Lack of Transparency and Corruption Hampering Privatization Program – University President

The University of Tehran President Farhad Rahbar said during a roundtable discussion on the state of economy on Saturday that legitimate businesses and individuals are refusing to participate in the privatization program of government-owned industries. He blamed the lack of transparency of the bidding process and widespread corruption for their lack of participation in the program.

“In many instances, the (government-owned industries) are transferred to people without expertise and experience due to corruption,” Rahbar said. “The negotiations with bidders are conducted behind closed doors, without the participation of the office of the inspector general or other oversight agencies,” he added (Fars News Agency, 4 December).

The university president also expressed his concerns about the income tax regime in the country. He said in the past 30 years, the income tax has fluctuated between 4 to 9 percent of the country’s GDP. In advanced economies, he observed, the income tax is at 30-35 percent of the GDP, and in the neighboring Turkey is at 24 percent. Rahbar called for the major overhaul of the tax system. Today, the government invited a panel of experts to discuss the tax issue.

Iran Eases Foreign Ownership Rules

Iran announced today that it has adopted new regulations to facilitate foreign investment in its capital markets. All restrictions on foreign investors transferring money out of Iran are removed and the limit of foreign ownership of Iranian companies is raised to 20 percent from 10 percent. Foreign investments are now exempt from paying any taxes.

"The government is now offering broader incentives to foreign investors with fewer regulatory strings attached," said Ali Saleh Abadi, director of Iran's Securities and Exchange Organization. "They will be exempt from paying tax and will no longer be subjected to excessive regulations." [Press TV, 26 April].

Iran is aiming to raise some $12.5 billion in foreign investment by privatizing more than 500 state-owned firms during its current fiscal year that began on 21 March. Among those firms are two carmakers and two refineries.

In the current political atmosphere and the hesitancy of foreign investors to enter the Iranian market, however, IRGC, the country’s most powerful branch of armed forces with extensive economic holdings in the country, is expected to take over the carmakers and the refineries put up for “privatization."