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Domestic Economy
Sun, Nov 09, 2008

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Front Page
Domestic Economy
Middle East
Art & Culture
Prefab Houses an Alternative
Post Company to Join Bourse
Energy Cooperation With Oman
Fifth Plan Targets
For Horticultural Products
Overcoming Financial Crisis
Chinese Firm May Build Rail Link
Sangab Building Tajik Power Plant
Dehloran Refinery Under Construction
Brazil Trade to Reach $10b
Air Transport MoU With Iraq
New Mobile Carrier Due
Working Conditions to Improve
50 CNG Stations Planned

Prefab Houses an Alternative
The government plans to promote prefabricated housing construction to boost the industry in collaboration with the private sector.
Deputy Minister of Housing and Urban Development Manouchehr Khajeh-Dalouei said high demand for housing units has forced decision-markers to use modern systems to speed up the process of housing construction.
“Prefabricated housing construction reduces time and costs,“ he said, adding that this would create some kind of supply-demand balance.
In fact, the government has ratified a separate bylaw to support prefabricated housing construction. Under the bylaw, the technological import is exempt from customs tariffs, according to ISNA.
To this end, the banking system will provide the private sector with 80 percent of funds for industrial housing projects in foreign exchange and rial. Currently, close to 3 percent of houses built inside the country are prefabricated. The government aims to raise the figure to 20 percent by the end of the fifth five-year economic development plan (2010-15).

There are key benefits to purchasing a prefab house, as it means full-size houses using prefabricated modules. It is a widely implemented in the housing sector across the world.
The first major benefit in buying a prefab home is time. A customized home or even a home built from scratch can take weeks or even months to complete. A prefab house, on the other hand, can be put together and made livable in as little as a few days. This benefit spills over into the next benefit.
Probably the most thought of criteria when purchasing or building a home is its cost. A prefab home is generally less expensive than regular homes and for good reason. A home that can be completed in a few days instead of a few months means less money spent on labor and construction costs.
Parts of the home are delivered to the site already built; the builders generally only have to connect the various modules and literally ’plug’ the house into the electrical, water, gas and phone grids. All of the interior work and most of the exterior work is done before the modules are shipped out. This also means that all costs are basically laid out up front and there is much less chance of a contractor having to add on expenses during the project.
A prefab home is generally less expensive than regular homes.
Another benefit that is often overlooked is the environmental benefits of prefab homes. These homes require less on site construction which means less equipment and construction vehicles releasing harmful smoke and fumes into the air.
Also, fewer materials are wasted on prefab homes since manufacturing is done carefully and precisely. And many modern prefab homes have excellent insulation systems, which means less energy usage and less waste when purchasing a prefab home.

Schemes Lauded
Minister of Housing and Urban Development Mohammad Saeedikia said Iran’s presence in the Fourth United Nations World Urban Forum (WUF4) in Nanjing, capital of Jiangsu in China, was a success.
Saeedikia said upon his return from China that Iran’s rich experience in the housing sector, especially the project for rebuilding quake-hit areas in the southeastern city of Bam (Kerman province) and also Mehr Housing Project, were highly appreciated by participants in the forum.
A team of experts from the ministries of interior, energy and housing, as well as from Tehran Municipality and universities attended the forum. Ministers of housing and representatives from 75 countries attended the meeting.
Participants explored schemes for the mass production of low-cost housing. In this context, prefab houses offer an attractive alternative.
House prices continue to fall across the nation, in some places experiencing more than a 40-percent drop.
The price drop in house and construction materials are expected to continue in the second half of the year, ending March 20, 2009. During the first six months of the year, fewer houses were bought and sold. In many cases, real estate agents had to slash prices to attract first-time home-buyers.
The government of President Mahmoud Ahmadinejad has been successful in stabilizing the housing market. The introduction of a coding system to track down real estate deals nationwide will similarly help minimize middleman activities in the lucrative sector. The digital signature scheme will likewise help regulate the purchase, sale and renting of residential units.
Reports suggest that in light of the new policies, prices of construction materials will continue to fall.

Post Company to Join Bourse
The government has agreed to offer the shares of Iran Post Company in the bourse, disclosed the company’s managing director.
Mohammad Hassan Mohebbian also said that articles of association of the post company would be prepared by March 2009, reported.
“The company aims to join bourse in the specified timeframe and prepare the conditions for establishing the second operator of the country’s post network,“ he said.
He further said that electronic post has doubled the number of mails.
“Per capita parcel post for each Iranian stands at 15 per annum,“ he said, predicting that the figure would rise to 17 with the promotion of postal services.
Meanwhile, Tehran Stock Exchange (TSE) has embarked on an ambitious modernization program to ensure greater market transparency and attract further domestic and foreign investors.
Concrete measures have been taken in the planning and operations of the stock exchange such as the settlement system, geographical expansion and new exchange laws to attract local and foreign capital. TSE is a full-fledged member of World Federation of Exchanges and a founding member of Federation of Euro-Asian Stock Exchanges.
The TSE is solely an order-driven market and all transactions are executed under the principles of open auction.
Trading takes place in an order-driven system, which matches buying and selling orders of investors. Investors can place orders with TSE’s accredited brokers, who enter these orders into the trading system. Then, the system automatically matches buy and sell orders of a particular security based on the price and quantity requirements

Energy Cooperation With Oman
Iran and Oman said they intend to seal a major gas deal by the yearend that would allow the export of more than 1 billion cubic feet of gas per day from Iran to Oman.
A deal to develop the Kish field which may hold as much as 45 trillion cubic feet of recoverable gas was signed in April, but the final agreement had been delayed over price wrangling. Yet, negotiations picked up after a recent visit to the Persian Gulf country by Iran’s Oil Minister Gholamhossein Nozari, Fars news agency reported.
Nozari struck the deal with Oman during his visit. Both countries are eager to finalize the agreement so production can begin by the targeted launch date in 2012. Oman would get the gas it badly needs to meet its export commitments and soaring local demand.
Iran would not only open new export routes to gas hungry Arab Persian Gulf countries, but also market a portion of its exports as LNG, which is more profitable and can be sold in the global market.
Oman has just 24 Tcf of gas reserves, compared to Iran’s 982 Tcf. It produces 2.3 bcf/d and demand is expected to increase by more than 25 percent by 2012.
Currently, the Persian Gulf state exports about half of its gas via LNG, but growing demand means exports are expected to fall.
In October, Oman is scheduled to begin importing 100 mmcf/d from Qatar via pipeline.

Fifth Plan Targets
For Horticultural Products
Fifth five-year economic development plan (2010-15) has been compiled for 42 horticultural products across the provinces, said deputy minister of agricultural jihad.
Mohammad Reza Jahansouz told Mehr news agency that the initiative is aimed at promoting new gardens, reviving dormant gardens, increasing production, producing saplings, insuring horticultural products, supplying farming machineries and increasing horticultural exports.
“Close to 19 million tons of horticultural crops will be produced by the end of Fourth Plan (2005-10),“ he said, adding that the figure would rise to 26 million tons by 2015.
The deputy minister noted that 20,425 agricultural machineries will be supplied.
“The fifth plan targets exports of 6.721 million tons of horticultural crops worth over $14.5 billion,“ he said.
Jahansouz said these programs have not been finalized yet, as the decision-making bodies may incorporate some changes.

Overcoming Financial Crisis
By Sadeq Dehqan

Head of Tehran’s Chamber of Commerce, Industries and Mines Yahya Al-e-Es’haq proposed establishment of a joint committee comprising private sector, governmental officials and experts to overcome the aftermath of the ongoing global financial crisis.
Addressing the 18th meeting of the chamber, he said, “Although western financial meltdown has left somewhat of an impact on some economic sectors of the country, it should not be expected that these problems would be resolved automatically. Remedial measures should be thought up for this purpose.“
Emphasizing that sectors negatively affected by the financial crisis should be supported, he noted, “A fund should be established for compensating the contingent damages of the crisis incurred on the national economy.“
He recalled that the crisis has affected the trade and service sectors. “The crisis will also create problems regarding compiling the annual budget, which is based on oil revenues. If the meltdown infiltrates the social domain, it will be very tough to handle it.“
Global prices of many products such as commercial ships have declined significantly and Iran can hop on the opportunity and buy them.
Al-e-Es’haq referred to the policies of Article 44 of the Constitution and added, “Based on the policies, the government should be downsized and ownership of various companies should be ceded to the private sector. This target should be heeded in the 2009-2010 budget bill.“
The official recalled that the draft of the fifth development plan (2010-5) has been prepared and underlined that issues such as risk factor and productivity should be highlighted in the annual budget bill.
“Given the recession worldwide, exports will encounter problems due to the decline in demand. One of our main problems is the business ambiance. To reach the targets declared in Vision-2025 we should forecast the necessary considerations in this regard and the annual budget bill should be compiled and implemented different from the past. If the annual budget bill does not conform to the existing realities, we will face problems. The pre-condition for correct compiling and implementing of the bill is interaction among the government, Majlis and economic activists,“ he noted.
He also recalled that at present global prices of many products such as commercial ships have declined significantly and Iran can hop on the opportunity and buy such products.
“Efficient interaction among the government, economic activists and Majlis should lead to a situation wherein the annual budget bill is compiled without wastage of time on peripheral matters. Otherwise, we will have serious problems,“ he noted.
Referring to the dispatch of an Iranian economic group to Istanbul for participating in the International Business Forum (IBF), which was held at the presence of 2,000 businessmen and 30 ministers of Islamic countries, he said, “Turkey is keen on expanding trade and economic bonds with Iran. In this meeting it was also decided that Iran-Turkey Trade Commission should be held twice a year instead of once. The Turkish side should revise tariffs and customs-related considerations so that the two-way trade could pick up significantly.“
Al-e-Es’haq emphasized that if Iran does not expedite its economic advancement, Turkey will replace it in the Islamic world. “Turkey has had some $135 billion of exports and we have a long way to go to reach this kind of figure.“
Meanwhile, a member of Tehran chamber, Mohsen Khalili-Araqi, lambasted the policies of Iran’s Chamber of Commerce, Industries and Mines (ICCIM) regarding enlargement of the chamber and said, “ICCIM should not increase its institutions to the extent that it cannot carry out its fundamental tasks.“
He emphasized the supervisory role of ICCIM for the three branches of power and recalled that ICCIM should adopt moves that can help it fulfill its supervisory role more efficaciously.
Khalili-Araqi recalled that in the past 80 years the national economy has been dominated by the state. “The government has not only controlled the economy, but also has made hindrances to growth and expansion of the private sector.“
He recalled that among the disadvantages of the state-run economy are non-competitiveness of the job and capital markets, low productivity, high unemployment and inflation, low per capita income, inefficiency of financial markets, low investments in developmental projects and low and fluctuating growth of the economy.

Chinese Firm May Build Rail Link
Iran has threatened to call off talks with Ashok Leyland Project Services Ltd and sign a contract with a Chinese firm to build a rail link in that country due to differences with the Indian infrastructure company over execution of the project. Iran had signed an agreement with a consortium led by Ashok Leyland Project Services, a unit of Ashok Leyland Ltd, the flagship company of the Hinduja Group, for the construction of a 708km Chabahar-Fahraj railway link.
The other members of the consortium for the 1.1 billion euros rail project include Ircon and RITES Ltd, both subsidiaries of the Indian Railways.
While the consortium favors constructing the project on the build, lease and transfer (BLT) model, the Railway Company of Islamic Republic of Iran wants it to be executed on the build, operate and transfer (BOT) model, said an Iranian government official in the Ministry of Roads and Transportation in New Delhi, according to Fars news agency.
“There is a Chinese company vying for the project. If we cannot solve the problem, we will sign the contract with it. As it is a very important project for our country, we cannot wait for such a long time,“ he said asking not be named. The source also declined to name the Chinese company.
In the BOT model, projects are owned by developers who enjoy rights to earn revenue from an asset over a specified period. In the BLT model, the contractor is paid a fixed amount to build the project by the client, usually in installments. A spokesperson at Ashok Leyland declined comment.
This is not the first time that a railway project involving Indian firms in Iran has hit a road block. Some other Iran projects of Rites have already hit the skids over a dispute over how they would be executed.
Iran has only 6,000km railway network. The Chabahar-Fahraj railway link aims to connect the country’s railway network to the ocean port of Chabahar. The traffic forecast studies show the line carrying 1.4 million tons of freight and 300,000 passengers in the first year of operations in 2014. Cargo and passenger traffic are expected to go up by 2026.
Meanwhile, Turkmenistan’s President Gurbanguly Berdymuhammedov on Friday once again stressed the importance of Iran-Turkmenistan-Kazakhstan railway.
According to IRNA correspondent in Ashkhabad, the Turkmen president was reported as saying so in a meeting with South Koran merchants and investors, adding that the path is the most economical one for the Central Asian countries wishing to do trade with Europe and South Asia.
He informed the Korean merchants that the project is currently pursued most rapidly and is scheduled to become an important international North-South transportation corridor.
The executive works over the 900km railroad, capable of transiting 15 million metric tons of goods annually, started in November 2006.

Sangab Building Tajik Power Plant
Tajik President Imomali Rakhmon called for accelerating executive operations for construction of Sangtudeh-2 power plant and dam in his country.
Rakhmov, speaking on the sidelines of his visit to the project along with a group of other Tajik officials, said the power plant should be built in two years, IRNA reported.
Iranian Sangab Company is implementing the project with the Tajik side.
“The Tajik people have pinned hope on efforts and endeavors of Iranian brothers in connection with Sangtudeh-2 power plant and I ask officials in charge of the project and the staff to make more efforts in this respect,“ he added.
Once the project comes on stream, 220 megawatts of electricity will be added to Tajikistan’s annual power generation capacity. It is scheduled to become operational by 2012 but Tajik officials want it to be inaugurated sooner.
The contract on the $220 million project was signed during Rakhmon’s Iran visit in January 2005. Close to $180 million will be extended to the Tajik government by Iran in the form of a 10-year credit and 40 million rials too will be financed by Tajik side.

Dehloran Refinery Under Construction
The construction of Dehloran Oil Refinery is underway in western Ilam province.
The project was launched in August 2007 in line with the policies of Article 44 of the constitution that seeks large-scale privatization. The private sector has taken the responsibility of implementing the project, thanks to its engineering and financial capabilities, reported.
Currently, officials in Sanat va Madan Bank are studying the project and Banking facilities would soon be extended for completing the project within three years.
Mousa Souri, managing director of Iran’s Oil Terminals Company, said 900 to 960 million barrels of light and heavy oil are exported from Khark Oil Terminal annually. A total of 1,020 tankers at Khark Oil Terminal and 1,200 at North Oil Terminal are loaded and unloaded per annum.
Souri added that Iran is exporting more heavy crude than light. Iran is the world’s fourth-largest oil producer with a capacity of 4.3 million barrels.
Meanwhile, the director of National Iranian Oil Company (NIOC) said the country has reduced its oil output by 200,000 barrels per day (bpd) from 4.04 million bpd.

Brazil Trade to Reach $10b
Iran’s Ambassador to Brazil Mohsen Shaterzadeh said Iran intends to increase its commercial and trade exchange with Brazil from $2 to $10 billion per annum.
Referring to the recent visit of Brazilian Foreign Minister Celso Amorim to Iran, Shaterzadeh said the two countries have decided to take common stances in international meetings, ISNA wrote.
Amorim, heading a delegation of 40, including representatives from Brazilian companies and businesses visited Iran on November 1-2. During his trip, he was received by President Mahmoud Ahmadinejad, Majlis Speaker Ali Larijani, Foreign Minister Manouchehr Mottaki and Secretary of Supreme National Security Council Saeed Jalili.
Since 1991, Amorim has been the first Brazilian FM who has paid a visit to Iran. Trade exchange between Iran and Brazil in the years 2002-2007 increased almost four fold.

Air Transport MoU With Iraq
Iran’s Civil Aviation Organization (ICAO) spokesman said a Memorandum of Understanding (MoU) was signed by Iran and Iraq on air transportation.
Reza Jafarzadeh told IRNA that the MoU was signed by ICAO Head Hossein Khanlari and his Iraqi counterpart Sabah Al-Sheybani in Tehran on Wednesday.
Under the MoU, Iranian domestic airline companies can fly seven times a week between Tehran and Baghdad and 14 flights from other airports to the holy city of Najaf.
The spokesman said the Iraqis can fly seven times from Baghdad to Tehran a week plus 14 times from other cities to the holy city of Mashhad, weekly.“
Other agreements include organizing seven cargo flights a week between the two countries.

New Mobile Carrier Due
Iran’s telecoms regulator is expected to announce the winning technical bid for the third domestic mobile phone carrier at the end of the month.
According to, the result of the technical bid will be out on November 30 and winners would have until January 11, 2009, to submit their financial bids. The contract will go to the lowest bidder the following day.
The winner company will have to compete with current telecoms operators, namely, Telecommunications Company of Iran and Irancell, which is 49 percent owned by the MTN Group.
The organizers have not disclosed the number of companies and firms, which have submitted their bids. Qatar’s Qtel expressed interest in the opportunity saying that it was in line with their plans to expand throughout the region.

Working Conditions to Improve
The government plans to improve working conditions.
Behrouz Alishiri, the head of Organization for Investment, Economic and Technical Assistance of Iran (OIETAI), said Iran ranked 142 among 181 countries in terms of working conditions last year.
He added that OIETAI is trying to improve the country’s ranking to 99 in collaboration with state organizations, IRNA reported.
The official said it is necessary to study the legal limitations to amend the working environment.
Alishiri said indexes have been designed to grade working conditions.
According to him, Iran stands 96 in terms of business start, 165 in getting permits, 147 in employment, 147 in registering assets, 84 in getting credits, 164 in legal support for investments, 104 in tax payment, 142 in overseas trade, 56 in feasibility of contracts and 107 in bankruptcy.

50 CNG Stations Planned
Some 50 CNG stations will be set up in Tehran by March 2009, said the head of Headquarters for Management of Transportation and Fuel.
Speaking on the sidelines of a ceremony to launch a station in Imam Hossein Town, Mohammad Rouyanian added that the price of CNG has not changed and it is delivered to the station owners at the earlier price of 80 rials, ISNA wrote.
He went on to say that CNG stations will be set up in Tehran’s satellite towns if they allocate the necessary land for the Municipality.
Only residents of the towns are entitled to fill up gas in these stations, Rouyanian said.
Iran has announced a twofold increase in the price of Compressed Natural Gas.
The Head of Transportation and Fuel Management Headquarters Mohammad Ruyanian told MNA that the government has decided to raise the price of compressed natural gas and has given the Oil Ministry until the end of the month to lay down the procedure for enforcing the order.
“CNG price at pumping stations which used to be 200 rials per liter will rise to 400 rials as of November 22,“ he added.

Salafchegan Exports
Close to 3,000 billion rials worth of commodities were exported from the Salafchegan Special Economic Zone since March, Ebadollah Kamkar, director of the zone, said.

Citrus Festival
The second national citrus festival will be held in Sari, Caspian province of Mazandarn in December, said deputy governor general of the province Valliollah Farzaneh.

G20 Urges Coordination
Finance officials from the Group of 20 nations (G20) will press their European colleagues to join a coordinated stimulus plan to tackle an impending recession when they meet in Sao Paulo this weekend.
UK Prime Minister Gordon Brown urged countries to heed the International Monetary Fund’s call for coordinated action, even as other European Union leaders fretted about reining in budget deficits, Bloomberg reported.
A coordinated package would add 50 percent more to growth than a similar amount spent in ad hoc measures by individual nations, said Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York.
“There are big areas of difference out there,“ Weinberg said. “The US and IMF view is clearly that fiscal stimulus is needed. The Europeans are not quite so clear on this.“

Crude Fall May Curb Investment
Saudi Aramco, the world’s biggest state-owned oil company, said a further drop in crude oil prices may curtail investments needed to offset declining output in aging fields.
“Investment is also needed to expand production capacity to meet long-term demand growth,“ Chief Executive Officer Abdallah Jum’ah said in a handout distributed at an industry summit in Beijing, Arabian Business reported.
Benchmark crude prices in New York have declined 58 percent since reaching a record $147.27 a barrel in July, because of concerns a slowing world economy will erode demand. The world will need to invest more than $26 trillion, almost twice the annual domestic product of the US, by 2030 to ensure energy supply, the International Energy Agency said.
“It is clear that collapsing oil prices are not only detrimental to the economies of oil-producing states but also to future upstream investments to sustain future oil demand consumption,“ Vienna-based consultant JBC Energy said in its weekly market report.

Obama Inheriting Worst Recession
US President-Elect Barack Obama will inherit the worst recession since Ronald Reagan’s second year in the White House, economists said as figures showed US payrolls plunged by more than half a million in the past two months.
The economy will shrink at a 3.5-percent annual rate in the fourth quarter and at a 2-percent pace in the first quarter of 2009, nearly twice prior estimates, Goldman Sachs Group economists led by Jan Hatzius wrote in a note. That would be the biggest back-to-back contraction since 1982.
According to AP, the surge in unemployment reflected an economic cave-in in October, when car sales plunged 32 percent, manufacturing contracted the most in 26 years and consumer confidence fell to a record low. The deepening recession puts pressure on Obama to quickly assemble a response and name his economic team.
Congressional Democrats are preparing a pre-inaugural fiscal stimulus bill and calls are also mounting for more Federal Reserve rate cuts.

China to Launch Stimulus Package
Evidence is mounting that China might launch a massive economic stimulus package in the near future as worries over a sharp slowdown in the world’s fourth-largest economy intensify, officials said on Friday.
From media reports to comments by government economists, speculation is swirling that Beijing would soon work out a comprehensive and aggressive plan soon to boost its sagging economic growth rate, AFP said.
What lends more ammunition to the speculation is that China Finance Minister Xie Xuren earlier this week left the Asia-Pacific finance ministers’ conference in Peru suddenly before the gathering got underway.
He also canceled his attendance at the G20 meeting in Sao Paulo, Brazil, leaving his deputy, Li Yong, to represent the Chinese Finance Ministry.
Official sources said he was summoned back to Beijing by his bosses to discuss important and urgent policies.

UK Banks Lower Interest Rates
British banks began falling in line to pass on a portion of the Bank of England’s interest rate cut to their customers. The moves at the various banks were not done without pressure from the government.
Chancellor of the Exchequer Alistair Darling met with bank executives Friday to press the point, The Times of London reported.
On Thursday, the day rates were cut, Lloyds TSB said it would pass the entire 1.5 percent rate cut on to customers. On Friday morning, Abbey said it would lower its standard variable rate. Bradford & Bingley also lowered rates on Friday morning. By afternoon, Nationwide said it would lower rates 1.5 percent, while Halifax agreed to a similar move. RBS then said it would do the same. The Council of Mortgage Lenders said lenders also would pass along rate cuts of between 0.5 and 1.5 percentage points to customers.