade zone. The Islamic Republic also wants to encourage local investors to participate in the oil market as it tries to reduce the state’s role in the country’s energy industry. 7
  8. 8. STOCK EXCHANGE OF IRAN & STOCK MARKET INSTRUMENTS TEHRAN STOCK EXCHAGE (TSE) The Tehran Stock Exchange (TSE) is Iran's largest stock exchange. The TSE is based in Tehran. The concept of stock industrialization dates to 1936, when Bank Melli, together with Belgian experts, issued a report detailing a plan for an operational stock exchange in Iran. However, the plan was not implemented prior to the outbreak of World War II, and did not gain traction until 1967, when the Government revisited the issue and ratified the "Stock Exchange Act". Initially limited in size and scope, the Tehran Stock Exchange (the "TSE") began operations in 1967, trading only in corporate and government bonds. Iran's rapid economic expansion in the 1970s, coupled with a popular desire to participate in the country's economic growth through the financial markets, led to a demand for equity. The Government became actively engaged in the process, by granting shares to employees of large state-owned and family-owned enterprises. Market activity increased substantially, as both companies and high net worth individuals participated in the new-found wealth associated with the TSE. As of May 2012, 339 companies with a combined market capitalization of US$104.21 billion were listed on TSE. TSE, which is a founding member of the Federation of EuroAsian Stock Exchanges, has been one of the world's best performing stock exchanges in the years 2002 through 2011.TSE is an emerging or "frontier" market. The most important advantage that Iran's capital market has in comparison with other regional markets is that there are 37 industries directly involved in it. Industries such as the automotive, telecommunications, agriculture, petrochemical, mining, steel iron, copper, banking and insurance, financial mediation and others trade shares at the stock market, which makes it unique in the Middle East. The second advantage is that most of the state-owned firms are being privatized under the general policies of article 44 in the Iranian constitution. Under the circumstances, people are allowed to buy the shares of newly-privatized firms. 8
  9. 9. MISSION Launching a fair, efficient and transparent market equipped with diversified instruments and easy access to create added value for the stakeholders VISION The region's leading Exchange and country's economic growth drive GOALS  Increasing the share of capital market in financing the economic productive activities  Applying effective rules and procedures to protect the market's integrity and shareholders' rights  Expanding market with the use of updated and efficient technology and processes  Developing financial knowledge and improving investment and shareholding culture in Iran  Facilitating market access by means of information technology  Observing accountability and transparency in cooperation with the stakeholders  Constant expansion of the company's intellectual properties and human resources. Attention to promotion of the private sector and new interest in the TSE brought life back to the market. However, lack of regulation and out-of-date legal framework led to crisis in the market leading to certain "meltdowns" until today. The market has experienced its share of highs and lows in the past years including topping the World Federation of Exchanges' list in terms of performance in 2004 to tumbling down to last place in 2007 due to political uncertainties in the region. 9
  10. 10. ROLES OF TSE Legislation establishing Tehran Stock Exchange (TSE) was formally enacted in 1966 and TSE began operation on April 6, 1967. Forty years after the establishment of the TSE, a new Securities Act was passed in November 2005. Under this Act, TSE have been demutualized. As defined in the Article of Association, TSE's primary roles are:       Establishing, organizing and managing of the Stock Exchange in order to trade listed securities Listing of securities Prescribing membership requirements for members and supervising their performance, and regulating their activities overseeing the transactions of the Exchange listed securities Monitoring the performance of issuers of the listed securities Processing and disseminating the information regarding the securities orders and transactions of securities TRADING PLATFORM The Tehran Stock Exchange (TSE) has started an ambitious modernization program aimed at increasing market transparency and attracting more domestic and foreign investors. Concrete measures that have been taken in the planning and operations of the stock exchange such as the settlement system, geographical expansion, new exchange laws in order to attract local and foreign capital. The TSE has installed the new trading system which has been purchased from Atos Euronext Market Solutions (AEMS) in 2007. The new system makes it possible to purchase and sell stocks on the same day. The system has also made it possible for 2,000 brokerage stations to work simultaneously, while the number was just about 480 in the past. The rise in electronic dealing, non-stop input and updated data on orders, transactions and indices are among other features of the new system. The new system has made it possible to link the stock market to the international bourses. The bourse can now handle 700 transactions per second and 150,000 transactions per day. 10
  11. 11. The trading system is an order driven system, which matches buying and selling orders of the investors. Investors can place their orders with TSE accredited brokers, who enter these orders into the trading system. Then, the system automatically matches buy and sell orders of a particular security based on the price and quantity requirements. The mechanism for which the price of equities is determined is as follows:   The best price (price priority) Time of order priority The trading system also generates and displays details of current and historical trading activity, including prices, volumes traded and outstanding buy and sell orders. This ensures that investors have the required information to be able to take informed investment decisions. The range of price movements is typically restricted to 3% daily either way from last closing. Restriction on Rights is 6%. This can be changed in specific situation by the Board of the TSE in case of unusual price movements resulting in an extremely high or low P/E ratio. Short selling is not permitted. There are no minimum trading lots. According to the Iranian Commercial Law, companies are prohibited from share repurchases. TSE Services Company (TSESC), who is in charge of the site, supplies computer services. TSESC is a member of Association of National Numbering Agencies (ANNA). Starting March 2011, investors will be able to trade in the Iranian stock market through the Internet from anywhere in the world (on a trial basis since July 2010), or get all the necessary information before traveling to Iran. There are 87 online service providers which offer round-the-clock information and services about Iran and its stock market. As of September 2011, 40,000 shareholders are registered and conducting transactions online. The Government of Iran directly holds 35 percent of the TSE, while securing another 40 percent through pension funds and investment companies such as the Social Security Investment Company, one of the largest institutional investors on the TSE. Bonyads also play a leading role in TSE trading. In 2005 fewer than 5 percent of Iranians owned stock. 11
  12. 12. The Government is promoting the shareholding culture in Iran. By March 2010, 3.219 million shareholders had registered in the TSE, with investment firms having 562,375 shareholders, which make it the "favorite industry" in the stock market. By September 2011, the number of registered shareholders in the TSE had increased to 4.5 million. HISTORICAL HIGHLIGHTS 1967 The Tehran Stock Exchange commenced operation on Feb. 4. 1969 Trade of Treasury and Land Reform bills started. 1972 Stocks of 23 companies and three bonds were traded at TSE. 1983 The law for Usury-Free Banking was enacted. Trading in bonds was abandoned. 1988 Eight-year war between Iran and Iraq came to an end. 1989 Sharp increase in trade from the beginning of autumn. 1992 1995 2002 TSE admitted as a full member of the International Federation of Stock Exchanges. TSE joins the Federation of Euro-Asian Stock Exchanges as one of its founding members. Capital market physical development occurs; principal steps in dissemination of information, education and development of financial products. 2003 Listed companies are allowed to issue corporate bonds 2005 The TSE new law is ratified by parliament. Increase the number of Regional floors to 21. 2006 TSE Demutualization is accomplished 2007 Launching Privatization Plan of State-Owned Companies 2008 2010 2012 Establishment of SMEs Market (Iran Farabourse) in the Capital Market Foreign Investment Deregulation – Launching Single – Stock Futures Market and On-line Trading Services – Being Elected As the Chairman of FEAS Until 2012 Launching A New Derivatives Product: Embedded Put Option 12
  13. 13. 2011: The best performing industries in 2011, in terms of total sales, were the banking and automotive sectors. The worst performers were home appliances and electronics. In terms of gross profit margin, mining, telecommunications, and oil and gas exploration & production were the best performing industries. Sales totals of the top 100 Iranian companies on the list ranged from $12.8 billion or the top ranking company, Iran Khodro, to $318 million for the 100th company. 2012: Companies showing the most profit, are mostly in pharmaceutical, petrochemical and steel businesses. The sharp decline of the Rial in 2012 has made exports more competitive. Other favoured companies are state-owned industrial companies that rely on a mostly domestic supply chain, turning locally-produced raw materials into products targeting Iranian consumers. OVERVIEW OF TURNOVER No. Shares Traded (million) Daily (million $)        July-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 June-10 20,256 5,747 53.9 3,202 35.8 4,669 56.7 26,675 1,547 19.8 17,837 100.7 436.3 112.7 116,562 (total) 93.83 (average) CENTRAL (CSDI): SECURITIES DEPOSITORY OF IRAN CSDI is responsible for clearing, settlement, depository, and registry (CSDR) or all posttrade activities for the Iranian Capital Market. All securities are held in immobilized or dematerialized forms. The CSDI is going to act as the central counterparty (CCP) of all trades in the future. For TSE, a central securities depository with the records of the final shareholders of all listed companies is maintained. 13
  14. 14. LEGAL STRUCTURE The new Securities Act which is more comprehensive and advanced than the previous one was passed on November 16, 2005 by the Iranian parliament to support investors' rights and aimed at organizing, preserving and developing a transparent, fair and effective market. Under the new Act, the Securities & Exchange High Council (Council) and the Securities and Exchange Organization (SEO) were introduced and created as regulators of Iranian capital market and TSE has been demutualized i.e. the membership organization entity was turned into a public joint stock company. The Council is the highest authority and is responsible for all related policies, market strategies, and supervision of the market. The Chairman of the Council will be the Minister of Economy & Finance; other members are: Minister of Commerce, Governor of the Central Bank of Iran, President of the Chamber of Commerce, Attorney General, Chairman of SEO, representatives of the active market associations, three financial experts requested by the Minister of Economy & Finance and approved by the Council of Ministers, and one representative from each exchange. The SEO will be responsible for administration and supervisory duties, governed by the Board of Directors. The SEO's Board of Directors will be elected by the Council. IRANIAN CAPITAL MARKET 14
  15. 15. FUNDS MANAGEMENT As of 2009, 21 mutual funds managed by permitted brokerage firms and investment banks are investing in the TSE according to the investment funds regulation. Mutual funds are open ended and their operation permission is issued by the Iran Securities and Exchange Organization (SEO). Since then, 41 funds have been established, four of which are fixed income funds and the remainder of which are equity funds. As of August 2010, total assets under management within the Iranian fund management industry amount to approximately $230 million with great potential for development. As of December 2010, TSE had a market capitalization of $84 billion. TEDPIX, TSE's Price and Dividend Index, became the world’s second-best performing equity index in 2010. 2012: TSE’s overall index hit a new record high in October 2012 surpassing 31,000 points. Export-oriented companies have been favoured because of a sharp decline in the value of the Iranian rial over 2012 FOREIGN PORTFOLIO INVESTMENT The performance of the TSE has had no correlation with major exchanges or emerging stock markets over the past few years and not even with the oil price. So far, the Tedpix index has been driven by domestic investors, including wealthy Iranians, public sector pension funds and the investment arms of state-owned banks. For the index to prosper in the long run, more foreign investors need to make significant share purchases. As at 2009, foreign portfolio investment accounts for only about 2 percent of the stock market in Iran. 15
  16. 16. STOCK MARKET INSTRUMENTS OTC MARKET Since 2009, Iran has been developing an over-the-counter (OTC) market for bonds and equities (aka Farabourse). Its shareholders include the Tehran Stock Exchange Corporation (20%), several banks, insurance companies and other financial institutions (60%), and private and institutional shareholders (20%). As of July 2011, Farabourse has a total market capitalization of $20 billion and a monthly volume of $2 billion. The OTC Market has been formed to promote the issuance and trade of various financial instruments and remove the existing gap that inhibits the financing of industrial firms via the securities market. BROKERS Trading takes place through licensed private brokers registered with the Securities and Exchange Organization of Iran. Thirty-one of the 88 brokerages active in the TSE are licensed to trade the futures contracts. The leverage for futures contracts is set at 1-to10. TSE will only deal in the derivatives through electronic trading. ELECTRONIC TRADING Starting March 2011, investors will be able to trade in the Iranian stock market through the Internet from anywhere in the world (on a trial basis since July 2010), or get all the necessary information before traveling to Iran. There are 87 online service providers which offer round-the-clock information and services about Iran and its stock market. As of September 2011, 40,000 shareholders are registered and conducting transactions online. TRADING FEES As of July 2010, trading fees include:   Equities and rights: 0.55% payable by the sellers and 0.5% the buyers. Participation bonds: 0.1% of transaction value payable by both the buyer and seller with a maximum of 100 million IRR. 16
  17. 17. NEW PRODUCTS AND SERVICES Presently, TSE trades mainly in securities offered by listed companies. Equities and Corporate Bonds are being traded at TSE at the moment. The plan is to introduce other financial instruments in the near future. The introduction of project-based participation certificates that bear a fixed annual return during the period of the project and promise the final settlement of the profit at the date of its completion, has diversified the market. FUTURES In 2008, commodity Futures came onto the Iran Mercantile Exchange (IME). In July 2010, TSE introduced six single-stock futures contracts based on Parsian Bank and Karafarin Bank, which will expire in two, four and six months. Thirty-one of the 88 brokerages active in the TSE are licensed to trade the futures contracts. The leverage for futures contracts is set at 1-to-10. TSE will only deal in the derivatives through electronic trading. In the TSE’s derivatives market, over 13,200 single stock futures contracts were traded in 2011 with a value of over 510 billion Rials. OTHER FINANCIAL INSTRUMENTS 17
  18. 18. FINANCIAL CRISIS  IRAN'S EXTERNAL DEBTS CUT BY $10B, HIT $7.2B: CENTRAL BANK CHIEF Report by Tehran Times Iran's external debts decreased by $10 billion in the past Iranian calendar year, which ended on March 20, IRNA quoted Iran's Central Bank Governor Mahmoud Bahmani as saying on Sunday. The external debts stood at $7.2 billion compared with $17.3 billion in the year which ended in March 2012, he added. He put the liquidity growth rate at 30.8 percent in the past year and said that liquidity decreased by 1.9 percent in the first Iranian calendar month compared with the last month of the past year.Meanwhile, Bahmani said that nothing more can be done to curb inflation, the Tasnim News Agency reported. "The [inflation] rate is very high. But, what can we do? We did our best to reduce the inflation, but that was all we could do," he said.Last year, the central bank paid 1.956 trillion rials (about $155 million) in financial facilities, 31.7 percent of which was paid to the production and industry sector, he noted. ... Payvand News - 05/27/13 ... -- 18
  19. 19.  JAPANESE BANK FREEZES IRANIAN ASSETS By Michiyo Nakamoto in Tokyo One of Japan’s biggest banks has frozen assets belonging to the Iranian central bank after an order from a US district court which is pursuing Tehran for $2.6bn in compensation awarded to victims of a 1983 bomb attack on US marines in Lebanon.Bank of Tokyo Mitsubishi UFJ moved after receiving the order this month but submitted an objection to the New York court on the grounds that it does not have jurisdiction over assets held in Japan. Japanese banks recently won an exemption from US sanctions which come into force on July 1. After that date the US will have the power to impose sanctions on any commercial banks handling Iranian imports if the country they belong to has not ―significantly reduced‖ the volume of oil imports from Iran. Additional reporting by Ben McLannahan, Tokyo.  IRAN'S CENTRAL BANK TO ISSUE LARGER BANKNOTES, DONYA SAYS By Ladane Nasseri Iran’s Central Bank plans to issue banknotes with twice the value of the largest ones in circulation, Donya-e-Eqtesad reported, citing Majid Saniei, an official at the financial institution. The bank will start printing 200,000-rial ($16) banknotes as soon as it receives permission from the Economy Ministry and will release the new notes into circulation in the Iranian new year starting March 21, the Tehran-based daily quoted Saniei, head of Iran’s security and minting organization, as saying. The Central Bank is also seeking approval for 500,000-rial notes and plans to introduce these in two years’ time, Saniei said. Iran’s largest banknote at the moment is 100,000 rials. The rial has weakened in the past year as the Persian Gulf country battles U.S. and European Union economic sanctions which have contributed to an inflation rate nearing 30 percent. Iran’s Central Bank estimates inflation will rise to between 30.6% and 31.5% in the Iranian month of Esfand ending March 20, Central Bank Governor Mahmoud Bahmani said last month. Iran is at loggerheads with Western powers over its nuclear program. 19
  20. 20.  UK SUPREME COURT RULES AGAINST BAN ON IRAN'S BANK MELLAT Britain’s Supreme Court has overturned a ruling against Iran's Bank Mellat over its alleged links to Tehran's nuclear energy program. On Wednesday, the highest British court ruled that the UK government was wrong to have imposed sanctions on the Iranian bank in 2009, and that the Treasury directive was ―irrational‖ and ―disproportionate.‖ The decision comes after the European Union General Court decided in January to quash sanctions imposed against Bank Mellat in July 2010. Bank Mellat has stated that it will explore legal channels and sue individual governments for the damages it has suffered as a result of sanctions. The illegal US-engineered sanctions were imposed based on the unfounded accusation that Iran is pursuing non-civilian objectives in its nuclear energy program. The Court ordered removal of Bank Saderat sanctions on Wednesday saying that the EU has failed to provide evidence that the bank is involved in Iran's nuclear energy program has also been the target of anti -Iran sanctions.  Iran Rial Crisis: Currency Fall Leads To Tightened Measures By ALI AKBAR DAREINI and BRIAN MURPHY TEHRAN, Iran -- Iranian authorities used aggressive measures Wednesday in an attempt to halt the nosedive of the country's currency, making arrests, vowing to stamp out sidewalk money changers and warning merchants against fueling the mounting public anger over the economy. There were unconfirmed reports of sporadic violence. Associated Press photos showed riot police blocking a street with the charred hulks of a garbage can and a motorcycle that had been set on fire. Smoke was rising from the area in central Tehran near the main bazaar.A declining currency causes shifts in an economy such as making imported goods more expensive. Although the currency crisis is blamed on a combination of factors – including internal government policies – the rush to dump rials appears to reflect an underlying perception that international sanctions have deepened problems such as runaway inflation and soaring prices for imports and that the only safe hedge is to grab dollars or euros. 20
  21. 21. INVESTMENT AND INVESTMENT PATTERN REASONS TO INVEST IN IRAN A unique geographical location at the heart of a cross-road connecting the Middle East, Asia and Europe, coupled with many inter- and trans-regional trade, customs, tax and investment arrangements; MARKET POTENTIALS AND PROXIMITY Vast domestic market with a population of 68 million growing steadily as well as quick access to neighboring markets with approximately 300 million inhabitants; 21
  22. 22. ABUNDANT NATURAL RESOURCES Varied and plentiful reserves of natural resources ranging from oil and gas to metallic and non-metallic species reflecting the country’s accessibility to readily available raw materials; INVESTMENT LEGISLATION Enactment of the new Foreign Investment Promotion and Protection Act (FIPPA) to substitute the former Law Concerning Attraction and Protection of Foreign Investments in Iran (LAPFI) by providing full security and legal protection to foreign investments based on transparency and international standards. 22
  23. 23. RULES & REGULATIONSGOVERNING FOREIGN INVESTMENT IN IRAN The legal corpus governing foreign investment in the Islamic Republic of Iran constitutes the Foreign Investment Promotion and Protection Act ( FIPPA) and the FIPPA’s Implementing Regulations, as well as legislation applicable for the establishment and conduct of economic activities in the country. While the prospective investors are recommended to get full knowledge about the legislation directly related to their interest, they are also advised to get familiar with certain legislation which is fundamental in their daily affairs, such as laws pertaining to companies formation and administration (Commercial CodeCompany Law); registration of companies, branches and representative offices; import/export regulations; taxation; industrial and intellectual property protection; status of foreign nationals ( entry, resident and work permits); banking and insurance; free and special economic zones regulations, etc.Since 1955, the legal framework of Iran’s foreign investment regime was defined under the Law for the Attraction and Protection of Foreign Investments (LAPFI). Moreover, in line with reforms in the overall economic framework, Iran’s parliament undertook to propose and approve a plan concerning a new foreign investment law entitled: The Foreign Investment Promotion and Protection Act (FIPPA) which was ratified in May 2002. FIPPA replaced the LAPFI which was in effect since 1955. FIPPA’s replacement of LAPFI has further enhanced the legal framework and operational environment for foreign investors in Iran. Some specific enhancements introduced by FIPPA for foreign investments in Iran can be outlined as follows:      Ä Broader fields for involvement by foreign investors including in major infrastructure; Ä Recognition of new modes of foreign capital exposure in addition to Foreign Direct Investment, e.g. project financing, Buy-Back arrangements and BOT schemes; Ä Streamlined and fast-track investment licensing and approval process; Ä Creation of a one-stop institution called the ―Center for Foreign Investment Services‖ at the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI), for focused and efficient support of foreign investment undertakings in Iran; Ä Further liberalization of foreign exchange mechanisms as enjoyed by foreign investors; 23
  24. 24.  Ä Introduction of new legal options governing the Government-Investor(s) relations. Clearly, the ratification of the FIPPA and the approval of its implementing regulations by the Council of Ministers represented a significant complement to a whole host of reforms taking place in Iran’s general macroeconomic framework and structural mechanisms. The trend in foreign investment applications in Iran since the ratification of the FIPPA demonstrates that the new economic environment and the enhanced foreign investment legal and regulatory regime have tapped a great foreign investment potential for Iran that can be realized at a more accelerated pace through a concerted effort aimed at transparent communication of the latest status of Iran’s dynamic economic and foreign investment framework. The Government of the Islamic Republic ofIran welcomes foreign investment in all areas of economic activity by foreign persons including real persons as well as juridical entities. In accordance with Article (1) of the FIPPA, the term Foreign Investor is defined to be natural persons and legal entities as wells Iranian nationals and companies either residing in Iran or abroad. The foreign investors by importing capital as defined in a very broad and diversified form, being in cash or in kind, or being machinery and equipment, raw materials, parts, specialized services as well as intellectual property for the purpose of investment in industry, mining, agriculture and services shall be eligible to enjoy the privileges and facilities provided under the FIPPA. The advantages and facilities shall be granted to foreign investors who obtain the Investment License. In general, foreign investment in Iran is free for all investors but such facilities and privileges are only granted to those investors who seek the FIPPA's coverage by way of submission of an application to the OIETAI, which is the central government agency to receive, license and protect the interests of foreign investors throughout the lifetime of their operation in Iran, notwithstanding the type and the manner of investment. In fact, the interests and rights of foreign investors under the FIPPA are fully recognized and secured against non-commercial risks which would simply commit the Iranian Government not only to facilitate the free flow of capital repatriation but also the full and fair compensation against acts of Government towards expropriation as well as interruption of activities of the foreign investors. Under FIPPA, foreign capital is defined in a very broad and diversified manner and can be in cash or in kind, being machinery and equipment, raw materials, parts, specialized services as well as intellectual property. 24
  25. 25. IRAN’S BANKING SYSTEM INTRODUCTION The pre-revolutionary banking system in Iran was dominated by western patterns. By 1979, there were 36 banks operating in Iran including many internationally jointventures banks. Following the Islamic Revolution (1979), as a result of the transfer of deposits abroad, and problems in collecting outstanding debt, most of the private banks were left in a precarious position. Consequently the need for an effective administration of the newly nationalized banks and thereby achieving uniformity in rendering newly adopted Islamic banking services, granting credit facilities and adopting a unified policy in other key economic, financial and monetary areas, necessitated the grouping of the newly nationalized banks into two main categories. Therefore, in early 1980 the 36 banks were merged into 9 banks comprising of 6 commercial and 3 specialized banks. Concurrent with nationalization, studies were also being made on Islamization of the banking system, which culminated in the Law on Usury-Free Banking ratified by the Parliament in 1983. Today Iran's banking system is still dominated by 11 state-owned institutions, including seven commercial banks and four specialized banks, which jointly hold approximately 85% of the Iranian banking sector. In addition, there exist six private banks, two private credit institutions, a growing number of credit co-operatives and three Free Zones based branches of foreign banks. Presently, a major initiative is underway for privatization and modernization of the Iranian banking industry. In line with new macroeconomic policies of the government, banks are gradually reducing interest rates, introducing new banking services and expanding their international network. Government debt to the banking sector is low, estimated at about 3% of GDP and 30% of budget revenues in 2007 and is mostly domestic. All domestic debts are denominated in local currency. The growth of credit granted to the private sector is expected to remain strong, as it has been for several years, rising from 35% of GDP in 2001 to an estimated 51% of GDP in 2005. The inflow of oil revenues inevitably adds liquidity to the financial system. Certain banking reforms permitting an increase in financing are also responsible for higher rates of consumption and private investments. 25
  26. 26. Lending and deposit rates of state-owned banks are still set annually by the Monetary and Credit Council, but the share of new credit that state-owned banks are allowed to allocate themselves increasing, and currently stands at 45% with different ceilings for specific sectors in line with the adjectives set out in the prevailing five year development plan. Iran banking system comprises of central bank, commercial banks and other financial institutions like insurance, mutual funds. Besides that Iran also have a well structured Islamic banking system. COMMERCIAL BANK Commercial banks are authorized to accept checking and savings deposits and term investment deposits, and they are allowed to use promotional methods to attract deposits. Term investment deposits may be used by banks in a variety of activities such as joint ventures, direct investments, and limited trade partnerships (except to underwrite imports). However, commercial banks are prohibited from investing in the production of luxury and nonessential consumer goods. Commercial banks also may engage in authorized banking operations with state-owned institutions, governmentaffiliated organizations, and public corporations. The funds received as commissions, fees, and returns constitute bank income and cannot be divided among depositors. Further the commercial bank includes the following types. Specialized government Banks includes 26
  27. 27. CENTRAL BANK OF IRAN The Central Bank of the Islamic Republic of Iran (CBI) (Persian: ‫ , بانک مرکزی جمهوری اسالمی ايران‬Bank Markazi Jomhouri Islami Iran) is the central bank of Iran. It is entirely government owned. Among its major purposes are: maintenance of the value of the national currency, balance of payments as well as facilitating trade transactions and contributing to the economic advancement of the country. The Central bank is in charge of laying and implementing monetary and credit policies of the country. Laying exchange policies and determining exchange rates are among the functions of Bank Markazi. The importation of goods, issuance of documentary credits and registration of orders for documentary bills of exchange for imports are also done in accordance with the policies of the Central Bank. It is a member central bank of the Asian Clearing Union. According to the Monetary and Banking Law, rectified at 18 Tir 1351 and the amendments thereto, the organs of the Bank Markazi Jomhuri Islami Iran are as follows: - General Assembly - Money and Credit Council - The Executive Board - The Note Reserve Control Board - The Supervisory Board 27
  28. 28. ISLAMIC BANKING In 1983 the Islamic Banking law of Iran was passed by the Majlis. According to this law, Iranian banks can only engage in interest-free Islamic transactions (interest is considered as usury or riba and is forbidden by Islam and the holy book of Qur’an). These are commercial transactions that involve exchange of goods and services in return for a share of the assumed "profit". Iran uses what are officially termed "provisional" interest rates, as rates paid to depositors or received from borrowers should reflect the profits or losses of a business. Under these rules, deposit rates, known as "dividends", are in theory related to a bank's profitability. In reality, however, these dividends have become fixed rates of return— depositors have never lost their savings because of losses made by the banks and almost never received returns larger than the provisional ex-ante profit rates. Interest charged on loans is presented as "fees" or a share of corporate profits. All such transactions are performed through Islamic contracts, such as Mozarebe, Foroush Aghsati, Joale, Salaf, and Gharzol-hassane. Details of these contracts and related practices are outlined in the Iranian Interest-Free banking law and its guidelines. This law describes and authorizes an Iranian Shiite version of Islamic commercial laws. Iran’s banking system adheres to Islamic rules that prohibit earning or paying interest. Having commenced its activities some three decades ago, the Islamic Banking system has enjoyed favorable growth and attracted the attention of many investors and bankers around the world. Instead of paying "a fixed interest", which is forbidden in Islamic law, Islamic banking shares its profit and loss with customers. In this system, although the banks offer their clients on account interest, this is rate may vary depending on the bank's performance by the end of the fiscal year. Based on this system, a bank has a close link with its clients and they make joint projects to sell to a third party. What is focused in Islamic banking is the objective of Fixed Usury Free Banking for establishing social justice, which tends to be the first objective of Islamic economic system. In fact, in usury-free banking system, the focus is the applicant's purpose. For each contract, a special technique is devised, in a way that firstly, the clients and the bank are not forced to pay or receive interest and secondly the profitability levels of the contract are also considered. In the Islamic banking system, the banking transactions have, therefore, been presented in the form of contracts. 28
  29. 29. BANKING ASSETS AND LIABILITIES  DEBT: The government's and banks' debts to the central bank dropped from 905,926 billion Rials (about 90 billion Dollars) in November 2008 to about 776,486 billion Rials (about 77 billion Dollars) in November 2009. According to CBI reports, the value of its assets fell by 11.6 percent during the last 12 months to 1,137,455 Rials in November 2009. Meanwhile, the total debt of 11 state-run banks alone to the Central Bank of Iran has exceeded $32 billion in 2009, showing a 10-fold increase over the past four years. Bank Melli Iran, with nearly $9 billion, had the biggest debt followed by Bank Sepah, Iran's oldest, with about $4.8 billion. Bank Maskan, Keshavarzi Bank, Bank of Industry and Mines and the Export Development Bank of Iran were next with the respective debts of $4.7, $4.1, $3.5 and $1.1 billion. Private-sector banks had much lower debts. Bank Parsian, the largest private-run bank, owed about $421 million to the Central Bank. In addition, the collective debt of state-sector companies to the Central Bank has reached $25 billion (2009). 29
  30. 30.  OVERDUE LOANS: According to unofficial figures, overdue loans have reached IR175,000bn ($17.8bn, €13.6bn, £11bn), an increase of 75 per cent over three years (November 2008. Plan to inject about $13 billion to recapitalize the banking sector (2008). Ninety individuals have managed to secure collective facilities totaling $8 billion from Iranian banks, with previous $27 billion unpaid loans (2009). In October 2009, Iran's General Inspection Office informed that Iranian banks have some USD 38 billion of delinquent loans, while they are only capitalized at USD 20 billion. Current average for late debts of Iran's state banks is over 15 percent while the global standard is 3 to 5 percent. SHETAB BANKING SYSTEM The Shetab (Interbank Information Transfer Network) system is an electronic banking clearance and automated payments system used in Iran. The system was introduced in 2002 with the intention of creating a uniform backbone for the Iranian banking system to handle ATM, POS and other card-based transactions. Prior to its introduction, some Iranian banks were issuing cards that only worked on the issuing banks ATMs and POS machines. Since the introduction of Shetab, all banks must adhere to its standards and be able to connect to it. Furthermore, all issued credit or debit cards must be Shetab capable. As of the end of 2003, the Shetab system had 2,926 ATMs and 16,070 POS units connected to it. 30
  31. 31. CHANLLENGES FACED BY BANKS OF IRAN  On 25 October 2007, the United States imposed unilateral sanctions against Iran. These sanctions include new measures to reduce Iran’s ability to conduct financial transactions between the state-owned banks of Iran and United States citizens or private organisations. Bank Melli was included in these sanctions, on the grounds that, besides its other customers, Bank Melli provides financial services to Iran’s nuclear and ballistic missile programmes. A fact sheet released by the US Treasury Department also asserts that between 2002 and 2006 Bank Melli sent at least $100 million to Hamas, Palestinian Islamic Jihad, and other groups, via the Quds Force, a branch of the Iranian Revolutionary Guard.  Critics believe that the Iranian Interest-Free banking law has simply created the context for legitimizing usury or riba. In reality all banks are charging their borrowers a fixed pre-set amount at a rate of interest that is approved by the Central Bank at least once a year. No goods or services are exchanged as part of these contracts and banks rarely assume any Commercial Risk.  At the beginning of 2012, the US and the EU imposed sanctions on Iran’s oil and financial sectors with the goal of preventing other countries from purchasing Iranian oil and conducting transactions with the Central Bank of Iran. The sanctions entered into force last summer.  Britain’s Supreme Court has overturned a ruling against Iran's Bank Mellat over its alleged links to Tehran's nuclear energy program. On Wednesday, the highest British court ruled that the UK government was wrong to have imposed sanctions on the Iranian bank in 2009, and that the Treasury directive was ―irrational‖ and ―disproportionate.‖ The decision comes after the European Union General Court decided in January to quash sanctions imposed against Bank Mellat in July 2010.  One of Japan’s biggest banks has frozen assets belonging to the Iranian central bank after an order from a US district court which is pursuing Tehran for $2.6bn in compensation awarded to victims of a 1983 bomb attack on US marines in Lebanon. Bank of Tokyo Mitsubishi UFJ moved after receiving the order this month but submitted an objection to the New York court on the grounds that it does not have jurisdiction over assets held in Japan.The legal action also targets the assets of other Iranian entities with accounts held by BTMU. 31
  32. 32.  Iran's external debts decreased by $10 billion in the past Iranian calendar year, which ended on March 20, IRNA quoted Iran's Central Bank Governor Mahmoud Bahmani as saying on Sunday. The external debts stood at $7.2 billion compared with $17.3 billion in the year which ended in March 2012, he added.  The banking system’s credit to GDP ratio, a standard indicator of the depth of bank intermediation, is the second highest among seven comparator emerging market countries considered in this study. Iran’s density of companies listed on the local stock exchanges is the highest among comparators. However, while the government’s privatization program has helped boost market capitalization, trading remains subdued due to the still limited free-float and the absence of mutual funds until 2009.  The depth of banking increased by 50 percentage points for the ratio of credit to GDP, and by 60 percentage points for the credit to non-oil GDP ratio between 2001 and 2010. This growth occurred largely between 2001 and 2005, when private banks were licensed for the first time since 1979. The expansion of private banks coincided with relatively attractive bank intermediation spreads (the difference between lending and deposit rates). Intermediation spreads narrowed in the second half of the decade through greater competition, followed by government attempts to boost bank lending against the background of the increasing isolation of Iran’s economy and dwindling access to foreign sources of capital. The narrower spreads of 2006-10 led to a pause in banking sector expansion. 32
  33. 33.  IRANIAN FINANCIAL INSTITUTIONS are barred from directly accessing the U.S. financial system, but they are permitted to do so indirectly through banks in other countries. In September 2006, the U.S. government imposed sanctions on Bank Saderat Iran, barring it from dealing with U.S. financial institutions, even indirectly. The move was announced by Stuart Levey, the undersecretary for treasury, who accused the major state-owned bank in Iran of transferring funds for certain groups, including Hezbollah. Levey said that since 2001 a Hezbollahcontrolled organization had received 50 million U.S. dollars directly from Iran through Bank Saderat. He said the U.S. government will also persuade European banks and financial institutions not to deal with Iran. As of November 2007, the following Iranian banks were prohibited from transferring money to or from United States banks:      Bank Sepah Bank Saderat Iran Bank Melli Iran Bank Kargoshaee (aka Kargosa’i Bank) Arian Bank (aka Aryan Bank) In other words, these banks were placed on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals List (SDN List). The SDN List is a directory of entities and individuals who have been prohibited from accessing the U.S. financial system. Although difficult there are ways to carry out an OFAC SDN List removal. As of early 2008, the targeted banks, such as Bank Mellat, had been able to replace banking relationships with a few large sanction-compliant banks with relationships with a larger number of smaller non-compliant banks. The total assets frozen in Britain under the EU (European Union) and UN sanctions against Iran are approximately 976,110,000 pounds ($1.64 billion). In 2008, the US Treasury ordered Citigroup Inc. to freeze over $2 billion held for Iran in Citigroup accounts. 33
  34. 34. CORPORATE GOVERNANCE IN IRAN To ensure sustainable human development, actions must be taken to work towards this ideal. Major donors and international financial institutions, like the IMF or World Bank, is increasingly basing their aid and loans on the condition those reforms ensuring good governance are undertaken. The most important above factor is accountability that is a concept in ethics with several meanings. It is often used synonymously with such concepts as answerability, responsibility, blameworthiness, liability and other terms associated with the expectation of account-giving. As an aspect of governance, it has been central to discussions related to problems in both the public and private (corporation) worlds. In politics, and particularly in representative democracies, accountability is an important factor in securing good governance and, thus, the legitimacy of public power. Accountability differs from transparency in that it only enables negative feedback after a decision or action, while transparency also enables negative feedback before or during a decision or action. Accountability constrains the extent to which elected representatives and other office-holders can willfully deviate from their theoretical responsibilities, thus reducing corruption. The relationship of the concept of accountability to related concepts like the rule of law or democracy, however, still awaits further elucidation. Social responsibility is a doctrine that claims that an entity whether it is state, government, corporation, organization or individual has a responsibility to society. This responsibility can be "negative," in that it is a responsibility to refrain from acting, or it can be "positive," meaning a responsibility to act. Corporate social responsibility (CSR) is an expression used to describe what some see as a company’s obligation to be sensitive to the needs of all of the stakeholders in its business operations. In my view, there are many misconceptions surrounding the subject. For example, I feel it is dangerous to conclude, as some have, that Iranian firms have lost their edge, that inadequate corporate governance is the villain, and that the large pension funds have a magic key to success. Certainly there have been compensation excesses and management failures, but overreaction to them entails its own dangers. However Tehran Stock Exchange (TSE) has been published draft of CG Bylaw and Admission& Inspection Manual of listed audit firm. So it is important that everyone, business and government alike, consider all sides of this complex issue and learn everything we can, before adopting radical change. 34
  35. 35. According to this draft all big listed Co. shall behave audit committee under responsibility of one of non-executive managers. For the first time this draft have been review some matters as follow: • Partner Rotation-Transition Questions • Audit Partner and Partner Rotation-Other Matters • Non-audit Services • Audit Committee Pre-approval • Audit Committee Communications • Fee Disclosures • "Cooling Off" Period A company’s stakeholders are all those who are influenced by, or can influence, a company’s decisions and actions. These can include (but are not limited to): employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighborhoods, investors, and shareholders (or a sole owner). The relationship among the CEO, top management and the board of directors is a complex and a fascinating subject, which has developed over many decades. As we know from reading the papers, it continues to evolve. That's due at least partially to the growing presence of big institutional investors. Also, individual investors' greater awareness of issues and events has increased public scrutiny of management on both financial and societal issues. Boards of directors today are much more actively involved in company matters than they used to be. Generally, I think increased board involvement is a positive development in company management. If a board nominee is not prepared to be an active, inquiring, participating director, he or she should decline the offer to serve. But board members, who attempt to micromanage, assume management's authority or exercise authority without attendant responsibility can be a negative factor. Demands on the chief executive have multiplied. A broad spectrum of societal issues has become an important matter of everyday business concern (the environment, diversity of workforce, etc.) At the same time, competition has intensified and become global, increasing pressure on management for financial results, raising the stakes on decisions, and narrowing the tolerance for mistakes. These trends mean the CEO needs all the wise counsel he or she can get. A board of directors composed of able individuals with diverse backgrounds and experience, can be a valuable ally to the CEO. This was certainly the case during Texaco's crisis period. 35
  36. 36. INFO I WANT TO SHARE  Iran’s new president, Hassan Rohani, has been hailed abroad as a reformist breath of fresh air. But at home he may still have to accommodate the crusty old guard Jun 22nd 2013 | TEHRAN THE first-round victory on June 14th of Hassan Rohani, with almost 51% of the vote in a field of six candidates, stunned both Iranians and the world at large. In the run-up to the contest, the most conservative of the candidates, Saeed Jalili, was widely tipped as the favourite. The supreme leader, Ayatollah Ali Khamenei, who has the final say in all crucial matters of state, would—it was surmised—look on with approval, perhaps with vote-rigging officials poised to enforce the desired result, as they did last time round, in 2009, when the country was thrown into a year-and-a-half of turmoil. Mr Rohani, a 64-year-old cleric, campaigned on a platform of engagement with the West (including on nuclear issues) and an easing of restrictions at home. Though he has served at the heart of the establishment for many years, he was plainly the most liberal of the eventual runners, though all of them had been vetted by the Council of Guardians, a clutch of clerics and lawyers, to ensure their fidelity to the tenets of the Islamic revolution of 1979. It helped Mr Rohani that the so-called ―principlist‖ bloc of the four most conservative candidates, led by Mr Jalili, failed to rally around one man.It is also generally assumed that he will back Syria’s embattled president, Bashar Assad, to the hilt, as his predecessor and the ruling establishment have done. Much store will continue to be set on strengthening the Shia axis that now stretches from southern Lebanon, where Hizbullah, a Shia party-cum-militia, reigns supreme, through Syria under its Alawite rulers, and across to Iran from Iraq, under the thumb of an increasingly s e c t a r i a n S h i a l e a d e r . 36
  37. 37.  Iranian tycoon claims EU sanctions are unfair By Fardad Fahrazad BBC Persian Meeting in a car park in Dushanbe: Babak Zanjani gives a rare interview to BBC Persian Iranian billionaire businessman Babak Zanjani has amassed the kind of fortune that could qualify him for a place on Forbes rich list. Instead he is on an EU sanctions list, accused of facilitating illicit oil deals for the Islamic Republic. The EU said he was helping Iran to get round international sanctions by selling oil abroad and channelling the profits back via his Malaysia-based First Islamic Bank.Mr Zanjani is adamant that he has been wrongly accused. "I didn't buy Iranian crude oil. I was buying low quality fuel oil to sell to Malaysia," he said. "The US and the EU have exempted several countries from the sanctions on Iran, Malaysia is one of them." China floods Iran with cheap consumer goods in exchange for oil With the Islamic republic increasingly cut off from global markets due to sanctions, Beijing is in a Rush-hour traffic in Tehran. China is angling for a large slice of the consumer market in Iran, including cars. A stone's throw from the former grounds of the British embassy, left vacant after a hostile takeover by anti-western demonstrators in late 2011, the new headquarters of the Geely brand is the second Chinese automobile manufacturer in Iran. Another company, Chery Motors, has been active here for five years, and produces several of its low -range vehicles on Iranian assembly lines. 37
  38. 38. Small business owners are not the only ones losing out. In a country where the state plays a significant role as an employer, the outsourcing of major infrastructure projects to Chinese businesses takes construction and engineering jobs away from the already struggling local labour pool. Over the past two decades of fortifying bilateral ties, Chinese engineers have spearheaded countless infrastructural projects, most prominently the Tehran metro system – a trend both Iranian and Chinese officials have been keen to encourage. "The new agreement seems to be, no more consumer goods. If we're going to barter, build us motorways, bridges and dams," said the Sino-Iranian trade analyst. As Iran's inflation and unemployment levels climb, the growing visibility of Chinese workers at public construction sites is thus likely to further foment public resentment. Presently, the massive expansion of Tehran's Sadr expressway – touted as a preelection achievement of the mayor, Mohammad Qalibaf – may give enough cause for local ire. Easily the most visible infrastructural endeavour in Tehran, the two-level, fourmile project is sponsored by China. Close your mouth like a diver in the sea Only under water can fish remain free. 38
  39. 39. REFRENCES 1. http://www.zawya.com/researchmonitor 2. http://data.worldbank.org/country/iran-islamic 3. Capital for the Future Author: The World Bank 4. Global Monitoring Report 2013 Authors: World Bank; International Monetary Fund 5. World Development Indicators 2013 Author: World Bank 6. Building Better Policies The Nuts and Bolts of Monitoring and Evaluation Systems Gladys Lopez-Acevedo, Philipp Krause, and Keith Mackay, 7. "Commercial Government Owned Banks". Central Bank of the Islamic Republic of Iran. Archived from the original on 9 February 2010. Retrieved 2010-01-31. 8. "Iran opens bank to support cooperatives". PRESSTV. Retrieved 2009-08-06. 9. financial Services Forecast", Economist Intelligence Unit, August 18, 2008 10. "Iran to launch investment banks". Payvand.com. 2006-11-22. Retrieved 2010-02-15. 11. Iran Banking and Financial Market Handbook, ISBN 1-4387-2384-9, International Business Publications, USA (March 20, 2010) 12. Iran Investment Monthly SUMMARY OF THE ASSETS AND LIABILITIES OF PUBLIC AND PRIVATE BANKS IN IRAN - Annual report by the Central Bank of Iran (includes official statistics about the OTC bond market in Iran) 13. Laws and regulations relating to the Iranian Banking sector Bank Supervision Central Bank of Iran. 14. Islamic Republic of Iran: IMF Staff Report – Statistics on the banking sector and macro-economic projections by the International Monetary Fund (March 2010) 15. Economist Intelligence Unit: Financial Services Report - Iran (March 2010) 16. BMI: Iran Commercial Banking Report (56-page report, 2009) 17. BMI: Iran Insurance Report (72-page report, 2012). 18. Tehran Stock Exchange: FACT BOOK. Retrieved July 31, 2010. 19. The History of Iran by Elton L. Daniel 2nd Ed. 39
  40. 40. 20. Iran: the Looming Crisis: Can the West live with Iran's nuclear threat? By Dr Emanuele Ottolenghi. 21. "Iranian Banks Under Sanctions: Government Looking Towards Foreign Banks". Payvand.com. Retrieved 2012-02-08. 22. Iran’s SHETAB system to be connected to Chinese banksIRAN: FIRST E-BANK OPENS IN TEHRAN. Industry & Business Article - Research, News, Information, Contacts, Divisions, Subsidiaries, Business Associations 23. Iranian National Bank. "Economic Trends No 62, Third Quarter 1389 (2010/2011), Balance of Payments, p.16" 24. Mobile Banking, Challenges and Strategies in the Banking System of Iran Amir Ghotbi, Nazanin Nassir Gharechedaghi Department of Information Technology, Shahid Beheshti University, Tehran, Iran 25. 2011 International Monetary Fund August 2011 Islamic Republic of Iran: Selected Issues Paper. 26. Nasseri, Ladane (2008-05-27). "Iranian Exchange to Start Commodity Futures in July; Oil Later". Bloomberg. Retrieved 2010-08-27. 27. Payvand.com: How U.S. Laws Can Affect Your Personal Affairs in Iran Retrieved January 4, 2010. 28. "Tehran Exchange Trades Futures to Attract Investors". BusinessWeek. 2009-12-08. Retrieved 2010-07-29. 29. BUSINESS WIRE: ATOSEURONEXT TO PROVIDE SYSTEMS TO TEHRAN STOCK EXCHANGE. Retrieved August 2, 2010. 30. Turquoise Partners: Iran Investment Monthly (February 2011) Retrieved April 30, 2011. 31. Taghavi, Roshanak; Margaret Coker (2009-08-06). "Tehran Struggles to Defend Currency". Wall Street Journal: A7. 32. In Iran, Stocks Are a Haven As Economy Hits the Skids. Wall Street Journal , 30 October 2012. Retrieved November 4, 2012. 33. Iran's Economic Conditions: U. S. Policy Issues By Shayerah Ilias. 34. Iran Company Laws and Regulations Handbook By Ibpus.com, International Business Publications, USA. 40

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