1. French- Iranian Seminar on Public Private Partnership And Intermodal Transport
Hossein abdoh tabrizi
26 Oct 2016

2. Current economical situation
Stagflation situation was a heritage of the last Government
Negative demand shock
Current government economical policies
Credit crunch
Negative oil shock

3. challenges High unemployment rate Lower family budgets
To keep unemployment rate at its current level, we need a growth rate of 6%
Major engine of economic growth during last Government: “capital factor” Capital stock and economic growth went hand in hand
Even with revenues similar to Ahmadinejad’s Government, the growth rate would have dropped to 2%-3% corridor
Major demographic changes

4. Inflation rates

5. inflation Average inflation rate: 19.55 %
Single Digit Inflation Rate: 2 Years
Two Digit Inflation Rate: 34 Years
Inflation Rate over 20 Percent: 17 Years
Inflation Rate over 30 Percent: 3 Years
Highest Inflation Rate: 49.4 Percent (1995)
Lowest Inflation Rate: 6.9 Percent (1985)

6. Last Two years inflation

7. Real GDP shrinkage

8. Real GDP Growth rates

9. Recession
Recession in recent years dominated the economy mainly because of two reasons:
Negative Aggregate Demand Shock
Credit Crunch

10. Nominal budget vs. real budget
Return
Source: Central Bank of Iran

11. Credit Crunch

12. Asset and equity of Iranian banks

13. Real interest rate

14. Income per capita growth rate (percent)

15. Household size

16. Major Demographic Changes

17. Unemployment rates

18. Active labor

19. Number of working force in families

20. THE ROLE OF PRODUCTIVITY
Training
Education
Startups
VCs

21. Productivity and capital inputs in the cake of CAPITAL FORMATION
Current share of Capital is too high
The missing part of the cake is productivity
Return
Source: World Bank

22. Startups have huge potentials in energy saving fields
Energy consumption
Cheap subsidized energy ended to high consumption rate, and low productivity of industries
Startups have huge potentials in energy saving fields
700 million barrels in a year ×
60 Dollars
162.2 billion m3 in a year ×
50 cents
123 billion dollars

23. Rouhani’s Post-Sanction Economic Strategy Options for Change
Interacting With the World without any Structural Reform
Economic Introversion without any Structural Reform
Economic Structural Reform with Full Interaction with the World and Full Utilization of National Capacities (Bank Reform/Debt Market/Market-Based Prices/Low Inflation Rate/ Diversifying into All Potential Markets,…)

24. Investment opportunities in different areas
Oil and Gas & Energy Saving Industries
Road and Urban Development
Mining Industry
Branding, Retail, and Tourist Industry
Services (Financial Services, IT)

25. Financing Methods Oil Off-taking Products and Services
Restructuring (Privatization Organization)
Government Budget & Development Fund
Private Sector Capabilities

26. Investment risks Lack of sound rules and compliance in banking sector
Exchange rate risk

27. Investment risks

28. Multiple exchange rate (IRR)
Source: Central Bank of Iran

29. Real Sector VS. Financial Sector
German issue
Real Sector VS. Financial Sector
(Banks)

30. Horizontal (EU) Agreement Vs. Bilateral Agreements
ECB Vs. Member Countries’ Central Banks

31. Alleviation of Accumulated Bank Worries
OFAC Clearance
Compliance: KYC/Sources and Destinations of Funds
Bureaucrats in Both Sides (Example: New Over-Dues)
Hurdle Removing with Small Projects (Example: Air Bus Deal)
HERMES
Regulatory Bodies
Ratification of $ U-Turn License
Money Laundry and Anti- Terrorism Laws
LEI (Legal Entity Identifier)
FACTA (Foreign Account Tax Compliance Act)
Revoking Signed Settlement agreements

32. Investment risks Lack of hedging instruments like futures market
No rating agency for the corporations and financial products

33. Tips Selecting a credible local partner.
Preparing decent business models.
Partially financing is a key factor for higher chances to have projects in Iran.
Real Estate recession and Real Estate Bubble is still on, so this should be included in making investment decision on real estate in Iran.

34. Tips
Governors and mayors are extremely optimistic about all the projects in their region, but there must be a detailed evaluation of those business plans.
Overall banking situation is not good mainly because of dominant high interest rates and the bulk of toxic assets. So choosing the right bank to buy into or to work with is a difficult decision to make.
Government of Iran owes almost nothing to the world, and its credit standing is high and you can count on it, if working with the Government.

35. Tips
Iran is not a member of WTO yet, and the Government discourages import of end goods and services. Setting up assembly line is a way around it. Tariffs are high, so it is recommended to produce inside the Country.
Learn about subsidy structures; businesses like electricity are not based on market economy.

36. What is Resilient economy
Economic Resilience is the economy’s ability to restore its normal state after facing a shock. This shock can be either external or internal.
Exploring how Iranian economy can bounce back from economic shocks
What are the implications of 24 guidelines of this program for foreign investors

37. Implications of Resilient Economy Guidelines for Foreign Investors
Less Interest for Sheer Imports/ Priority for Production in Iran/ Technology Transfer
Keen to Enhance Economic Capacities Developed During Sanction Time Span
No Monopolistic Rights Awarded
No Expansion of Government Sector/ More Breathing Space for Private Sector
Avoidance of Debt-Bloated Government/ Staying away from Sovereign Guarantees/More Commercial Guarantees
Sidestepping the Potential Foreign Exchange Crisis/More FDI/Less Portfolio Investment
Expanding Capital Market Facilities Vs. Downright Reliance on Banks
More Diversification in All Frontiers: Imports/Exports/Technologies/Financial Markets/…

38. Yet, Such a Huge Arena of Opportunities
Too Many Problems
So Many Obstacles
Yet, Such a Huge Arena of Opportunities

39. Thank you