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Iran’s private sector gets a new lease of life

Iran’s authorities are looking to invigorate the country’s private sector with plans to sell up to $110 billion-worth of state assets over the next 10 years. Can the programme attract the foreign investors it needs to succeed? And can Iran’s government learn from past mistakes? Euromoney reports.

The role of ‘Justice’ shares

ON JULY 3 2006 Iran’s supreme leader, Ayatollah Khamenei, issued an executive order demanding a stepped-up approach towards privatization of core industries, including even the oil and gas sectors. The leader took this approach as a result of obstacles impeding economic growth including a lack of foreign investment, persistent unemployment and high inflation. This order requires an 80% divestiture in all state-owned enterprises by the government including banking, mining, transportation and heavy industry. Certain key activities and entities are excluded from this process.

The urgent need for such action shows the economic hurdles still facing the country despite high oil prices. Political issues are largely responsible for an economic downturn due to systematic domestic and foreign pressures. The country faces a mounting budget deficit exacerbated by high inflation and government subsidies.

In an interview with Isna news agency on July 23, the chairman of the Tehran Chamber of Commerce, Mohammad Nahavandian, welcomed this initiative as a significant precursor for membership of the World Trade Organization. Membership demands a harmonious business, fiscal and legal framework with consistent and proven economic policies developed specifically to foster economic growth. The privatization initiative should provide momentum for this.

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