Iran's Economy

Iran's economy is a non-homogeneous mixture of state ownership of large enterprises, village based farming, low tech private manufacturing, and small-scale private trading. In many areas the government directly competes with the private sectors.

Pertinent Data
Work Force
Education
Health
Budget
Debt
Exports
Imports
Agriculture
Electricity
Natural resources
Transportation
Pipelines
Communications
Available Risk Cover
RSA Exports
Foreign Exchange
Trade General
Documentation
Weights and Measures
Population
Age Distribution

Pertinent Data:

GDP ......................................... $323.5 billion (1995 est.)

GDP real growth rate ................ -2% (1995 est.)

GDP per capita ......................... $4,700 (1995 est.)

GDP composition by sector:

• Agriculture ..............................21%
• Industry .................................. 37%
• Services ................................. 42% (1994 est.)

Inflation rate (consumer prices) .. 60% (1995 est.)

Work Force:

• Labor force ............................ 15.4 million
• By occupation ..................... agriculture 33%, manufacturing 21%
• note .................................... shortage of skilled labor (1988 est.)
• Unemployment rate ................ over 30% (1995 est.)

Education: (1994 est.)

• Literacy ................................. Age 15 and over can read and write
• total population ...................... 72.1%
• male ......................................78.4%
• female .................................... 65.8%

Health: (1992)

• Infant mortality rate ................ 64/1,000
• Life expectancy .....................65 years

Budget:

• Revenues ........................................... $NA
• Expenditures: .....................................$NA, including capital expenditures of $NA materials, food processing (particularly sugar refining and vegetable oil production), metal fabricating, armaments
• Industries: .......................................... 4.3% (1994 est.)
• Industrial production growth rate ....... (1994, unofficial): 2,600 rials= $U.S.
• Exchange rate ................................... (1997, unofficial): 4750 rials= $U.S.

Debt:

• Iran has faced increasingly severe financial difficulties since mid-1992 due to an import surge that began in 1989. Iran was unable to meet its obligations on short-term debt in 1993; by the end of the year, it was $8- $9 billion in arrears on payments. Early in 1994, estimates of Iran's debt ranged from $16 billion to $30 billion. At yearend 1994, Iran rescheduled $12 billion in debt. Iran's financial situation remained tight in 1996 because the bulk of payments due under its rescheduling agreements in 1993-94 became due.

Exports:

• Amount ............... $18 billion (f.o.b., 1994 est.)
• Commodities petroleum 85%, carpets, fruits, nuts, hides, iron, steel. Oil accounts for about 85%-90% of Iran's exports. In 1993, Iran's OPEC quota was about 3.4 million barrels per day, and estimated production was 3.5 million barrels per day.
• Partners .............. Japan, Italy, France, Netherlands, Belgium/Luxembourg, Spain, and Germany

Imports:

• Import Licenses... All imports into Iran are required to be authorized by the Ministry of Commerce special before being registered by authorized banks except for special military and pharmaceutical goods, and souvenirs and gifts brought in by incoming travelers. All imports require the prior approval of the procurement and distribution organizations, except for goods imported by the Ministry of Defense and certain other military goods.
• Amount .............. $13 billion (c.i.f., 1994 est.)
• Commodities ...... machinery, military supplies, metal works, food, pharmaceuticals, technical services, refined oil products
• Partners ............. Germany, Japan, Italy, UK, France, UAE

Agriculture:

Products

• The principal cash crops are fresh and dried fruit.
• The main cash crops are wheat, barley, sugar beet and sugar cane.
• Production of mutton, lamb and poultry is important.
• Other crops include rice, nuts, cotton, dairy products, wool, caviar and grain.

Principal Commercial Centers

• Teheran is the commercial, industrial and financial center of Iran.
• Other centers include Esfahan, Mashad, Tabriz, Shiraz, Ahwaz, Bakhtaran, Qom and Orumiyeh.

Industry:

• Iran's reserves of gas are the second largest in the world.
• Top industries are textiles, food processing (particularly sugar refining and vegetable oil production), transport equipment, iron and steel, copper and non-electrical machinery, petrochemical, petroleum, cement and other construction materials, armaments, kerosene and cigarettes.

Electricity:

• Capacity ................................. 19,080,000 kW
• Production ............................. 50.8 billion kWh
• Consumption per capita .......... 745 kWh (1993) Daz Dam

Natural resources:

• Type ........................ Iran has natural resources as petroleum, natural gas, coal, chromium, copper, iron ore, lead, manganese, zinc and sulfur.

Transportation:

Railways:

• Total ........................ 5,093 km
• Broad gauge ............ 96 km 1.676-m gauge
• Standard gauge ........ 4,997 km 1.432-m gauge (146 km electrified) (1995)

Highways:

• Total ....................... 140,200 km
• Paved .................... 42,700 km
• Unpaved ................. 97,500 km (1995 est.)

Waterways:

• Detail .............. 904 km; the Arvand Rud is usually navigable by maritime traffic. About 130 km; channel has been dredged to 3 m and is in use.

Ports:

Detail ............. Abadan (largely destroyed in fighting during 1980-88 war), Ahvaz, Bandar Beheshti, Bandar-e 'Abbas, Bandar-e Anzali, Bandar-e Bushehr, Bandar-e Khomeyni, Bandar-e Mah Shahr, Bandar-e Torkeman, Jazireh-ye Khark, Jazireh-ye Lavan, Jazireh-ye Sirri, Khorramshahr (limited operation since November 1992), Now Shahr.

Merchant Marine:

• Total ..................... 130 ships (1,000 GRT or over) totaling 2,791,892 GRT/4,891,615 DWT
• Ships by type ........ bulk 47, cargo 41, chemical tanker 5, combination bulk 2, liquefied gas tanker 1, multifunction large-load carrier 1, oil tanker 19, refrigerated cargo 3, roll-on/roll-off cargo 9, short-sea passenger 1, specialized tanker 1 (1995 est.)

Airports:

• 212 with paved runways over 3,047 m 30 with paved runways 2,438 to 3,047 m (1995 est.)

Heliports

• 11 with paved runways 1 524 to 2 437 m 31 with paved runways 914 to 1,523 m 17 with paved runways under 914 m 22 with unpaved runways over 3,047 m 1 with unpaved runways 2,438 to 3,047 m 2 with unpaved runways 1,524 to 2,437 m 10 with unpaved runways 914 to 1,523 m 12 (1995 est.)

Pipelines:

• Crude oil ......................... 5,900 km
• Petroleum products ......... 3,900 km
• Natural gas ...................... 4,550 km

Communications:

Telephones .............................. 3.02 million (1992 est.)

Telephone system

• Domestic ....................... microwave radio relay extends throughout country; system centered in Tehran satellite earth stations - 3 Intelsat (2 Atlantic Ocean and 1 Indian Ocean) and 1 Inmarsat (Indian Ocean Region);
• International ................... HF radio and microwave radio relay to Turkey, Pakistan, Syria, Kuwait, Tajikistan, and Uzbekistan; submarine fiber-optic cable to UAE Radio

broadcast stations .......... AM 77, FM 3, short-wave 0 Radios 14.3 million (1992 est.)

Television broadcast stations .... 28

Televisions ............................... 3.9 million (1992 est.)

Exhibitions

• International Trade Fair (capital goods); Date: 2-9 October 1999; Venue: International Fairgrounds, Tehran.
• International Agriculture, Food Processing and Food Packaging trade Fair; Date: 18-21 May 1999; Venue: Export Promotion Center of Iran.
• International Medical, Hospital and Pharmaceutical Equipment Fair; Date: June 1999; Venue: Iran.
• International Trade Fair for the Construction Industry, the Building Materials Industry and Mining; Date: June 2000; Venue: Export Promotion Center of Iran.

Available Risk Cover

• Credit Guarantee Insurance Corporation (CGIC) does offer cover to South African companies exporting to Iran.

RSA Exports - Recommended Terms

• The Standard Bank of South Africa has the capacity to confirm letters of credit issued by prime Iranian banks.
• Confirmed irrevocable letter of credit.

Foreign Exchange

• Exchange control is vested in the Bank Markazi (Central Bank of Iran).
• All foreign exchange transactions must take place through this bank or authorised banks.
• The foreign exchange system consists of two rates namely; the official rate and the Export rate. The official rate is mainly used for the payment of essential goods and the Export rate is used for all other import payments.
• The foreign exchange budget, which is approved by Parliament, establishes allocations for imports by the different ministries and institutions.
• Payments for imports are required to go through the banking system.
• Imports made with foreign currency must be accompanied by evidence that the currency was obtained from Iranian banks before goods may be released from customs.
• Advanced payments of 15 to 100 percent, depending on the product and the credit worthiness of the importer, are required when financing is involved.
• The government of Iran operates an export earnings retention scheme whereby export earnings must be deposited in an authorised bank within a certain specified time period. The exporter will then receive a foreign exchange deposit certificate. The certificate must be converted within four months into a foreign exchange guarantee letter or the amount will be converted into rials by the bank.
• There are no restrictions on the import of foreign currency if declared on arrival.
• Export of foreign currency is allowed up to the declared limit of imported goods.
• Import of local currency is allowed up to RL 20,000 and its exports up to RL 200,000. Any amount larger than that requires authorisation from the Central Bank.

Trade General

• All imports into Iran must be authorised by the Ministry of Commerce before being registered by authorised banks.
• The import list, which is revised annually, distinguishes between authorised, unauthorised and prohibited goods.
• Authorised imports are considered essential, unauthorised imports include non-essential goods and those which are manufactured locally in sufficient quantity to meet domestic demand, and prohibited goods include luxury items, opium and firearms for which no authorisation will be given.
• Products imported within the framework of the general regulations are machinery and industrial equipment.
• Drugs, food products and cosmetics are imported under special conditions.
• Commodities may be shifted from one list to another as and when it is deemed necessary.
• Most duties are ad valorem although a few items still bear specific duties.
• The majority of customs duties are assessed on the CIF value of the goods.
• A few items are subject to specific duties.
• Tariffs are based on the CCCN.
• Imports are also subject to a Commercial Benefit Tax (CBT) at varying rates.
• Municipal tax, port health tax, porterage, etc., are collected in addition to customs duties and CBT.
• Samples of no commercial value, catalogues, commercial propaganda and similar publications (excluding cinematographic publicity) are duty free.
• Authorised goods can be imported without restriction.
• Conditional goods can be imported under certain conditions with due consideration for the regulations.
• Prohibited goods consist of those whose transactions are forbidden.
• All goods must be cleared from warehouses at seaports within four months of unloading or may be sold at auction.
• Those of value may be entered against bond or by guarantee of a reputable Iranian merchant that they will be re-exported within a specified time.
• Iran maintains five free trade zones, including Sirjan, Chahbahar and the islands of Qeshm, Kish and Hormuz.
• The Iranian Parliaments passed a bill in September 1995 banning the imports of non-essential goods, including soft drinks, toys, cigarettes, chocolate, chewing gum and candy.
• Several economic co-operation agreements and trade conventions were signed between Iran and the member states of ECO like Afghanistan, Azerbaijan, Kazakhstan, Kyrghistan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan.
• April 1995, Iran signed an economic co-operation memorandum with Armenia and Turkmenistan.
• 30th July 1995, Iran signed a trade co-operation agreement with the Kingdom of Morocco.

Marketing of Goods and Packages

• It is a good marketing device (and for certain goods may be a requirement) to have labels, descriptions and instructions printed in the Persian languages. Drugs and poisons - for example, must have labels and instructions printed in Persian.
• There are special marking regulations for pharmaceutical specialties intended for medical and veterinary purposes, foodstuffs sold in containers, beverages, mineral waters, syrups, juices and extracts, toilet and beauty articles and accessories. No product may bear a false or misleading indication of origin; and most goods require a mark of origin.
• Shipments and related documents must be marked 'Persian Gulf' and not 'Arabian Gulf'. The Iranian customs authorities will refuse permission to unload cargo, if this regulation is not observed.
• Packages containing inflammable or combustible materials must be labeled with special "International Marks" to indicate the contents and to assure that such will be handled in a proper manner.
• According to sound shipping practice, these packages should be the consigneeÕs mark, including port mark, gross weight should be shown on each package and they should be numbered unless the shipment is such that the packages can be readily identified without numbers.

Documentation

Air Waybill

• Number of copies should be based on the importers instructions and requirements of the airline used.

Bill of Lading

• No special requirements. Send four copies to Iran with other documents.

Certificate of Origin

• May be required by the terms of the letter of credit or importer. When required, the certificate is usually prepared in triplicate. The following information should be given: country of origin, names of shipper and consignee and statement describing goods in terms of kind, weight and quantity shipped. The certificate must be certified by a chamber of commerce, which will retain one copy. The commercial invoice does not require authorization unless requested by the importer or letter of credit. If authorization is required, an original and one copy must be presented. The exporter must forward the original to the importer's bank with other documents. The importer may require an extra copy.

Import Licenses

• All imports into Iran are required to be authorized by the Ministry of Commerce special before being registered by authorized banks except for special military and pharmaceutical goods, and souvenirs and gifts brought in by incoming travelers. All imports require the prior approval of the procurement and distribution organizations, except for goods imported by the Ministry of Defense and certain other military goods.

Commercial Invoice

• Four copies are required. Additional copies may be required by the importer, Iranian bank or for the completion of the letter of credit. Exporters must ensure that the letter of credit contains specific requirements with regard to authorization. Unless the importer clearly states that authorization is not required to clear the goods through customs or to effect payment, exporters should have their documents authenticated by an Iranian Embassy. The invoice must show an itemized statement of the current export price of the goods, including the cost of cartage, ocean freight and insurance. The following declaration is required: 'I (name), (title), (name of company) hereby swear that the prices stated in this invoice are the current export market prices for the merchandise described therein and I accept full responsibility for any inaccuracies or errors therein.'

Insurance Certificate

• Generally speaking, insurance must be taken out in Iran.

Packing List

• No known special requirements. Usually issued in six copies.

Permits and Visas

• For tourist visits approval needs to be obtained from Iran.
• For business visits an application has to be made to the Department of Foreign Affairs of Iran by the host in Iran.
• The cost of visas issued for South African passport is R 100-00 (this price may change, refer to the rate of exchange in this regard).

Pre-shipment Inspection

• All goods imported into Iran under a letter of credit must be inspected before shipment for quality, quantity and packing of goods. An import duty report is issued for customs clearance.

Pro-forma Invoice

• This is required by the importer to effect registration and to apply for a documentary letter of credit. Four copies are required containing, inter alia, supplier's name and address; date and number; quantity; description; unit price and total FOB value of commodities; estimated inland and ocean freight charges up to Iranian port; terms of payment; signature of supplier. Follow the importers instructions regarding the inclusion of insurance premiums.

Other Documentation

• A certificate of free sale is required for all imports of pharmaceutical, medical devices, foodstuffs and cosmetics. This certificate should state that the sold commodities are in free circulation in the exporting country.
• Exporters of veterinary products (including feed concentrates and supplements) to Iran must furnish a certificate issued by the appropriate authorities to the effect that the product was produced in, and used and sold freely in the country of origin. This certificate must be authenticated by an Iranian consular official. It is required at the beginning of each Iranian year (March 21). Subsequent shipments during the year require only a simple health certificate, issued by the appropriate authorities with an analysis of the product and a statement that the product is free from disease and toxication. This does not require consular legislation.

Weights and Measures: The metric system is utilized.

Population: 66,094,264 (July 1996 est.)

Age Distribution (1996 est.)

• 0-14 years ................. 45% ............. male 15,166,131 female 14,289,283
• 15-64 years ................ 52% .............. male 17,326,388 female 16,731,470
• 65 years and over ....... 3% .............. male 1,327,718 female 1,253,274