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Year in Review | Diplomacy & Politics | Economy | FDI | Finance | Energy | Industry & Mining | ICT | Transport | Real Estate & Construction | Agriculture | Health & Education | Tourism

Iran 2011

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ISBN 978-1-908180-00-1

thebusiness year

The Karoun III Replacement Road, a world-class public infrastructure project by the Stratus Group

Acting Professionally The Stratus Group of companies provides a host of comprehensive, state-of-the-art services to its clients based on the synergies generated by its subsidiaries and partners

Performing Globally Stratus Group’s enterprises are involved in a wide range of activities such as public infrastructure development, finance, investment, insurance, general contracting, upstream oil and gas services, and urban development in Iran and around the world

No: 23, Saadat Abaad, Kaj Square West Sarv St., Tehran - Iran | T/F (+9821) 22364257-9 |

Iran 2011 In partnership with: Organization for Investment, Economic and Technical Assistance of Iran



Center of Attraction





A New Era - REVIEW: Banking


Dr. Mahmoud Bahmani, Governor of the Central Bank of Iran - INTERVIEW


Being Unique - REVIEW


Dr. Ali Divandari, Chairman and Managing Director of Bank Mellat - INTERVIEW


HE Dr. Mahmoud Ahmadinejad, President of the Islamic Republic of Iran


Vali Zarrabieh, CEO of Saman Bank -

Turkish Prime Minister Recep Tayyip Erdoğan - GUEST SPEAKER


Dr. Majid Reza Davari, Chairman and Managing Director of Bank Tejarat







Competitive Age - ROUNDTABLE: Banking


Dr. Valiollah Seif, CEO of Karafarin Bank -


Dr. Kourush Parvizian, Chairman and Managing Director of the Export Development Bank of Iran - INTERVIEW


First Bid - REVIEW: Capital Markets


Dr. Ali Salehabadi, President of the Securities and Exchange Organization






The Giants Go Public - REVIEW: Insurance


Calm During the Storm - REVIEW



HE Dr. Seyed Shamseddin Hosseini, Minister of Economic Affairs and Finance

Dr. Javad Farshbaf Maheryan, President of Bimeh Markazi Iran and Head of the High Council of Insurance - INTERVIEW


S.M. Alipour, Managing Director of Asia Insurance - INTERVIEW





Dr. Behrouz Alishiri, Vice-Minister of Economic Affairs and Finance and President of OIETAI - INTERVIEW

A.M. Zarrabi, Managing Director of Karafarin Insurance - INTERVIEW


Foreign Direct Investment - FOCUS


Irteza Ali Qureshi, COO of Kansai Paint Iranian - INTERVIEW


Ziya Domanic, Managing Director of Unilever Iran - INTERVIEW


Marc Corbion, Managing Director, MAF PARS Hypermarkets - INTERVIEW


Privatization - FOCUS


Mohammad Sadr Hashemi Nejad, Chairman, Stratus Group Holding Iran






Mohsen Memari, CEO of Ghadir Investment - INTERVIEW


Dr. Mohammad Nahavandian, President of the Iran Chamber of Commerce, Industries and Mines - INSIDE PERSPECTIVE


Yahya Ale-es-hagh, President of the Tehran Chamber of Commerce, Industries and Mines - INTERVIEW




157 105




More Than Heavy - REVIEW


Hojjatollah Amani Dowlatsara, Managing Director and Member of the Board of Behran Oil - INTERVIEW



Moving Around - REVIEW


Seyedeh Fatemeh Moghimi, Managing Director of Sadid Bar International Transport - INTERVIEW


A. Ghannad Rezaei, Managing Director of Pasargad Oil - INTERVIEW




Finding Its Place - REVIEW


Mohammad Reza Montazeri, Managing Director and Board Member of FKCC/ Tamin Cement Holding - INTERVIEW


Constructive Solutions


City on the Move - FOCUS: Parand City


Kianoosh Heshmati, Managing Director of Sakht Ajand Real Estate Investment Company - INSIDE PERSPECTIVE

- ROUNDTABLE: Construction


The Opportunities Ahead - FOCUS: Oil & Gas


The Race Is On - SPECIAL FOCUS: South Pars


Dr. Gholamreza Manouchehri, CEO of Petropars Ltd. - INTERVIEW



Working Together - COMPANY PROFILES


Growth on the Land - REVIEW



Dr. Mohammad Talebi, President of Bank Keshavarzi - INTERVIEW


Mohammad Rostami Safa, President of Safa Industrial Group - INTERVIEW


A. Ebrahimi, Managing Director of the Iran Tractor Manufacturing Company (ITMCO)


Gholamreza Behmanesh, Managing Director and Member of the Board of Directors, Azar Ab Industries - INTERVIEW


129 133



Ali Khayrandish, President of Iran LNG.




Building on the Basics

- REVIEW: Petrochemicals

S.R. Sharif Mousavi, Managing Director of Marun Petrochemical Company - INTERVIEW




Extending the Base - REVIEW


Javad Najmeddin, President and CEO of Iran Khodro Industrial Group (IKCO)


Consuming & Changing - REVIEW: FMCG


G.A. Soleimani, CEO of Solico Group


Behrouz Foroutan, Chairman of Behrouz Food Industries - INTERVIEW


Under Ground - REVIEW: Mining


L. Saeedi, Managing Director and Member of the HEPCO Industrial Group Board





ICT 157

The Big Connection - REVIEW


Saber Faizi, Managing Director and Member of the Board of the Telecommunications Company of Iran (TCI) - INTERVIEW



ISBN 978-1-908180-00-1 Publisher Rupert Smith Regional Director Ayşe Hazır Editor-in-Chief Gilles Valentin Country Director Peggy Rosiak Country Editor Aytuğ Şaşmaz




The Right Tonic - REVIEW: Health


Equipping the Medical Sector - INSIGHT:


Dr. Seyed Hamid Mostafavi, Managing Director of Exir Pharmaceutical Company

Medical Equipment



Branding & Selling - ROUNDTABLE:


Ramin Fallah, Managing Director of Fanavari Azmayeshgahi - INTERVIEW

Project Assistant Amirreza Tasooji


Ali Akbar Esmaeili, Vice President of Atieh Hospital - INTERVIEW

Managing Editor Jason J. Nash


Access & Quality - REVIEW: Education


Human Capital - FORUM

Assistant Country Director Gülay Sultan Özdamar Regional Contributor Seyyed Hassan Hosseini

Sub-Editors Jon Black Peter Howson Janine Oakman



Contributors Jackson Allers Richard Carriero Peter Speetjens 187

Transcribers Katherine Kugay Attila Pelit Jared Wall Advertising Manager Caroline Miller Creative Director Genee Presta Graphics & Illustrations Genee Presta Cover Illustration Pınar du Pre Circulation & Marketing Director Amy Burtin Printing: Apa Uniprint Production: The Business Year 78 York Street London W1H 1DP T +44 (0)207 692 8335 F +44 (0)207 692 8336 The Business Year is a tradename of Wildcat Publishing Inc. Copyright The Business Year International Inc. 2011. All rights reserved. No part of this publication may reproduced, stored in a retrievable system or transmitted in any form or by any means, electronic, mechanical, photocopied, recorded or otherwise without prior permission of The Business Year International Inc. The Business Year International Inc. has made every effort to ensure that the content of this publication is accurate at the time of printing. The Business Year International Inc. makes no warranty, representation or undertaking, whether expressed or implied, nor does it assume any legal liability, direct or indirect, or responsibility for the accuracy, completeness or usefulness of any information contained in this publication.

208 195



Ebrahim Pourfaraj, Managing Director of Pasargad Tours Iran and Chairman of the Iranian Tourism Operators’ Association - INTERVIEW


Saman Jilanchi, Managing Director of Raamtin Residence Hotel - INTERVIEW


Marjan Mobin, Managing Director of Pars Caravansary - INTERVIEW


Flower of the World - FOCUS: Shiraz





Add It Up - REVIEW: Accountancy


Abbas Hoshi, Senior Partner of Hoshiyar Behmand & Co, and Member of Crowe Horwath International - INSIDE PERSPECTIVE


Eartly Delights - FOCUS: Kish Island


When in Iran... - HOTEL GUIDE







Center of Attraction ARMENIA



1,648,000 sq km 18th largest in the world TOTAL POPULATION

73.6 million Tabriz
































Reserves 137.1 billion barrels (10% of the world’s total) Shiraz FARS




4.2 million barrels/day (5% of the world’s total)









2.1 million barrels/day

Bandar Abbas

Kish Island




Generation 222.3 billion kWh Consumption 169.0 billion kWh







Male 70 Female 75


IR499.2 trillion (2009, in 1997/98 constant prices) $331.1 billion (2009, current prices) TURKMENISTAN GDP PER CAPITA

$4,400 (2009) $10,940 (2009, PPP-adjusted)


$8.4 billion (in 2Q-4Q 2009) $10.3 billion (estimated for 1388 2Q 2009-1Q 2010)


10.8% (March 2010 y-o-y)


11.9% total 10.8% male, 16.8% female


Islamic Republic



Supreme Leader Ayatollah Ali Khamenei Elected by Assembly of Experts for life term


President Mahmoud Ahmadinejad Elected popularly for four-year term


290-member Parliament elected popularly and 12-member Guardian Council appointed by the Supreme Leader and the Parliament SISTAN & BALUCHISTAN





31 provinces (ostans) 324 counties (shahrastans)


Despite its huge economy and central position in the world oil and gas market, Iran remains somewhat of a mystery to most investors. However, statistics alone reveal why Iran is such a compelling destination for investment. In PPP-adjusted terms, the IMF estimated that Iran had a GDP in 2009 of some $828 billion, making it the world’s 18th largest economy, while in nominal GDP terms it comes in at 28th with $326 billion. The country managed to shrug off most of the effects of the global economic crisis, with annual growth managing to stay above 2%. Prior to this period growth came in at a healthy average of 5.6% per year from 2005/06 until 2008/09. Although Iran possesses some of the world’s largest oil and gas reserves, it is actively attempting to diversify its economy and place more stress on the output of its growing industry and service sectors. Iran has also conducted one of the most effective and wide-ranging privatization efforts seen in the region in recent years. The privatization program, which was accelerated in 2006 and backed by a decree from the Supreme Leader, aimed to cede 80% of the government’s shares in state-owned enterprises (SOEs) in all sectors except for the upstream oil and gas sector and the defense industry to private sector players, and shrink the state’s share of the economy from 65% to 20%. In 2010, more than 300 SOEs were announced for privatization, including petrochemical companies, refineries, power plants, air carriers, banks, insurance companies, car manufacturers, mines, and agri-food industrial complexes. The Iranian Privatization Organization has been put in charge of the sell-off process, and has used a blend of block stake sales and IPOs on the Tehran Stock Exchange to move ahead with the sales. Encouraging more foreign investment is also seen as a core part of the economic reform process. The Iranian government sees foreign investment both as a mechanism of financing development and as a means of technology and knowledge transfer. Further steps have been taken to facilitate foreign investment into the country in 2010, the most important of these being the removal of the three-year lockup on invested capital, and the provision of Central Bank guarantees for access to hard currency for the repatriation of funds. With these regulations, the country aims to further ›› Iran2011


With more than 5,000 years of continuous history, Iranian society has a rich set of cultures and traditions. Population distribution (in millions) Rural Urban 21.7















Population profile (in millions) 60+ 45-59 30-44 15-29 0-14 100 90 80 70 60 50 40 30 20 10 0

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Sources: Central Bank of Iran, UN Population Database

GDP in USD billions GDP current USD billions GDP, PPP current USD billions 900 800 700 600 500 400 300 200 100 0 2000










Sources: World Bank, World Development Indicators.

PPP-adjusted GDP per capita In current USD ,000 12 11 10 9 8 7 6 5 4





Sources: Central Bank of Iran, IMF








increase foreign investment, which reached $10 billion in 2007, and FDI, which stood at $3 billion in 2009, an 88% increase compared to 2008. Iran has also arranged a series of generous “tax holidays” for private foreign investors who engage in activities considered a high priority for development. The Iranian economy is being developed in broad terms using the “Vision 2025” plan, adopted in 2005 to guide the reform process, as well as the Five-Year Development Plans (FYDPs) that the government sets out. In March 2010, the Fourth FYDP ended and the Fifth FYDP was being carefully scrutinized by Parliament. The new plan will continue the agenda of economic reform, by sustaining efforts at privatizing SOEs and broadening the country’s economic base. In order to support economic diversity, the government will increase its research budget to 3% of GDP, and encourage more active collaboration between business and the university sector. With more than 5,000 years of continuous history, Iranian society has a rich set of cultures and traditions that very few other societies can claim. In addition, the country has a young and steadily urbanizing population: 65% of the population is under the age of 30 and 68% lives in urban settings. With 3 million students currently studying at its universities, Iran has one of the highest education attainment rates in the region. Its population richness is enhanced by its ethnic diversity. The Iranian population is made up of Farsi people, Azeris, Kurds, Baluchis, Lurs, Turkmens, and Arabs, who have lived in the same geography harmoniously for hundreds of years. With its many natural and human assets, Iran has every reason to look to the future with hope. For the first-time visitor to Iran, the country is able to demonstrate not only the progress it has made, but also the cultural treasures it has preserved. Iran has much to share with the international business community. Through an in-depth analysis of each sector of the economy, and interviews with leading businessmen and businesswomen in the country, The Business Year: Iran 2011 aims to introduce its readers to this unique and fascinating country. ●


DIPLOMACY & POLITICS INSIDE 13 Being Unique - REVIEW | 17 HE Dr. Mahmoud Ahmadinejad, President of the Islamic Republic of Iran - INTERVIEW | 22 Turkish Prime Minister Recep Tayyip Erdoğan - GUEST SPEAKER


Being Unique

The Islamic Republic of Iran is based on a complex interaction of Islamic principles, social justice, and democracy that have stood the test of time since the Revolution. The Iranian cabinet is chaired by the President and includes 10 vice-presidents, the head of the Presidential Office, and 21 ministers. The current First VicePresident is Mohammad Reza Rahimi (seated to the right of President Ahmadinejad) and the current Head of the Presidential Office is Esfandiar Rahim Mashaie (seated to the left of the President).

Political observers and commentators used to finding similar governmental structures around the world are often stumped when understanding the unique political structure of Iran. Yet, once the underlying principle of this system is figured out all the complexities disappear: The system is based on a combination of the principles of Islam on the one hand, and of participatory democracy on the other. As the people of Iran, who make up the electorate, determine the future of the country by voting for the legislative and executive branches of government, other institutions ensure that these policies correlate with Islamic principles and legal precedent.

The Constitution that consolidated the Islamic Republic was ratified by the Iranian people in a referendum held in 1979. This Constitution foresees a positive role for the government to reveal the country’s true economic and social potential. In other words, the government is obliged to conduct favorable policies and take the necessary measures to expose and continuously improve the wealth of the country. Another characteristic of the Islamic Republic is the mandate to provide mechanisms for the participation of the people in the decision-making processes of the government. These participatory mechanisms were strengthened in 1999 following ›› Iran2011


Iran’s Supreme Leader, Ayatollah Ali Khamenei.

changes that mandated the popular election of city and village councils for the first time in the history of the country. The Constitution also ensures a rational separation of powers between the different branches of the government, so as to avoid the accumulation of power in any one hand so that the Islamic democracy preserves its sustainability.

Ayatollah Ali Khamenei, the second Supreme Leader of the Islamic Republic, was appointed to the post in 1989. As the Rahbar of the country, he stays aloof from daily politics, but preserves his right to guide the constitutional organs of state and amend state policy.

CENTRAL GOVERNMENT STRUCTURE According to the Constitution of the Islamic Republic, the highest-ranking government official is the Supreme Leader (or Rahbar) who is mandated to oversee the policies of the government so that they correlate with the principles and requirements of Islam. The Supreme Leader is not much involved in the daily affairs of state, as he only intervenes in the formulation of macro-policies to ensure

the compliance of government policies with Islamic principles. The Supreme Leader is also the Commander-in-Chief of the Armed Forces and also appoints the Head of the Judiciary. The Supreme Leader is elected by the Assembly of Experts and serves a lifetime term of office. The current Supreme Leader, Ayatollah Ali Khamenei, was appointed to succeed Ayatollah Khomeini in 1989 after having served as president of the country for eight years. Ayatollah Khamenei is a supporter of efforts to empower the private sector in the country. In 2007, he requested that the government make more intense efforts to speed up the privatization process and strengthen property rights by establishing special commercial courts under the auspices of the Ministry of Justice. The Assembly of Experts is an 86-member body consisting of the country’s leading jurists and scholars of Islamic jurisprudence. Mandated to fill any vacancy in the post of leadership and monitor the Supreme Leader’s performance, the members of the Assembly are elected by popular vote for an eight-year term. The current speaker of the assembly is Ali Akbar Hashemi Rafsanjani, who served as President of the country between 1989 and 1997. The President, who is responsible for the formulation and execution of the macropolicies of the state and implementation of the Constitution, is popularly elected for a fouryear term. No person can act as the President for more than two consecutive terms. The President is also Head of the Council of Ministers, which comprises 21 ministers responsible for various public services and policies. The current President of the Islamic Republic is Dr. Mahmoud Ahmadinejad, who was first elected in 2005 and again in 2009, with 62.4% of the votes in the second round of the presidential election. President Ahma-

Iran’s central government structure Direct Election Appointment or Approval












The Iranian Parliament, or Majlis, is directly elected by popular vote and is composed of 290 members, five of which are elected from religious minority groups. Until 2007 Iran had the world’s youngest voting age, at just 15 years. Suffrage is now set at 18 years of age.

Members of the Iranian Parliament.

dinejad’s priorities in economic policy include decreasing state control over the economy and achieving a more equitable distribution of wealth and opportunities for Iran’s citizens. The current program conducted by the government in privatizing state assets is testament to this, with an extensive range of formerly state-owned companies sold off in the program and the provision of “Justice Shares”, which are ceded to the lower strata of the community. The steps taken by the government to decrease red tape and attract more FDI to the country are other indicators of President Ahmadinejad’s policies. The Parliament of Iran (or Majlis) consists of 270 deputies elected every 4 years. The Parliament makes laws concerning every aspect of governmental and social affairs. Regarding economic policy, the Parliament plays an important role as the body that investigates and approves the detailed and extensive FYDPs that later guide the economic policies of the government. As an effective measure of scrutiny of the cabinet by the representatives of people, all members of the Council of Ministers must be approved individually by the Parliament, and the Parliament can call for the dismissal of any number of the government’s ministers at any time. The current speaker of the Parliament is Ali Ardeshir Larijani. In the governmental system of Iran, the Council of Guardians plays a role similar to that of the constitutional courts found in other countries as it inspects the laws passed by the Parliament to determine whether they are in compliance with Islamic legal principles and the Constitution. The Council has

12 members, six of whom are appointed by the Supreme Leader and the remaining six are nominated by the judiciary and approved by the Parliament. Another important task of the Council of Guardians is in overseeing the presidential and parliamentary election process. The current Chairman of the Council of Guardians is Ahmad Jannati. The Expediency Council mediates between the Parliament and the Council of Guardians should there be a difference of opinion between the two institutions regarding legislation. The Judiciary is independent of the executive and legislative branches of government, and the Head of the Judiciary is appointed directly by the Supreme Leader for a five-year tenure.

LOCAL GOVERNMENT The structure of local government in the Islamic Republic strikes a balance between effective administration and popular participation in decision-making processes. The country is divided into 31 provinces (ostans) whose governors are appointed centrally by the Ministry of the Interior. The allocation of financial resources to the provinces is determined by the central government. The provinces are further separated into 324 counties (shehrestans), each of which includes a city with a population of 50,000 or more as well as smaller towns and village agglomerations. Cities and villages within shehrestans have their own local councils, whose members have been directly elected by the electorate since 1999. This popular election of local officials constituted an important political ›› Iran2011


One of the main pillars of the Ahmadinejad government has been its accent on improving economic diplomacy. Iran has been developing ties with various regions around the world. The Iran-Brazil Economic Forum was organized in Tehran in 2009 with the participation of the former President of Brazil, Lula da Silva (left). In September 2010, President Ahmadinejad received Li Changchun, a member of the Politburo Standing Committee of the Communist Party of China (right), underlying the close relations between the two countries.


milestone in the history of the country as it was the first time the people were able to exercise control over local affairs. City and village councils perform a broad range of functions including the election of mayors, the supervision and auditing of the budget of municipalities, as well as the planning and coordination of economic, social and educational issues within their local constituency. The councils consist of five to 11 members depending on the size of the population living in the city or village, but this number can increase up to 15, as in the case of Tehran. Another important figure for the local governance system of Iran is the Imame Jomeh (the leader of Friday prayers) who is appointed to every city and village by the Supreme Leader.

DEVELOPING ECONOMIC TIES Benefitting from the accelerated levels of globalization and economic integration, one of the characteristics of the Ahmadinejad government has been the improvement of Iran’s economic relations with a diverse range of countries around the globe. Latin America, although geographically distant, has become a closer trading partner: IMF figures suggest that Iran-Latin American trade soared 209% in 2008, totaling $2.9 billion. These countries included Brazil, whose Foreign Minister Celso Luiz Amorim described Iran as being the “new geographic partner of the country”. Ahmadinejad and Lula da Silva, the former President of Brazil, announced a trade volume goal of $25 billion with increased cooperation between both countries, particularly in the fields of industry, trade, energy, and technology. Another country whose ties with Iran have been developing fast is China. The two sides

are committed to expanding their level of economic cooperation, with Chinese Vice-Premier Li Keqiang describing China as “Iran’s main economic partner”. Chinese companies are already involved in energy exploration and production projects in Iran worth about $29 billion, and in refining and other industrial activities valued at $10 billion. Other countries in the region neighboring Iran are also among those with which the country has strong ties. Syrian President Bashar al-Assad visited Iran in October 2010 and together with President Ahmadinejad declared that they were targeting a trade volume of $5 billion between the two countries in the medium term, up from the $336 million recorded in 2009-2010. Iranian firms are currently involved in many construction projects in Syria, while Iran’s largest automotive producer, IKCO, has established vehicle assembly facilities in Damascus. Turkey is also very much interested in improving its economic ties with Iran. The Turkish Prime Minister Recep Tayyip Erdoğan and Iranian First Vice-President Mohammad Reza Rahimi jointly declared that the mediumterm target for the volume of trade between their two countries is $30 billion. In 2010, the annual volume of trade is estimated to have increased to $10 billion. Trade is expected to encourage mutual direct investment in the form of joint ventures between the two countries’ private sector interests, especially in the sectors of industry, finance, and tourism. With its unique political structure, steps taken toward more participation, and improved economic ties with a diverse set of countries around the globe, the Islamic Republic of Iran is looking to the future with strength, dynamism, and determination. ●




Dr. Mahmoud Ahmadinejad Determined to Succeed TBY talks to HE DR. MAHMOUD AHMADINEJAD, President of the Islamic Republic of Iran. THE BUSINESS YEAR: How would you characterize the stable

CURRICULUM VITAE BORN 1956 EDUCATION PhD Engineering and Traffic Transportation Planning MS Civil Engineering, Iran University of Science and Technology CAREER MILESTONES 2005 President of the Islamic Republic of Iran 2003 Mayor of Tehran 1997 Professor, Iran University of Science and Technology 1993 Governor General, Ardabil Province

Iran is the birthplace of a great civilization, having a historical background of over 7,000 years...

and dynamic aspects of the Islamic Republic of Iran’s place in the fast-changing political and economic order of the world? DR. MAHMOUD AHMADINEJAD: Everyone knows that the land of Iran is the birthplace of a great civilization, having a historical background of over 7,000 years and being a civilization based on humane and divine values. Monotheism, respect for the rights of nations, and a rejection of the slavery and bondage of mankind are among the key features of Iranian civilization. After the coming of Islam, Iran’s civilization, on the basis of Islamic culture and education, grew faster and experienced further expansion, achieving great ratings in the fields of monotheism and the belief in one God, literature and the arts, logic and philosophy, science and technology, mathematics and astrology, medicine, physics, chemistry, ethics, and human sciences, and it has introduced great scientists and provided many services to humanity as a whole. During recent centuries, and especially over the course of the last century due to the consequences of aggression, war making, violations, and the avarice of oppressors, the forward movement of our nation encountered obstacles and hurdles. However, the cultural and intellectual foundation of our nation, through the endeavor and hard work of its wise and compassionate people, remained immune, leading the Iranian nation to the year 1357 (1978). In that year, under the leadership of Imam Khomeini, the monotheist, brave, wise man that lived a simple life and served the people, the Islamic Revolution in Iran began. The dictatorship, which through the support of the colonial powers, was overwhelming Iran, was toppled, and independence, freedom, and a governing system based on the votes of the people and the principles of Islam was established in our country. Despite confronting international avarice, the eight-year Imposed War, threats, and unlawful sanctions, the Iranian nation proudly flies the flag of dignity, independence, and progress, and has bravely resisted all aggressions and disagreements and is removing all barriers in its way. The nation of Iran looks for peace, justice, dignity, and advancement for all nations. It respects all human beings and propagates love, affection, and friendship. Fortunately, the Islamic Republic of Iran has friendly and brotherly relations with all the nations and governments of the world, always insisting on the enhancement of relations based on justice, mutual respect, friendliness, and brotherhood, ›› Iran2011


Through diversification in production, transition to a global economy, privatization, and reorganization of the capital markets Iran is vastly improving its productivity.

Iranian President Mahmoud Ahmadinejad with Syrian President Bashar al-Assad in Damascus.

while standing firm against international avarice and expansionism and confronting aggression, occupation, and those who choose to deny the rights of nations. Today, the nations of the world, and a majority of their governments, support the fair, just, and humanitarian stances of the Islamic Republic of Iran and see themselves on the side of the Iranian nation. This context is an advantageous opportunity to pave the way for the development and advancement of all nations through cooperation and concerted action. Could you explain Iran’s growing ties with the economies of Asia and the Pacific and the importance of these increasingly privileged relationships for the Iranian economy? We, as an Asian country, belong to the Asian civilization, which is the root of human civilization. Our destinies are interlocked. The development of each of us means the development of the others, and if any harm comes to any of us, the others suffer as well. There are numerous reasons why Asian countries should stay together. None of us are expansionist, avaricious, or greedy. Our cultures share values such as humanity, love, affection, justice, and brotherhood. All of us confront insecurity, war, and terrorism. Over the course of recent years, it was made clear that the international economic system is not based on justhebusinessyear

tice, and revolves around the benefits that some certain capitalistic countries derive. It is not only incapable of serving the economic interests of the nations, but also causes the spilling over of crises from high-risk countries and their shaky capitalistic systems to our countries. This bitter and costly experience proves that we should depend on ourselves and look to each other more than before. Mutual, multilateral, and regional cooperation may play a key role in dynamic economic growth, bringing security and stability to countries. For the time being, the Islamic Republic of Iran’s relations with the countries of Central Asia, our neighbors, and those countries located in east and southeast Asia as well as plenty of other Asian countries, bilaterally, multilaterally, or through organizations such as ECO and COMCEC, are strong, and developing. Trade, technology transfer, the financing of industrial, agricultural, and energy projects, the implementation of joint touristic projects and so on are among the economic benefits that these relations deliver to us. What has been the impact of changing political relations with the EU—a key trading partner—on EU-Iran economic relations? Iran’s foreign policy is based on the principles of justice, friendship, mutual respect, and the maintenance of human

dignity. The relations of the Islamic Republic of Iran and the governments who apply these principles shall be robust and good. The experience of the recent decades shows that, unfortunately, some European governments, under the influence of the international oppressors, with the Zionist regime at the top of them, are not allowed to establish fair and friendly relations. Of course, the unfair behavior of some Europeans shall be to the detriment of themselves. They think the world is limited to Europe. The world is much bigger than the mentality and ideas of some. Although the market share of European companies in Iran has increased in the current year, in comparison to the rapid growth of Iran’s foreign trade, it is declining and Asian countries are quickly replacing them. Europe’s share in Iran’s oil exports remains fixed, while in the non-oil sector Asian countries, especially our neighbors, have surpassed countries such as Germany and Italy. In the imports sector, the UAE, China, and South Korea have enhanced their ranking when compared to Europe in their levels of foreign trade with Iran. At present, many American and European companies struggle to get around the obstacles and sanctions to work with the Islamic Republic of Iran. What is your evaluation of the performance of the Iranian economy under



President Ahmadinejad spearheads the bold Vision 2025 program.

your direction, the domestic and international factors influencing this performance, and your assessment of the path ahead? To improve the efficiency of the Iranian economy, there are transformations and reforms underway in seven fields within the framework of the General Policies of the System and the Twenty-Year Vision. The consequences of such transformations include the establishment of more justice in the distribution of resources; the growth of talents and capabilities; further price transparency; the greater participation of the people and private sector, whether domestic or foreign, in the economy; the prevention of resource waste; a smaller bureaucracy; and enhancing competitiveness and the like. The reforms underway include those of the tax system, the improvement of the banking system, goods distribution channels, the customs system, the national currency value, the subsidy system, and productivity. The first step in targeting subsidies was successfully taken and the management and strength of the Iranian nation

was well demonstrated during this great effort. Our experience in targeting subsidies is an outstanding achievement that can be an example to other countries. This act was conducted while Iran was under the heaviest of international sanctions. This matter is proof that the impact of sanctions on Iran’s economy is trifling. The second is that Iran’s system has the highest level of stability and strength, and enjoys the support of the people as it continues its advancement and progress. How do you see Vision 2025 and other related policies creating a more efficient Iranian economy? Through diversification in production, transition to a global economy, privatization, and reorganization of the capital markets Iran is vastly improving its productivity. A portion of the resources originating from making the prices of energy carriers real shall be allocated to producers in different sectors in the form of concessional loans or government grants in order to raise productivity. Market competitiveness shall become more transparent

and the investments made by domestic or foreign investors in projects shall be streamlined. Today, Iran’s capital markets are among the most prosperous and successful securities and exchange markets in the world. The indexes have improved dramatically and no sign of economic crisis or the crises of the world securities and exchange markets can be seen in the Iran securities and exchange markets, providing a good opportunity for foreign investors and clients to do business in this market. The securities market for oil products and petrochemicals is already active, and soon the securities and exchange mechanism for the oil market will be brought into operation. The absence of some foreign investors resulted in $50 billion worth of gas production projects in the southern part of Iran being awarded to domestic contractors. The volume of investment in energy projects is ramping up, while in other sectors of the industry some other projects are ready to be awarded to investors and contractors. The Twenty-Year Vision Document is a milestone on the road to achieving broader horizons, and it is ›› Iran2011


establishment of relations independent of the great powers, and this will happen. We maintained our high economic growth over the course of the last year, when we were under sanctions, and growth will occur this year too. These things make nations more determined, and provide new chances for the success of our nation. There is a characteristic of the Iranian nation that, if not unique then at least uncommon, and that is its ability to turn threats into opportunities. The Iranian nation takes the most severe threats and then through its civilizational and cultural mechanisms changes them into tremendous opportunities. The Islamic Republic of Iran has been under the sanctions of its enemies for the last 32 years, and the sanctions have not had any influence on the will and determination of the Iranian nation. The people of Iran reached new peaks of progress and advancement during the sanctions, conquering new peaks of knowledge. The sanctions taught the Iranian nation to rely on its own resources and capacities more than ever before, the results of which have been seen in different scientific, research, and industrial achievements. Other countries can benefit from these advances as well. Meanwhile, foreign investment has experienced impressive growth. The only impact of sanctions was on increasing solidarity and expediting our growth rate.

President Ahmadinejad welcomes and encourages investors.

of course based on justice and the respect of the rights of nations in international relations. As I said before, at present international relations are to the detriment of nations, increasing poverty and widening the gap between affluent and impoverished countries. The relations of international institutions and financial organizations need to undergo fundamental changes, while institutions such as the US Federal Reserve, which empty the pockets of nations through the issuance of unregulated paper assets, need to be restricted in their actions. Regional convergence, defining new Asian shared values, making transactions through national currencies, enhancing banking and monetary relations, and eliminating the US dollar as a means of transacthebusinessyear

tion could be a big help in implementing fundamental changes in the international economic system and in enhancing domestic and regional economies. Which sectors and areas have been most affected by international sanctions, and what measures have been taken to alleviate the impact of the sanctions regime? The literature of sanctions belongs 30 years in the past. The period when the Americans regarded themselves as masters of the world has passed. We have plenty of opportunities available. We advised them not to implement such sanctions, and if they continue we will create new independent relations in the world. Even now there are many nations and governments who are interested in the

How do you interpret the role of foreign investment in fostering change and increasing the performance of the Iranian economy? Foreign investment has played, and continues to play a key role in the country’s Fourth and Fifth Five-Year Development Plans (FYDPs). Regarding the target of 8% economic growth, the role of foreign investment shall especially be taken into consideration. Based on the existing laws, the treatment of foreign investors shall be the same as for domestic investors and no discrimination will apply; their security is also guaranteed. Fortunately, the growth rate of foreign investment in Iran, when compared to other countries, is at the highest of levels. How is Iran moving to produce a young, forward-looking nation? What reforms do you consider necessary to develop the nation’s human capital and increase the collaboration between the worlds of academia and business? The youth of a nation is key to the devel-



President Ahmadinejad receives former Brazil President Lula in Tehran.

The government is being decisive in its support of the endeavors of the youth to foster their talent and abilities for the development of the country.

opment of its innovativeness, freshness, and creativity. In addition, the middleaged and elderly have also taken deep and unique steps. The Islamic Revolution was a result of the faith, hard work, and creativity of our youth. The same goes for our victory in the holy defense, which in the eyes of all the politicians of the world was something unachievable. Another miracle of youth is currently underway. Our nation, in order to achieve its worthy position in the world and in the scientific, technical, and cultural relations of the globe, needs the innovative, productive, and courageous presence of the youth, and this is being realized. The government is being decisive in its support of the endeavors of the youth to foster their talent and abilities for the development of the country. The enhancement of universities and research institutes, creating appropriate opportunities in all scientific, research, and technical fields, providing easy financial resources, and encouraging innovative and creative young people are among the measures being taken. The worthy achievements of Iran in different industries, such as oil and gas, nuclear energy, aerospace, and so on is indebted to the youth of this land, and this journey will continue. How do you see the future of Iran as “the economic, scientific, and technological leader of Southwest Asia� as stated in the Vision 2025 development plan? In the vision for the year 1404 (2025), Iran, based on its culture, science, and

spirituality, should stand first in the region in all economic, cultural, scientific, and political aspects. The government and nation of Iran are moving in the same direction and great scientific, industrial, and political advances are happening fast. The Islamic Republic of Iran, relying on its civilization and cultural foundations, notwithstanding the contradictions and preventive acts of arrogant exploiters, can compensate for its previously imposed backwardness very quickly. The victory of the Islamic Revolution, and the faith, resistance, insight, and purity of the Iranian nation has provided it with an exceptional opportunity. In a time that the big powers of both the East and West have reached the end of the line and global relations are at the threshold of a great transformation, the Iranian nation will continue its route of advancement, and physical and spiritual progress through its best endeavors. The current period is a new chapter in the life of the Iranian nation. The Iranian nation has always been the standard bearer of peace, brotherhood, love, and affection, wishing prosperity, peace, security, and friendliness to all. Regarding the general move of the world towards justice, purity, love, and affection, there is the growing hope that cruelty, aggression, poverty, discrimination, and enmity will come to an end, being replaced by justice, purity, and affection all over the world, and that all peoples will be able to enjoy the rulership of righteous and divine governments. â—? Iran2011



Recep Tayyip Erdoğan Iran Is the Bridge to Asia Turkish Prime Minister RECEP TAYYİP ERDOĞAN on the importance of relations between the two countries.

The centuries of relations between our two countries, our two civilizations, and our two geographies will take a new direction, and we are very excited about that.

CURRICULUM VITAE BORN 1954 EDUCATION BA Economic and Commercial Sciences, Marmara University CAREER MILESTONES 2003 Prime Minister of the Republic of Turkey 2001 Founding Chairman, Justice and Development Party 1994 Mayor, Istanbul Metropolitan Municipality 1985 Provincial Chairman, Welfare Party


Turkey and Iran are the representatives of two deep-rooted and neighboring civilizations. These two countries have centuries and even millennia-long connections with each other. This connection, this friendship between the two cultures rests upon the caravans of camels through which trade was realized between Persia and Anatolia for centuries. In fact, the economic relations between our two countries are even older than the history of many countries that exist on the world map today. The common 380-kilometer-long boundary between Turkey and Iran functions as a factor that strengthens our togetherness and solidarity. Our common values in culture and civilization, ranging from Mevlana and Omar Khayyam to Fuzuli and Shahriar, do not allow the boundaries between us to act as a barrier. Eras and generations have changed, unrests and turbulences have occurred, and yet none of them have interrupted the commercial and cultural interactions between Turkey and Iran. However, the level of economic cooperation between the two countries is far from satisfactory and sufficient. Today, the volume of trade between Iran and Turkey is just $10 billion. Through our mutual visits, the two governments have set the goal of increasing this figure to $30 billion in the upcoming five years as a medium-term target. Now, it is time to realize this target, and it is time to take action. If we cannot achieve this, then there is an Iranian saying: “They sat down, they talked, and they dispersed.” As the Prime Minister of Turkey, I would be disappointed if any of my Iranian friends said that about us. Therefore, my government and the Iranian government, in cooperation with our business communities, are doing everything to realize this plan. Iran and Turkey live in a difficult geography. Both of our countries have boundaries with unstable regions such as the Caucasus, Iraq, and Afghanistan. In this difficult geography, both of our countries are symbols of peace, security, and stability. Both countries aim to foster this stability and peace in the whole region of the Near East, and improving the economic and other forms of relationship between the two countries is the best way to contribute to this process. The more interaction



Left to right Imam Mosque, Esfahan, President Ahmadinejad receives Turkish Prime Minister Erdogan, Ortaköy Mosque, Istanbul.

Both countries’ geographies are strategically important, and we have to find a way to benefit from this advantage. As we are the bridge for Iran toward Europe, Iran is our bridge to Asia.

is realized peacefully between these two large states in the region, the more stable the whole region will become. Our two countries hold utmost importance for each other. Both countries’ geographies are strategically important, and we have to find a way to benefit from this advantage. As we are the bridge for Iran toward Europe, Iran is our bridge to Asia. Thus, the destinies of our two countries to increase ties with the rest of the world are bound together. As the Prime Minister of Turkey, I would like to suggest to my Iranian friends that they should not be afraid of the liberalization of trade and the removal of tariffs, quotas, and other forms of trade barriers. Turkey has been through this process. Many people in Turkey were against the Customs Union with the European Economic Community when Turkey and Europe were mutually opening up their boundaries to each other in 1996. Yet, we trusted the strength of our people, and we relied on the competitive ability of our industrialists. Nowadays, in many houses of Europe, people are using televisions, washing machines, and refrigerators made in Turkey. This is a huge source of pride for Turkey. As a result of the Customs Union, both Turkey and Europe won. Turkey has gained a lot of selfconfidence. There is nothing to be afraid

of regarding the liberalization of trade and the removal of trade barriers. Now, it is time to build these mechanisms of free and unhindered trade between Turkey and Iran. By putting a preferential trade agreement into practice, I am sure that we can realize the target of $30 billion in a smooth manner and both countries will benefit. One other thing both Turkey and Iran have to accomplish to reach that target is to break the power of the bureaucratic oligarchies in both countries. They exist in Turkey and I know they exist in Iran. Yet, bureaucrats are accountable to the people. If you do not follow up on them, they will not do what they have to do. To increase the volume of trade between our countries, we have to make it easier and this is only possible through breaking the power of the bureaucratic oligarchies. I know the Iranian government will put a lot of effort into achieving that, just as we have. The centuries of relations between our two countries, our two civilizations, and our two geographies will take a new direction, and we are very excited about that. We know there are things to do to foster this new direction, and we are very much ready to undertake them. ● Exclusive to TBY based on the Prime Minister’s speech at the Foreign Economic Relations Board’s Turkey-Iran Business Forum, Istanbul 2010.



ECONOMY INSIDE 25 Calm During the Storm - REVIEW | 30 HE Dr. Seyed Shamseddin Hosseini, Minister of Economic Affairs and Finance - INTERVIEW | 34 Invest in Iran: OIETAI - COMMUNIQUÉ | 38 Dr. Behrouz Alishiri, Vice-Minister of Economic Affairs and Finance and President of OIETAI - INTERVIEW | 42 Foreign Direct Investment - FOCUS | 43 Irteza Ali Qureshi, COO of Kansai Paint Iranian - INTERVIEW | 46 Ziya Domanic, Managing Director of Unilever Iran INTERVIEW | 49 Marc Corbion, Managing Director, MAF PARS Hypermarkets - INTERVIEW | 52 Privatization - FOCUS | 53 Mohammad Sadr Hashemi Nejad, Chairman, Stratus Group Holding Iran - INTERVIEW | 56 Mohsen Memari, CEO of Ghadir Investment - INTERVIEW | 58 Dr. Mohammad Nahavandian, President of the Iran Chamber of Commerce, Industries and Mines - INTERVIEW | 60 Yahya Ale-es-hagh, President of Tehran Chamber of Commerce, Industries and Mines - INTERVIEW


Calm During the Storm

Iran has one of the highest urbanization growth rates in the world. From 1950 to 2009, the urban proportion of the population increased from 27% to 71%. The United Nations predicts that by 2030 80% of the population will live in urban areas. Tehran, with a population of 7.7 million, is the largest city in the country. Other cities with a population of more than 1 million include Mashhad (2.4 million), Esfahan (1.6 million), Tabriz (1.4 million), Karaj (1.4 million), and Shiraz (1.2 million).

Over the past decade Iran’s economic growth has been robust and its external position has strengthened thanks to a favorable oil price and pro-cyclical economic policymaking. The performance of the Iranian economy has been buoyant in recent years, benefitting from a strong oil price and expansionary fiscal and monetary policies. Nominal GDP was estimated by the IMF to be $333.1 billion for 2008/9, with projections for 2010/11 of $353.7 billion. Real GDP growth was estimated to have averaged 5.6% over 2Q 2005-1Q 2009, tapering off down to around 2-2.5% during 2008/9 in response to fluctuations in the international crude oil price. Gross official reserves reached $80.5 billion, sufficient to cover 12 months of imports by September 2009. The Central Bank of Iran (CBI) has used this opportunity

to calm inflation, with estimates for the end of 1388 (corresponding to the end of 1Q 2010) of 10.8% for consumer price inflation (CPI). Despite the drop in the oil price, the current account (CA) surplus ended 2008/9 strongly, reflecting the increasing strength of non-oil exports and the increasingly diverse export basket of the country. The government was able to rely on support from the Oil Stabilization Fund (OSF), which helped cover the projected fiscal deficit that occurred as a result of oil price fluctuations. At the same time, the state budget for 2009/10 was one that sought to rein in government spending and prepare ›› Iran2011


Iran for a new bout of pro-cyclical spending from 2010 on.

Government Budget


The dependence of government revenues on the oil & gas sector is decreasing.

42% 30% 2Q-4Q 2007 - 2Q-4Q 2009

Government budget (2Q-4Q 2009, USD billion) Others Privatization OSF Others Taxes Oil & Gas

Assetacquisition Capital Current

2.2 2.4


11.3 13.2 10.8





Inflation Central Bank policy to bring down inflation is succeeding


25% 10.8% Nov 2008 - Mar 2010

Year-On-Year Inflation Rate (%) 30 25 20 15 10

Source: Central Bank of Iran, Karafarin Bank


01-03 2010

01-12 2009

01-12 2008

04-12 2007

5 0

In Iranian economic policy-making, socioeconomic development plays an important part. Ever since 1990, the Iranian government has outlined its economic decision-making through a series of Five-Year Development Plans (FYDPs). Prepared and formulated by the Presidential Office, the plans follow the guidelines of the Supreme Leader and are closely scrutinized by the Parliament prior to their implementation. The first development plan covered the years 1990-1995. Subsequent plans focused on reconstruction and later the development of Iran’s economy and industrial base, with an emphasis on becoming self-sufficient in producing strategic industrial and agricultural goods, while aiming for an improvement in the living conditions of the people and the social development of the country as a whole. In 2005, a higher level economic strategic plan, called “Vision 2025”, was developed that would help guide the ongoing Five-Year Development Plan (FYDP) process. From an economic point of view, Vision 2025 set the goals of “gaining economically, scientifically and technologically the first position in the Southwest Asia region (including Central Asia, the Caucasus, Middle East and the neighboring countries), by putting emphasis on the production of scientific knowledge and the transition to a knowledge economy”. The plan has set a target of $3.7 trillion of investment in all fields of the Iranian economy by 2025, according to Iran Daily. The Fourth FYDP (1384-1389) covered roughly the period from the second quarter of 2005 to the first quarter of 2010. For this period, and in order to achieve the goals set in Vision 2025, the plan foresaw annualized growth of 8%. After realizing 5% and 6% growth in the first two years of the plan, the country reached the target of 8% in 2007. However, as a result of the global economic downturn, the growth rate fell to 2.5% and 2.1% in 2008 and 2009, respectively, according to the CBI’s own figures. Although negatively affected by the downturn, Iran was among the few emerging countries that were only affected mildly by the global recession and it managed to sustain its uninterrupted growth pattern by maintaining growth above 2%. The effect of the global economic downturn reached Iran mainly through decreased revenues from crude oil. As the average sale price of Iranian crude oil decreased from $94 per barrel in 2008 to $64 in 2009, revenues

from the sale of crude oil declined by 29% and stood at $55 billion, although Iran’s average crude oil production did not change and stood at 4 million barrels per day; 62% of the crude oil was exported in 2009. The decrease in oil prices is closely related to the government budget, as generally 40% of central government revenues come from oil and gas sales. In the first nine months of 1388 (2Q 2009-4Q 2009), government revenues reached $45.3 billion, some 0.5% lower than the same period in 2008. Government expenditures, on the other hand, reached $61.2 billion, down 1.6% on 2008 figures. Thus, the government budget showed a deficit of $15.9 billion, 8% lower than the deficit for the same period in the previous year. The fact that the Iranian government managed to shrink the deficit in a period when revenues coming from oil and gas were also lower is explained by the 14% increase in tax revenues. This is mainly due to a 16% increase in direct taxes, which make up 73% of tax revenues in the Iranian system. Revenues from both public and nonpublic corporation taxes recorded growth of 68% and 49%, respectively. The introduction of a value-added tax (VAT) in September 2008 has improved revenue collection means significantly. The VAT is levied at a universal 3% rate, though with exceptions for tobacco (15%) and fuel products (30%), according to the IMF. Revenues derived from VAT are to be equally shared between the central government and the municipalities. VAT has been initially applied to all importers, exporters, and incorporated businesses with an annual turnover in excess of IR3 billion. Iran is one of the few countries that do not need to resort to foreign borrowing in times of budget deficit. In 2009, the budget deficit was financed mainly through withdrawals from the OSF, in which surplus oil revenues from previous years are accumulated as well as revenues derived from the sell-off of state assets under the extensive privatization program. The share of privatization revenues in financing the budget deficit increased from 3% in 2007 to 15% in 2009, whereas withdrawals from the OSF decreased from 86% to 71% in the same period. The slowdown in economic growth was also brought about by a tightening of monetary policy by the Central Bank in order to bring down inflation. This policy, accompanied by a cooling down of the economy as a result of the global downturn, was successful as the average annual CPI rate fell to 10.8% in March 2010 as opposed to 25.4% in March 2009. The month-on-month rate was down from 17.8% in March 2009 to 10.4% in March and 9.4% in July 2010. Thus, the economic planners were able to reach the target of



Investing in Society

Rush hour on Mirdamad Boulevard in Tehran.

Tehran is looking to conquer its traffic snarls, and has installed four main metro lines and two bus rapid transport (BRT) routes to improve transport circulation in the city. The metro system alone carried some 447 million passengers in 2009.

bringing inflation down to 10%, as set out in the Fourth FYDP. While inflation is on the decrease, unemployment in Iran continues to be a challenge. Hovering between 9% and 11% from the beginning of 2007 until the end of 2009, the rate surged up to 14.1% in the first quarter of 2010 and 14.6% in the second quarter. Although the Iranian economy was able to create 725,000 jobs per year during the course of the Fourth FYDP, the targeted 11% unemployment rate could not be achieved due to the large numbers of young people entering the labor force each year. In 2Q 2009-4Q 2009, Iran’s balance of payments registered a deficit for the first time in 12 years. The deficit stood at $4.3 billion as opposed to a surplus over the same period in the previous year, which stood at $20.6 billion. The turn from surplus to deficit in the balance of payments had two causes: First, as explained above, revenues from the export of oil and gas decreased by 33% over the period and stood at $48 billion. Secondly, the capital account deficit surged by 69% in the same period and registered a deficit of $12.6 billion as opposed to a $7.5 billion surplus in the 2Q 2008-4Q 2008 period. While the decrease in revenues from oil and the deficit on the capital account negatively affected the balance of payments, other indicators showed strong signs of the economy beginning to diversify its export base. The export of non-oil products continued to increase and reached $15.1 billion in 2Q 2009-4Q 2009, registering an increase from $11.8 billion to $14.3 billion in the same period for 2007 and 2008, respectively. The top five importers of non-oil Iranian goods were Iraq, China, the UAE, India, and Afghanistan. ››

The Social Security Organization (SSO) is the main social insurer in Iran providing compulsory coverage for wage earners and salaried workers as well as voluntary coverage for self-employed individuals. More than 7 million people are covered by SSO and nearly 1.5 million people receive pensions from the organization. If the dependents of insured people are included, the population who receives insurance and medical services from the SSO increases to almost 30 million, or nearly half of all Iranians. The SSO possesses a large investment group, which uses the funds it collects from contributors to invest in different areas of the economy. The Social Security Investment Company (SSIC or Shasta) was established in 1986 and started with a capital of IR20 billion; this figure reached IR20,000 billion in 2006, or some $2 billion at the time. The company consists of investment holdings that specialize in a host of sectors, such as the Sadare Tamin Company in the area of tiles and ceramics; Tamin Chemical and Petrochemical; Tamin Gas and Oil Investment; Tamin Pharmaceutical; FKCC/Tamin Cement; and Tamin Transportation. These various Tamin Group companies have around 40% of the pharmaceuticals market, 35% of the cement market, and 25% of the tile and ceramic market. The SSIC is also involved in new markets with its subsidiary Modern Industries Investment Holding, which specializes in nanotechnology, biotechnology, and ICT. In the ICT sector, Tamin Telecom will soon become the third mobile operator and bring 3G technology to Iran. The SSIC also has significant or controlling stakes in companies involved in the automotive and auto parts industry, metals (e.g., copper), shipping lines, and home appliance manufacturers. In 2010, according to the SSO's Managing Director and CEO Dr. Rahmatollah Hafezi, the SSIC oversaw $8.4 billion (around 2.5% of Iranian GDP) in investments through its various companies. Among its strategies for the future, the SSIC aims to pinpoint potential ventures arising out of the government’s privatization plans, to investigate higher liquidity investment prospects such as real estate, play a bigger role in the development of Iran’s capital markets, and further develop strategically important sectors such as ICT.


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The Business Year: Iran 2011  


The Business Year: Iran 2011