Economy
Mon, Jan 15, 2007
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SEC to Rule
On Money Laundering Bill
Turkey Invests
In Aras Free Zone
Banks Will Get $400m
For Export Promotion
High Inflation, Low Income
Amplify House Prices
Spain Plans Int’l Water Exhibit
Venezuela, Iran Back
OPEC Production Cut
Bank Saman May Buy European Bank
Textile Factories in Trouble

SEC to Rule
On Money Laundering Bill
TEHRAN, Jan. 14--State Expediency Council (SEC) will determine the fate of the controversial bill on fighting money laundering by late February, said an SEC official.
Mohammad Baqer Nobakht, deputy head of the SEC Center for Strategic Studies, told Fars that the council has set up a working group to study the issue.
“The working group will announce its views on the flaws the (constitutional supervisory body) Guardians Council has found with the bill (soon), which will help finalize the State Expediency Council’s decision on the bill by late February,“ he said, adding that the bill had been submitted to the parliament in 2002.
The official further said that the campaign against money-laundering is vital to the national economy, stressing that Iran is signatory to several international treaties, which necessitate the implementation of anti-money laundering measures.
Experts contend that once the bill on money laundering becomes a law, the ground will be prepared for the destructive, underground economic activities to be brought under control.
Houshang Khostouei, a member of the High Council of Iran’s Chartered Accountants Association, says transparency in deals and clarity on sources of money have turned into a necessity in the Third Millennium.
“In many other countries, particularly Europe, sources of money have to be clearly identified,“ he said. “In such countries all financial transactions are handled through the banking system, whereas in Iran, most transactions are done out of this system.“
He said the campaign against money laundering will largely benefit the society, stressing that the would-be law will help reduce financial offenses, as it will expose money earned through embezzlement, drug trafficking and any other offences.
He noted that electronic money has to replace banknotes in order to better keep track of sources of money, adding that those who benefit from a non-transparent economy will try to prevent the implementation of any anti-money laundering law.

Turkey Invests
In Aras Free Zone

TEHRAN, Jan. 14--Aras Free Zone Organization announced on Saturday that the Turkish Poly World Company has earmarked $555,000 for investment in this area in the current year.
A report released by the organization said that the Turkish company is engaged in production of polyethylene, and that the investment will create 20 direct jobs.
On account of its special geographical location, Aras Free Trade and Industrial Zone is considered as the export gateway to Europe as well as markets in the Caucasus area and central Asia.
The development plan of Aras free trade and industrial zone was ratified by the Majlis last summer due to its strategic location as well as its economic and political exchanges with regional countries.
According to the plan, the zone will be expanded to an area of more than 3,000 square kilometers. Aras Free Zone, with Jolfa as its center, is situated 137 kms to the northwest of the provincial capital of Tabriz, 734 kms to the west of Tehran and on the banks of Aras River.

Banks Will Get $400m
For Export Promotion
TEHRAN, Jan. 14--Iranian banks will receive some $400 million until late March as part of the government’s efforts to boost banking facilities extended to exporters.
According to ISNA, the Export Promotion Bank of Iran has asked the banks to prepare for initiative.
The bank has said that it has omitted LC and turnover conditions for extending financial facilities to exporters in a bid to encourage broader use of the Export Guarantee Fund by the exporters.
It has also said that the LC-related conditions for purchase of Iranian goods by foreign parties have also been lifted.
Export Promotion Bank of Iran has also facilitated exchange of the US dollar into the euro in business transactions with Persian Gulf littoral states and Southeast Asian states, where the greenback is the dominant currency.
It said most European countries demand euro-denominated transactions with Iran.
Iran’s non-oil exports grew by 47.1 percent in value during March-October 2006 compared to the figure for the same period the previous year.
Mehdi Ghazanfari, deputy commerce minister, said earlier that 21.2 million tons of non-oil products worth $10.133 billion were exported in the said period, adding that exports also increased by 39 percent in terms of volume during the period.
“Each ton of exports sold for an average $477 showing a 6.2-percent growth compared to the figure for March-October 2005,“ he noted, adding that while petrochemical products top the list of exports with a value of $3.6 billion, industrial goods run a close second with $3.5 billion, followed by agricultural products at $1.2 billion.
Some 16 percent of Iranian commodities are shipped to the United Arab Emirates, he said, adding that China, Iraq, India and Japan rank second to fifth main export destinations.

High Inflation, Low Income
Amplify House Prices
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Investment in housing sector has declined resulting in a drop in supply and consequent rise in house prices.
TEHRAN, Jan. 14--A senior lawmaker said here on Sunday that the high inflation and declining per capita income and purchase power are partly to blame for the rise in house prices, stressing that the increase in social risks has also played a significant role.
House prices have skyrocketed in the past one year in Iran with certain parts of the capital Tehran seeing a constant rise in prices, which have shocked many citizens and experts alike.
Ali Akbar Aqaei, who heads the parliament’s Development Commission, told Moj news agency that high social risks have hindered supply in the housing sector, adding that the housing market has suffered from the imbalance between demand and supply.
“Investment in housing sector has declined resulting in a drop in supply and consequent rise in house prices,“ he said, adding that the government must adopt supportive policies to encourage constructions.
The MP said as long as labor costs and prices of construction materials continue to rise, house prices will not fall.
He further noted that if the government’s efforts to improve the housing market lead to higher inflation, the situation would worsen.
Experts say growing liquidity, rising prices of construction materials and the decline in the number of constructions have caused prices of houses to go up dramatically in recent months.
Nosratollah Alimi, an advisor to the Ministry of Housing and Urban Development, said earlier this month that the government is extending financial facilities to people to help improve house construction activities, stressing, however, that the imbalances between supply and demand and the high prices of construction materials coupled with the annual increase in labor costs and media speculations have increased prices of real estate.
“The media have created a psychological atmosphere, which has helped aggravate the people’s concerns about the housing sector developments,“ he said, adding that the Ministry of Industries and Mines, which is in charge of supervising production of construction materials, and the Commerce Ministry, which oversees their imports, should join hands to allay public concerns by ensuring supply of the products.
He said construction of rental units and ceding lands on discount to developers could be regarded as an appropriate option for small cities, adding that such measures would not be helpful in Tehran.

Spain Plans Int’l Water Exhibit
MADRID, Spain,
Jan. 14--Spanish government has officially invited Iran to attend an international exhibition on ’Water and Sustainable Development’ dubbed as ’EXPO 2008’.
Emilio Fernandez Castanue, a director with Spanish foreign ministry handed over the invitation letter to Iran’s Ambassador to Madrid Davoud Salehi.
The Spanish diplomat said that based on experts studies, many areas in the world, including the Middle East, will face serious water shortage and drought in the coming decades, so Iran’s participation in EXPO 2008, which aims to consider ways of confronting such a crisis, could be ’very important’.
Iran, not only has a strategic situation in the Middle East, but has valuable experiences in the fields of collecting and using water, the diplomat added.
According to IRNA, Iran’s ambassador, for his part, explained Iran’s activities and achievements in this field and hailed the Spanish government’s initiative in holding such an exhibition.
“Water and Sustainable Development“ exhibition will be held in the city of Saragossa from mid-June 2008 and will last for 3 months.
So far, Iran, China, Japan, South Korea, Malaysia, Indonesia, India, the Philippines and Vietnam are among Asian countries who have been invited to the exhibition.

Venezuela, Iran Back
OPEC Production Cut
CARACAS, Venezuela, Jan. 14--Venezuela and Iran have agreed to call for a production cut by the Organization of Petroleum Exporting Countries, AP quoted Venezuelan President Hugo Chavez as saying Saturday.
Speaking after talks with visiting Iranian President Mahmoud Ahmadinejad, Chavez said the two countries agreed to back a production cut to stem a recent fall in crude prices.
“We know today there is too much crude in the market,“ Chavez said. “We have agreed to join our forces within OPEC ... to support a production cut and save the price of oil.“
OPEC in recent months has committed to a total cut in output of 1.7 million barrels per day, including a 500,000 barrel-a-day reduction set to begin Feb. 1.
OPEC ministers are scheduled to meet next on March 15 in Vienna, Austria.
But reports have said OPEC is considering further cuts before then. Dow Jones Newswires reported Friday, citing a senior OPEC delegate, that OPEC is discussing holding an emergency meeting Jan. 20-21 to reduce output by another 500,000 barrels a day.

Bank Saman May Buy European Bank
TEHRAN, Jan. 14--A leading private Iranian bank is planning to purchase a small European bank in a bid to expand its operations in Europe.
Bank Saman President Allahverdi Rajaei-Salmasi told ISNA that the private bank is not worried about Western sanctions against Iran, stressing that instead of setting up branches in Europe, the bank has preferred to buy a European bank.
“For a long time we have been planning to establish overseas branches, but have not been able to do so due to certain problems. Now we are going to buy a small European bank, instead.“
The US Treasury Department said earlier this month that it has blacklisted Iran’s fifth largest state-owned bank, Bank Sepah.
The Treasury’s decision effectively bars any US-owned banks and American citizens from having any dealings with Bank Sepah.
Bank Sepah has offices in London, Paris, Rome and Frankfurt.
The US government had similarly blacklisted Iran’s Bank Saderat in September.
However, Rajaei-Salmasi contended that such sanctions would not have much impact on the Iranian banks’ international interactions at least in the short-run.
“We are facing no problems at present and are changing our dollar-denominated holdings into other currencies,“ he said, adding that the Central Bank of Iran has asked the country’s banks to use the euro instead of the dollar in their transactions.

Textile Factories in Trouble
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Textiles sell in Iran at 30-35 percent higher than in countries like Bangladesh, China and Pakistan.
QOM, Jan. 14--Some 90 percent of the country’s 3,600 textile factories are facing closure, said a lawmaker here on Sunday, expressing regrets over the deepening financial crisis that has crippled Iran’s textile sector.
Alireza Mahjoub, a member of the Majlis Social Commission and a representative of the labor community in the legislative body, said in the holy city of Qom that the textile industry is going through a critical condition.
“Unfortunately, Iran Termeh and Tehran Patou companies, which were among the country’s largest textile units until recently, are now wrestling with a (financial) crisis,“ he said, blaming mismanagement for the financial problems of the two companies.
According to ILNA, Mahjoub, who is also director general of Iran Labor House, said the government must raise the workers’ base salary to 2.5 million rials ($270) per month, if it does the same for its own employees.
The government announced in May that it has decided to come to the rescue of the textile industry, and that half a billion dollars has been envisaged for revitalizing the troubled sector.
Jamshid Bassiri, secretary of Textile Industries Association, told ILNA, however, that the crisis facing textile industry will not be overcome by injecting state funds.
“Our main challenge is the unsupportive rules and regulations,“ he said, adding that the government should formulate mechanisms in line with international standards and which can effectively help lower production costs.
He pointed out that textiles sell in Iran at 30-35 percent higher than in countries like Bangladesh, China and Pakistan, stressing that production costs can be reduced by amending the laws.
“If the government extends financial facilities in hard currency and the textile industry is obliged to repay in foreign exchange, the sector will face numerous challenges,“ he said, adding that in recent years, the government extended financial facilities in euros, which caused a huge financial losses to the textile factories in the wake of the strengthening of the currency.
“We received loans at 7,200 rials for each euro and paid back 12,000 rials for each euro,“ he said, calling on the government not to get the industry involved in the dollar-euro fight.
Bassiri said the huge hike in labor costs has led to the closure of several textile factories nationwide.
Some experts blame excessive import and smuggling of Chinese textiles for many of the challenges facing domestic textile industry.