BY:Mr. Naresh Thatipamula

INTRODUCTION

• Iran is a middle-east country with Iraq, Pakistan, Turkey, Afghanistan, Azerbaijan as neighbors.

• 17th largest country.

• Officially known as Islamic Republic of IRAN

• Previously termed as Persia.

• Currency: Iranian Rial (1 Rial = 0.000037 USD = 0.0023INR).

• Capital: Tehran

• Home of one of the world’s oldest civilizations.

• Population: 77.45 million(2013).

Nature & Structure

• Iran’s Economy is a Mixed & Transition economy.

• Major par is public sector owned.

• 60% of the economy is centrally planned.

• Dominated by Oil & Gas production.

• Considered as Energy Super Power.

• Unique feature is the presence of large religious foundations called Bonyad.

GDP

Composition by sector:agriculture: 10.6%

industry: 44.9%

services: 44.5% (2013 est.)

GDP (PPP):

Industrial Production Growth rate:

Count

ry2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Iran 5.7 4.4 5.5 5.5 3 3.5 3 3.2 4.8 4.5 4 4.3 -2.7

From 2008 to 2009 Iran has leaped to 28th place from 69th place in annual industrial production growth rate.

Industries in Iran:• Petroleum & Petrochemicals,

• Fertilizers,

• Caustic soda,

• Textiles,

• Tourism

• Cement and other Construction materials,

• Food processing (particularly sugar refining and vegetable oil production),

• Ferrous and non-ferrous metal fabrication,

• Armaments

Petroleum Industry:

• Member of OPEC.

• Oil and Gas industry is the most active industry of the country.

• Fourth largest reserves of oil and second largest reserves of gas in the world.

• Constitutes 18.7 percent of GDP.

• The oil and gas industry has been the engine of economic growth, directly affecting public development projects, the government’s annual budget, and most foreign exchange sources.

Petroleum Industry:

Agriculture

• Constitutes 10.6% of GDP.

• Only 12% of the total land area is under cultivation.

• Diversified climatic conditions make it possible to cultivate various crops.

• Wheat, rice, and barley are the country's major crops.

• Maize (corn)), fruits (dates, figs, pomegranates, melons, and grapes), vegetables, cotton, sugar beets, sugarcane and pistachios, nuts, olives, spices, raisin, tea, tobacco, Berbers and medicinal herbs are other Agro Outputs.

Monitory Policy

• The Central bank is in charge of laying and implementing monetary and credit policies of the country.

• Interest rate is usually set based on political priorities and not monetary targets. There is little alignment between fiscal and monetary policy.

• The Central Bank's data suggest that the money supply growth has been about 40% annually. The rapid growth of money supply came from high demands for borrowing capital at the rate of 12% the banks offer, imposed by the Government to make credit accessible to average Iranians and small entrepreneurs.

Fiscal Policy

• Fiscal year: 21 March - 20 March

• Budget: revenues: $47.84 billionExpenditures: $66.38 billion (2013 est.)

• Since the 1979 revolution, government spending has averaged 59% on social policies, 17% on economic matters, 15% on national defense, and 13% on general affairs.

• Payments averaged 39% on education, health and social security, 20% on other social programs, 3% on agriculture, 16% on water, power and gas, 5% on manufacturing and mining, 12% on roads and transportation and 5% on other economic affairs.

Economic Planning:

Prior to 1979, Iran's economic development was rapid. Traditionally an agricultural society, by the 1970s the country had undergone significant industrialization and economic modernization.

After the Revolution of 1979, Iran's government proceeded with 4 reforms:

•First they nationalized all industry, including the NIOC, and all Iranian banks.

•The new Constitution divided the economy in 3 different sectors, namely

"State", "Cooperative" and "Private", with the majority being state-owned

businesses.

•The Government started using central planning to control the economy, having

the Supreme Leader, the President and Majlis creating 5-year socio-economic

plans.

•The State took control of setting Prices and Subsidies.

Economic Planning:

• Iran follow Five year Plans.

• Started from 1991, Iran now is in 5th Five Year Plan till 2016.

• The target of the current plan is to make Iran Self Sufficient in major fields by the end of this plan.

Budget:

• Iran goes for Yearly budget which starts from March 21st every year.

• This year budget bill worth is 7,930 trillion rials ($319 billion at the official exchange rate) for the next Iranian calendar year.

Taxation

• Taxes and other related revenues include 11.6% of GDP.

• Taxes include personal and corporate income taxes, value added taxes, excise taxes, and tariffs.

• Other revenues include social contributions - such as payments for social security and hospital insurance - grants, and net revenues from public enterprises.

Taxation Types

Income Tax

• Salaries (tax rate for public sector employees: 10%; other sectors: 10-35%);

• Income from professions, trades, and miscellaneous sources;

• Incidental or windfall earnings;

• Real estate income;

• Income derived from agriculture.

Real Estate Tax

Inheritance Tax.

Corporate Tax.

Various indirect Taxes

Trade Liberalization:

• Trade reforms were brought slowly in late 1980s.

• Iran applied for membership in WTO in 1996 but accepted as observer member in June 2005.

• Iran ranks 62nd in the World Economic Forum's 2011 analysis of the global competitiveness of 142 countries.

FDI:

• In 2010, Iran ranked sixth globally in attracting foreign investments.

• Foreign investors have concentrated their activity in a few sectors of the economy: the oil and gas industries, vehicle manufacture, copper mining, petrochemicals, foods, and pharmaceuticals.

FDI (contd.)

• Unfavorable or complex operating requirements and by international sanctions hinder the FDIs.

• USA, UAE, Singapore, Canada, Australia, nearly 20 European Countries, South Africa are the major investors in Iran.

• Iran has two types of laws concerning foreign companies. The first are laws that address issues concerning foreign companies directly such as the Foreign Investment Promotion and Protection Act (FIPPA) and the second are general laws of which certain articles or by-laws address foreign companies, for instance the Taxation Law and the Labor Law.

Government

• Iran has Presidential Democracy and theocracy guided by an Islamic ideology.

• Consists of 31 provinces each governed from a local center, usually the largest local city, capital of that province.

• The provincial authority is headed by a Governor-General, who is appointed by the Minister of the Interior subject to approval of the cabinet.

Constitution

• Adopted by referendum on October 24, 1979, and went into force on December 3 of that year, replacing the Constitution of 1906.

• All democratic procedures and rights are subordinate to the Guardian Council and the Supreme Leader.

• Consists of 14 Chapters and 177 Articles.

• In 1989, few amendments were made to it. Eliminated the Prime Minister post and instead made permanent the Expediency Discernment Council to work out disagreements between the Parliament and Council of Guardians.

Article 44:

• “All large-scale and mother industries, foreign trade, major minerals, banking, insurance, power generation, dams, and large-scale irrigation networks, radio and television, post, telegraph and telephone services, aviation, shipping, roads, railroads and the like" are entirely owned by the government.

• the economy of Iran is to consist of three sectors: state, cooperative, and private; and is to be based on systematic and sound planning.

• This article has been amended in 2004 to allow for the Privatization of the Iranian economy.

Legislature• The Islamic Consultative Assembly of Iran, also called The Iranian

Parliament or People's House, is the national legislative body of Iran.

• The Parliament currently has 290 representatives in which 14 are of non muslimminorities. 8% are women

• The recent election took place on 2 March 2012 and the new parliament was opened on 27 May 2012.

• Although the executive proposes most new laws, individual deputies of the Parliament also may introduce legislation.

• Deputies also may propose amendments to bills being debated.

• The Parliament also drafts legislation, ratifies international treaties, and approves the national budget.

Executive Branch

• President as the highest state authority after the Supreme Leader, is elected by universal suffrage, by those 18 years old and older, for a term of four years.

• The President is responsible for the implementation of the Constitution and for the exercise of executive powers, except for matters directly related to the Supreme Leader.

• The President appoints and supervises the Council of Ministers, coordinates government decisions, and selects government policies to be placed before the legislature.

• Currently, 10 Vice-Presidents serve under the President, as well as a cabinet of 21 ministers, who must all be approved by the legislature.

• President Hasan Fereidun RUHANI (since 3 August 2013); First Vice President Eshaq JAHANGIRI (since 5 August 2013)

Judiciary

• Judiciary in Iran "is an independent power".

• The head of the judiciary is appointed by the Supreme Leader and serve for "a period of five years."

• He is responsible for the "establishment of the organizational structure" of the judicial system; "drafting judiciary bills" for parliament; hiring, firing promoting and assigning judges.

• The Minister of Justice owes responsibility in all matters concerning the relationship between the judiciary, on the one hand, and the executive and legislative branches, on the other hand.

Cultural Heritage

• Iran has one of the richest art heritages in world history and encompasses many disciplines including architecture, painting, weaving, pottery, calligraphy, metalworking and stonemasonry.

• Several languages are spoken in different regions of Iran. The predominant language and national language is Persian, which is spoken across the country.

• Azeri, Kurdish, Arabic, Balochi and Turkmen are other regional languages.

• Religions: Muslim (official) 99.4% (Shia 90-95%, Sunni 5-10%), other (includes Zoroastrian, Jewish, and Christian) 0.3%, unspecified 0.4% (2011 est.)

Demography

Population: 80,840,713.

Growth rate: 1.22%.

Age structure:0-14 years: 23.7% (male 9,834,866/female 9,350,017)15-24 years: 18.7% (male 7,757,256/female 7,341,309)25-54 years: 46.1% (male 18,955,874/female 18,289,849)55-64 years: 6.3% (male 2,519,630/female 2,603,458)65 years and over: 5.2% (male 1,941,692/female 2,246,762) (2014 est.)

Sex ratio:

At birth: 1.05 male(s)/female0-14 years: 1.05 male(s)/female15-24 years: 1.06 male(s)/female25-54 years: 1.04 male(s)/female55-64 years: 1.03 male(s)/female65 years and over: 0.89 male(s)/femaletotal population: 1.03 male(s)/female (2014 est.)

Urbanizationurban population: 69.1% of total population (2011)rate of urbanization: 1.25% annual rate of change (2010-15 est.)

Life Expectancy

total population: 70.89 yearsmale: 69.32 yearsfemale: 72.53 years (2014 est.)

Literacy

total population: 85%male: 89.3%female: 80.7% (2008 est.)

In the Age group 15-24, 97% is educated.

Business Culture

Greeting:

• The most common greeting in Iran is 'salam' (peace be upon you). One would also reply with 'salam'. When departing, Iranians will generally usually use, 'khoda-hafez' (may God preserve you).

Dress:

• Clothing comprises of trousers, shirt and jacket. Many officials will be seen with collarless shirts. Ties are very uncommon.

• Women should wear very conservative clothing that covers arms, legs and hair. When in public women must cover their hair with a scarf. However, the last decade has seen incredible changes. Women can now be seen wearing make-up, jeans and scarves that barely cover the hair.

Meetings:• Business hours are Saturday to Thursday 9 a.m. - 5 p.m. Lunch is usually an hour at

around 1 p.m. Friday is a holiday.

• Other times to avoid doing business are Ramazan, Eid-e Fetr (festival celebrating the end of Ramazan), Eid-e Ghurban (celebrating the end of the pilgrimage) and Ashura (the tenth day of Muharram).

• Punctuality in Iran is rare. If you are doing business with government officials in Iran be prepared to be kept waiting. The administration and bureaucracy in Iran can be chaotic, Be patient and courteous. If you like tea, do not be afraid to ask for lots of it!

• At the beginning of any meeting engage in niceties and ask after people's health, families, work, etc. Wait for your counterpart to initiate the change in conversation to business matters.

Negotiation:

• Your success is defined by your aptitude to build effective personal relationships combined with a clearly outlined and well presented proposal.

• Business is personal in Iran. Many businesses are family owned and run. Even within government, officials usually work within networks of friends and associates. If you have influential friends in Iran, do not be afraid to call in favors.

• They enjoy haggling and getting concessions so be prepared for long negotiations.

Trends in Technology

• Iran has made great strides in different sectors, including aerospace, nuclear science, medical development, as well as stem cell and cloning research.

• Theoretical and computational sciences are highly developed in Iran. Despite the limitations in funds, facilities, and international collaborations, Iranian scientists have been very productive in several experimental fields such as pharmacology, pharmaceutical chemistry, and organic and polymer chemistry.

Technology Ranking

Iran ranked 47th in Global Innovation Index. Here is how the country ranked in the determining factors:

• R&D intensity: 42nd

• Productivity: 50th

• High-tech density: N/A

• Researcher concentration: 48th

• Manufacturing capability: 74th

• Tertiary efficiency: 18th

• Patent activity: 22nd

Budget:

• Iran's national science budget was about $900 million in 2005.

• By 2009 this ratio of research to GDP reached 0.87% and the set target is 2.5% to be reached by 2015.

• In 2009, Iranian government formulated a 15 year comprehensive national plan for science focused on higher education and strengthening the links between academia and industry in order to promote a knowledge based economy.

• Iran's government has devoted huge amounts of funds for research on high technologies such as nano technology, biotechnology, stem cell research and information technology.

Transfer of Technology:

• Iran is in collaboration with Russia to get transferred the Arms and technology.

• Iran is transferring its missile technology to Hamas.

• Transferring of technology from Universities to Industries is very weak.

KHUDA HAFIZ