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Sun, Apr 19, 2009

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Bankers See
Iran Opportunities
Proposals to Resolve Financial Crisis
Crescent Price Offer Rejected
Kenyan Tea Eyes Iran Market
Non-Oil Exports at $23b
Growth After Slowdown
ONGC to Invest $3b
Iran a Leading Wheat Importer
Gas Talks With Kuwait

Bankers See
Iran Opportunities
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International and Islamic banks can open their branches in Tehran and other cities.
Several foreign banks see huge untapped opportunities in Iran for Islamic finance, spurred on by hopes US President Barack Obama’s new approach toward the Islamic Republic will end years of illegal sanctions hampering business.
Home to some 70 million people, Iran might become one of the hottest markets for the industry due to expected privatizations, a need for infrastructure projects and a young population, executives told the Reuters Islamic Banking and Finance Summit.
The UN Security Council has imposed three rounds of illegal sanctions on Iran since late 2006 under pressure from the United States over its perfectly legal civilian nuclear program.
But in a sharp change of US policy, Obama has offered a new start in relations.
“I hope that the world leaders will embrace Iran because I think it’s got great potential for our business,“ said Simon Eedle, managing director of Global Islamic Banking at France’s Calyon.
“We’ve been present in Iran for many years and we’ve done business in Iran for many years. We are only constrained by international sanction agreements.“
Islamic lenders in Bahrain, a regional center for Islamic finance located just across the Persian Gulf from Iran, couldn’t agree more.
“The minute you see a green light from the US, everybody will jump in,“ said Nabeel Kazerooni, head of private equity business at Bahrain-based Gulf Finance House (GFH).

Massive Market
Majid Al-Sayed Bader Al-Refai, chief executive of investment bank Unicorn, took a similar view.
“I think Iran is a massive market, it’s huge, if you don’t see that you just don’t know the market. I think President Obama has done a fantastic job so far. If he keeps this up we’re on the right track.“
Demand from the world’s 1.3 billion Muslims for investments that comply with their beliefs has soared and assets that comply with Islamic law are estimated at between $700 billion and $1 trillion.
Iran’s banking system adheres to Islamic rules that prohibit earning or paying interest. 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.
GFH’s Kazerooni said legal uncertainties were an obstacle after past ownership deals or terms in privatizations were changed after being signed. “Iran doesn’t have a good track record, people are a bit wary,“ he said.
While the Persian Gulf Arab region has attracted many international banks seeking to tap opportunities in the world’s top oil-exporting region, many Western banks have halted or reduced Iran-related business as a result of illegal sanctions.
Yet others still see ways in to a potentially major market.
“With the whole notion of Islam being inclusive, it is almost against the logic to exclude a country and a market of opportunity,“ said Knut Storholm, a partner at Boston Consulting Group.
Liberalization
Minister of Economic Affairs and Finance Shamseddin Hosseini said the government welcomes international banks’ presence in the domestic market. Speaking in a gathering of bank directors last week, he told them that the necessary preparations are completed for international and Islamic banks to open branches in Tehran and other cities.
At least 44 foreign banks have offices in Tehran and most likely they all will be allowed to open branches in Iran to offer consumer level banking services.
Iran’s 2020 vision promises an active private banking sector with dynamic links with global banking community.

Proposals to Resolve Financial Crisis
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Vice President Parviz Davoudi said on Friday that Iran is ready to share its experiences for closer cooperation with the world in the fields of finance and commerce.
Speaking at the 2009 meeting of the Boao Forum for Asia (BFA) in Beijing on Saturday, Davoudi said in order to manage the financial crisis, the developed countries should hold more talks with Asian states to share experiences, utilize Islamic financial methods, include the developing nations and utilize their experiences and capabilities.
He then urged the western world to refrain from imposing their ineffective financial policies and sanctions on the developing nations, IRNA reported.
Iran and China have vowed to strengthen cooperation in ’all levels’ to tackle the challenges of the global financial crisis.
In a meeting with Iranian Vice-president Parviz Davoodi on Friday, Chinese Premier Wen Jiabao said the economic downturn brought dramatic changes to the world’s economy and political structure.
The meeting was held ahead of a summit of the Boao Forum for Asia (BFA), which is focusing on the role of Asian countries, especially emerging economies, in tackling the global financial crisis.
Both Davoodi and Wen stressed that Iran and China should maintain ’high-level contacts’ to jointly cope with the global financial crisis and promote the reform of the global financial system. “We should also steadily further our energy cooperation, explore the potential of finance and trade cooperation, so as to advance our mutual beneficial cooperation,“ Wen said.
Concerning Iran’s nuclear issue, Wen called on all relevant parties to ’seize the current favorable opportunity’ and resume talks to resolve the dispute.
“China respects Iran’s nuclear program for peaceful purpose, resolutely safeguards the international non-proliferation system and advocates that the Iranian nuclear issue should be peacefully resolved through negotiation,“ said Wen.
Earlier this month, the five permanent members of the United Nations Security Council -- the US, Russia, China, France and Britain - plus Germany (P5+1) invited Iran for negotiations on the country’s uranium enrichment program.
Iran’s President Mahmoud Ahmadinejad said Tehran was ready to hold talks with the West over its nuclear program if such talks are based on justice and respect.
He also said that Iran would put forward a new incentive package to Western powers designed to end the standoff.
Earlier, at a meeting with Vietnamese Prime Minister Nguyen Tan Dung, Davoudi also said that Tehran-Hanoi commercial and trade cooperation should expand in the fields of energy, railway transportation, and the steel and refinery pertinent industries.
The Vietnamese party said his country wants growing cooperation and relations with Iran in different economic sectors.
Meanwhile, Chinese Prime Minister Wen Jiabao said on Friday that Iran’s successful economic management and resistance against global financial crisis should serve as a model for others, including China.
In a meeting with Davoudi, Jiabao predicted that the financial crisis will result in structural changes worldwide. He said that Beijing considers relations with Iran as being long-term and strategic.
“The Tehran-Beijing relations can expand in different fields regarding the ongoing global conditions,“ the Chinese official said, adding that the two countries can play an influential role in improving the global conditions.
Davoudi is in Beijing for the 2009 meeting of the Boao Forum for Asia (BFA) on April 17-19.

Crescent Price Offer Rejected
National Iranian Oil Company (NIOC) has denied that the UAE firm Crescent has offered a new price for gas imports from Iran, Fars News Agency wrote.
Executive Director of the Crescent Petroleum Group Majid Hamid Jafar claimed on Tuesday that the UAE firm had agreed to increase the price it pays for gas imports from Iran after several rounds of negotiation with Iranian officials.
However, on Wednesday NIOC Head Seifollah Jashnsaz said that there have been no talks with Crescent on a price rise. “We have received no letter from Crescent which says it has agreed to raise the price for gas imports. They have not yet offered to hold talks with us on the issue,“ he added.
The National Iranian Oil Company and Crescent signed a deal in 2001 to transport natural gas through a 90-mile pipeline from the Salman field to Lavan Island in the Persian Gulf.
However, Iran increased its initially proposed price, citing a sharp rise in international gas prices since the time the contract had been agreed.
Jafar said Crescent had proposed a ’much higher’ price than the previous offer, adding that the firm was waiting for a response from the Iranian Oil Ministry.

Kenyan Tea Eyes Iran Market
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Kenya has been allowed to exhibit Kenya’s tea in the Tehran trade exhibition.
Growth of the tea sector in Kenya is set to increase once the country fully ventures into the Iranian market, Kenya Broadcasting Corporation reported.
Speaking at a meeting of stakeholders on the National Trade Policy Wednesday, Trade Permanent Secretary Cyrus Njiru said that already the country has been allowed to exhibit Kenya’s tea at the Tehran trade exhibition.
“What we are now insisting on is value addition, if we achieve this in the tea sector we will be able to increase the product range and achieve our targeting of increasing trade and help to realize the Vision 2030 goals,“ said Njiru.
He noted that his government is pushing the need to conclude the Doha Round of trade talks in order to integrate fully into the world trade arena.

Non-Oil Exports at $23b
Iran exported goods worth $23 billion during March 2008-March 2009, up 8 percent over the same period a year earlier, said Head of Iran Customs Office Ardeshir Mohammadi.

Astara Port Goes Private
Under a new agreement with Roads and Transportation Ministry on Saturday, the private sector will develop and manage Astara Port in Gilan province.

Growth After Slowdown
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Iranian growth will begin to pick up again in line with a slow recovery in the global economy over the course of 2009-14 to average 3.6 percent.
The current Iranian year (started March 21) is expected to be a tough one. Economic growth will slow, mirroring the slowdown in all the major economies of the world.
Real GDP growth has fallen to just 2.4 percent, down from 4.7 percent in 2008-9. While Iran will not fall into recession, the projected growth rate would be the most lackluster in a decade. Thereafter, growth will begin to pick up again, in line with a slow recovery in the global economy, and over the course of the forecast period (2009-14), growth is predicted to average 3.6 percent.
This is substantially below an estimated 5.6 percent average growth rate over the previous five years, when economic expansion was driven in large part by the oil boom.
The website of Research and Markets has announced the addition of Business Monitor International’s (BMI) Iran Commercial Banking Report for the first quarter of 2009 to their offering. BMI’s report provides independent forecasts and competitive intelligence on Iran’s commercial banking industry, Researchandmarkets.com reported.

New Phase
We also see gross fixed capital formation growth slowing to 2.5 percent in 2009-10, down from over 6 percent the previous two years. Domestic liquidity will be impacted by fewer petrodollars entering the banking system, leading to a slowdown in lending to businesses.
This report is being written at a time when the global financial crisisÑwhich arose as a result of the evaporation of inter-bank liquidity--has moved into a new phase.
Stock market participants appear to have taken the view that the policy responses taken by governments, central banks and multilateral institutions will be sufficient to prevent a total collapse of the global financial system. Instead, stock market participants are focusing on the impact of a near-global recession on the earnings of non-financial companies.
The number and size of standby facilities agreed by the International Monetary Fund (IMF) since early mid-October supports the view that, of the emerging markets whose commercial banking sectors are surveyed by BMI, the countries of Central and Eastern Europe (CEE) are those whose economies are most at risk of suffering adverse affects as a result of the global financial crisis.
This is partly because the macroeconomic imbalances are relatively severe and partly because the Central and Eastern European countries are more directly affected by the brutal recession that is unfolding in wealthier member-states of the European Union.
As yet, it has not been possible to collate hard numbers for most of the countries whose commercial banking sectors are surveyed by BMI, which clearly quantifies the impact of the global financial crisis on the banks.

Emerging Markets
In the emerging markets (and, indeed, the developed countries) of the Asia-Pacific, commercial banks appear to be well placed to deal with the crisis.
The same is, broadly, true of commercial banks in the various countries of the Middle East and North Africa. In Latin America, Chile, Brazil, Mexico and Colombia appear better placed than Argentina, Venezuela, Bolivia and Ecuador. South Africa’s situation appears to have much in common with that of Brazil. In contrast, Nigeria faces some of the same challenges as those that confront Venezuela. The positions of most countries in Central and Eastern Europe, however, are alarming.
However, the key issue remains, as always, oil. Iran is the world’s second-largest oil producer and its economy is quite dependent on petrodollars. Movements in oil price impact the economy profoundly. Within the banking sector, the key factors are its relatively small size and lack of independence.
Iran’s overall Commercial Banking Business Environment Rating of 46.7 is towards the lower end of the countries in the Middle East and Africa region that are surveyed by BMI. This score is underpinned by a solid if not spectacular score of 54.4 on the banking market structure of the limits to potential returns element.
This is reflective of the sheer scale and entrenched position of the banking system in the Iranian economy, which is comparatively large for the region, rather than a high level of development.

ONGC to Invest $3b
India’s Oil and Natural Gas Corporation Ltd (ONGC) plans to invest up to $3 billion in the Farzad gasfield in Iran.
The company has submitted a plan to the Iranian government to extract 1.1 billion cubic feet of natural gas from the region and turn it into liquefied natural gas for export. The plan is expected to get approval soon, The Telegraph reported.
Farzad gasfield is part of the Farsi Block, which is operated by ONGC Videsh Ltd. along with Indian Oil. ONGC Videsh, which holds a 40-percent stake in the 3,500-sqkm offshore block, found oil in the block in 2006 when it drilled three wells.

Iran a Leading Wheat Importer
World wheat trade is expected to moderately rise in April, thanks to higher imports by Iran, Egypt, Tunisia, Libya and Turkey, according to an estimate by the US Department of Agriculture (USDA).
Import projections are also raised 0.5 million tons for EU-27 and 0.3 million tons for Bangladesh. Partly offsetting the import surge by a handful of nations is the 0.3-million-ton import reduction for South Korea, thus moderating the wheat trade, Commodity Online reported.
The Financial Times reported that Iran has become the world’s largest wheat importer, as the government has been actively taking measures to ensure food sufficiency due to drought--forcing it to buy the grain from the US after a gap of 26 years.
The USDA forecasts Iran will buy 8.5 million tons of wheat in the 2008-09 crop year, which ends in June, taking it ahead of Egypt as the world’s top importer.
Iran would then account for about 6.5 percent of the global trade of the grain, the FT report added.
US wheat ending stocks for 2008/09 are projected at 16 million bushels lower this month, as an increase in imports is more than offset by higher projected domestic use. Imports are projected at 5 million bushels higher, mostly reflecting the pace of hard red spring and durum wheat imports from Canada.
World wheat trade for 2008/09 is projected higher this month. Higher projected imports for Middle Eastern and North African countries boost expected shipments for EU-27 and FSU-12 exporters.
Imports are projected to be 0.5 million tons higher for Iran, 0.4 million tons higher for Egypt, 0.3 million tons higher for Tunisia, and 0.2 million tons higher each for Libya and Turkey.
Exports are raised 1.5 million tons for EU-27, 1.0 million tons for Ukraine and 0.5 million tons for Russia. They have also been raised by 1.0 million tons for Argentina and 0.4 million tons for Uruguay.
Partly offsetting are reductions for Canada and Brazil, down 1.5 million tons and 0.2 million tons, respectively. Global exports, at a record 128.0 million tons, are projected 2.7 million higher than last month and 11.1 million higher than in 2007/08.
World wheat consumption for 2008/09 is projected lower with reductions in feeding in EU-27 and South Korea and lower food use in Ethiopia only partly offset by higher projected use in the United States. Global ending stocks are projected 2.3 million tons higher with the largest increases for Canada, EU-27, Ethiopia and Iran.

Gas Talks With Kuwait
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National Iranian Gas Export Company (NIGEC) held talks with Kuwait Petroleum Company (KPC) in Tehran on Wednesday to export 300 million cubic feet of natural gas to Kuwait per day.
NIGEC Managing Director Seyyed Reza Kasaizadeh told Mehr News Agency that the two sides have also negotiated the establishment of a joint company tasked with the construction of gas swap pipelines between Iran and Kuwait, Presstv reported.
The export-bound natural gas will be transferred via Iran’s sixth cross-country pipeline that passes through the Persian Gulf.
KPC Chief Executive Saad Al-Shuwaib previously said Kuwait’s domestically produced natural gas is not sufficient for the country’s consumption, so KPC plans to import the deficit from neighboring countries.

EconomyCol2
Armenia Rail, Power Deal Signed
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Iranian and Armenian transport ministers on Wednesday signed an agreement to build a railway linking Armenia with Iran’s Persian Gulf ports.
The construction of the 470-kilometer long railway, with 410 kilometers passing through Armenian territory, is expected to last for at least five years and cost $1.5-$1.8 billion, Moj News Agency reported.
The ministers agreed that it is difficult to estimate the cost as the length of the tunnel has not been determined and that tunnel construction is relatively expensive.
Meanwhile, Iranian companies will take up the Meghri Hydropower Station construction, RA Minister of Energy and Natural Resources Armen Movsesyan told a news conference. According to him, the investments will be reimbursed by energy produced.
Under the deal, the construction staff will include numerous Armenian professionals.
In March 2007, Hydropower Station Construction agreement was signed between Armenia and Iran.

Expat Investment Fund Planned
The government has proposed setting up a joint investment fund with $5 billion in basic capital and an economic union to serve Iranians living abroad.
Head of Organization for Investment, Economic and Technical Assistance of Iran Behrouz Alishiri said that a taskforce had been formed to pursue the proposal, IRNA wrote.
“Setting up a network to attract investment from Iranian expatriates and using their experience in stimulating foreign investments are among the activities of the taskforce,“ Alishiri announced at a seminar attended by a group of expatriates in Tehran last week.
Some 800 expatriates participated in the three-day meeting that opened on Tuesday with an address by President Mahmoud Ahmadinejad.
Foreign Ministry spokesman Hassan Qashqavi urged easing the country’s bloated bureaucracy in order to give efficient services to five million expatriates in economic and scientific fields.
“Many Iranians residing in Western countries are willing to do business with their compatriots at home, but are discouraged by our bureaucracy, which prevents them from making the best use of their resources to serve their motherland,“ Qashqavi said.
According to him, Foreign Ministry had set up a special department to follow up issues related to expatriates planning to visit the country.

No Change in Caspian Policy
Iran’s special representative in Caspian Sea Affairs and Deputy Foreign Minister for European Affairs Mehdi Safari said Tehran’s stance vis-ˆ-vis the Caspian Sea status remain unchanged.
Addressing a news conference attended by deputy foreign ministers of Russia, Azerbaijan Republic, Turkmenistan and Kazakhstan, the Iranian envoy said Tehran pursues its national interests and has no plans to change its previous position with regard to the world’s largest inland body of water, IRNA reported.
Describing the results of the summit of special taskforce of the five littoral states as ’positive’, the official further said that the conference was a success and the results will certainly help boost cooperation among the littoral states.
The compilation of the Caspian Sea legal regime and strengthening cooperation among the nations within the framework of ratifications of the second summit of the countries’ leaders were also discussed at the gathering.
He hoped that the representatives will make constructive decisions in line with further affinity and cooperation in the next summit in Baku.
The 25th meeting of Caspian Sea littoral states’ taskforce wrapped up in Moscow on Wednesday.

Milk Powder Imports Under Scrutiny
A number of stockbreeders have threatened to show up at the Ministry of Commerce with their cattle in protest to excessive milk powder imports.
The stockbreeders who had gathered in front of the ministry on Tuesday were demanding the Foreign Ministry to stop the trend, Presstv wrote.
The stockbreeders said the ministry should provide greater support and threatened to stage another protest, this time with their cattle, if their demands were not met.
The protesters said that they were not happy with the low import tariffs in milk powder products, which, according to them, is encouraging the country’s dairy industry to buy the imported product instead of their fresh milk.
Deputy Commerce Minister Mohammad-Sadeq Mofatteh rejected the stockbreeder’s claim by insisting that powdered milk has not been imported in great quantities.
“According to official import statistics, there have not been significant imports of this product. Almost the same quantities of powdered milk have been imported and exported,“ Mofatteh told ILNA. “The difference between these two quantities does not even add up to a single day’s demand for milk in the country,“ he added.

EconomyCol3
$47b Credit for Mexico
The International Monetary Fund (IMF) approved a $47 billion credit line for Mexico under a new scheme designed to throw a cash lifeline to countries hit by the global economic crisis.
“The Mexican authorities have stated they intend to treat the arrangement as precautionary and do not intend to draw on the line,“ the IMF said, ABC Online reported.
It was the first line of credit approved under a new IMF program aimed at giving countries the flexibility to draw on credit at any time to prevent financial crisis.

Russia, Azerbaijan Broadening Ties
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Russian President Dmitry Medvedev met his Azerbaijani counterpart Ilham Aliyev on Friday to discuss a deal on natural gas sales that could undermine the EU-backed Nabucco pipeline.
“In my opinion we have a very high chance of entering a full-blown agreement,“ Medvedev told reporters after meeting Aliyev at the Russian leader’s residence outside Moscow, PRIME-TASS reported.
The meeting came after Russia and Azerbaijan’s state-run energy companies last month signed a preliminary deal on natural gas sales from 2010, which could remove a potential source of gas for Nabucco.
Aliyev said Azerbaijan--a former Soviet republic in the energy-rich Caspian Sea region--hoped to diversify its gas exports. The country currently exports gas westwards through Turkey.
He said Russia was a natural partner for Azerbaijan because the countries were neighbors and gas export infrastructure was already in place.

G8 to Plot Food Strategy
Farm ministers of the Group of Eight meeting in Italy this weekend aim to forge a strategy to secure food supplies and stabilize prices, as rich nations scramble for acreage abroad to feed their people.
But tensions caused by the pull toward protectionism may also simmer at the first-ever meeting of G8 farm ministers and their counterparts from major developing nations, Reuters reported.
The idea of creating a global grain reserve is likely to be on the agenda. The ministers will seek ways to boost farm productivity and rein in speculative trade in agricultural commodities--a major cause for surging food prices last year leading to a food crisis with riots and raising the number of hungry people in the world to nearly one billion.

Vietnam Reduces Taxes
Vietnam will reduce tariffs on goods and services to push up demand in the face of an economic slowdown.
According to AFP, value-added tax (VAT) on garment and textile products, cement, and motorbikes will be reduced by 50 percent between May 1 and December 31.
Registration fees for cars with fewer than 10 seats will also be reduced by half, while garment and footwear enterprises will benefit from a 30-percent cut in corporate income tax for the fourth quarter of last year. The cuts are to stimulate demand and consumption, and prevent an economic downturn.
Meanwhile, The Philippine Central Bank still has scope to cut interest rates from a 17-year low and may use other policy tools should the economy worsen, Governor Amando Tetangco said.

Air France-KLM to Cut Jobs
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Air France-KLM Group, Europe’s biggest airline, may cut its workforce by as much as 2.9 percent in the next two years amid a collapse in global air travel.
The carrier will eliminate 2,500 to 3,000 jobs by the end of March 2011, Brigitte Barrand, a spokeswoman at the Paris-based company, said in a telephone interview, confirming a report in French business daily La Tribune.
Airlines are scaling back capacity in response to declining passenger traffic. Air France-KLM said three weeks ago that it will report an operating loss of about 200 million euros for the 12 months ended March 31 and is unlikely to return to profit this fiscal year.

VW May Overtake Toyota
Volkswagen AG may have passed Toyota Motor Corp as the world’s top selling automaker in the first quarter, helped by robust demand in its main markets, while its Japanese rival suffered sharp declines, partial company data suggests, according to Reuters.
The German automaker, with its nine car and truck brands, including Audi, Skoda, Seat and Skania, has set a goal of overtaking Toyota and General Motors Corp to be the world’s No.1 seller by 2018--a target that was initially met with skepticism.