Iranian Rial

screwball · January 11, 2017

The Iranian Parliament approved on Monday macroeconomic targets set in the sixth five-year development plan (2016-21).

Out of the 210 parliamentarians present in the session, 148 MPs voted in favor and 11 against the indices, while 16 lawmakers abstained, IRNA reported.

As per the approval, the GDP growth rate is targeted to stand at an average of 8% annually throughout the plan.

According to the Statistical Center of Iran's latest report, Iran's GDP during the first six months of the current fiscal year (started March 20, 2016) grew 6.5% compared with last year's corresponding period. The growth was put at 4.5%, excluding oil.

The Central Bank of Iran has put Iran's H1 economic growth rate higher at 7.4%.

The World Bank Group in its latest analysis of Iran’s economy has forecast Iran’s economy to grow at an annual average rate of 4.5% in 2016–18.

The bank, in Iran Economic Monitor for fall, has revised up the real GDP growth for 2016 by 0.1 percentage points at 4.3%, reflecting a larger increase in oil and gas production. In particular, the oil and gas sector is projected to grow by 14.5% in 2016 up from 12.9% in the previous estimate.

The parliamentarians also set an average annual growth target of 6.7% for Iran's gross national product.

> Inflation Target Set at 8.8%

The approval sees average inflation rate throughout the Sixth Plan standing at 8.8%.

The average goods and services Consumer Price Index for urban areas in the 12 months ending December 20, which marks the end of the Iranian month of Azar, increased 8.6% compared with last year’s corresponding period, according to the latest report released by the Central Bank of Iran.

The CBI had put the inflation rate for the preceding month of Aban, which ended on November 20, at 8.6% as well. The overall CPI (using Iranian fiscal year to March 2012 as base year) stood at 252.9 in Azar, indicating a 1.4% growth compared with the previous month.

The index registered a year-on-year increase of 9.2% compared with the similar month of last year.

The CBI report came after the Statistical Center of Iran put Aban inflation at 7.2%.

The government of President Hassan Rouhani lowered runaway inflation that hit above 40% during the former administration to below 10% for the rolling year ending June 20 for the first time in a quarter century.

> 10.2% for Unemployment

As for unemployment, the MPs estimated a 10.2% average rate for the five-year period ending March 2021.

According to the latest figures released by SCI, the unemployment rate in the second quarter of the current Iranian year (June 21-Sept. 20, 2016) stood at 12.7%. The figure registers a 1.8% increase compared with last summer and a 0.5% rise compared with the previous quarter (March 20-June 20, 2016).

The new data show 3.33 million Iranians were unemployed in Q2. It also shows 10.4% of men and 21.8% of women of ages 10 and above were jobless during the period.

The unemployment rate was 14.4% for urban areas and 7.9% for rural areas. Joblessness was higher among women compared to men and among those living in urban areas.

The youth unemployment rate, i.e. the proportion of the population between the ages of 15 and 29, stood at 26.7% in summer, registering a 3.3% rise compared with the same period of last year and a 1.8% increase over last quarter.

Other forecasts by the MPs include a 21.4% average annual growth for gross fixed capital formation; an average annual liquidity growth rate of 17%; an average annual productivity growth rate of 2.8%; a 5% average annual growth in government spending; 21.7% average annual growth in non-oil exports and a 16.9% in overall imports.

According to the Islamic Republic of Iran Customs Administration, Iran’s non-oil foreign trade stood at $81.38 billion in the last Iranian year (March 2015-16). Imports amounted to $40.13 billion—down 22.77% compared with the preceding year.

Exports reached $41.24 billion, indicating a 16.3% drop.

IRICA's latest statistics show non-oil foreign trade during the nine months of the current Iranian year (started March 20) stood at $63.12 billion.

About 91.26 million tons of commodities worth $31.59 billion were exported during the period, registering a 9.05% rise in value compared with the corresponding period of last year.

Imports stood at 24.86 million tons worth $31.53 billion, indicating a 4.38% rise in value year-on-year.

screwball · January 11, 2017

Five petrochemical projects are expected to go on stream by the end of the current fiscal year in March 2017, the head of National Petrochemical Company said.

"Phase 2 of Kavian Petrochemical Complex with an annual production capacity of 1 million tons and Phase 2 of Morvarid Petrochemical Company whose annual output stands at 550,000 tons, in addition to Takhte Jamshid and Entekhab petrochemical complexes, each with an annual production capacity of 250,000 tons will become operational by mid-February," Marzieh Shahdaei was quoted as saying by Mehr News Agency.

She added that plans include the completion of Phase 2 of Pardis Petrochemical Company with an annual production capacity of 1 million tons by the yearend.

Asked about other ongoing projects, Shahdaei said three units in Bushehr Petrochemical Complex and Marjan Methanol Plant—aka 7th Methanol Project—in Phase 2 of South Pars in Asalouyeh will become operational next year.

Commenting on Iran's annual installed petrochemical capacity, the official added that the capacity stands at 64 million tons, although plans are in place to boost it by 40 million tons over the next five years and reach 100 million tons a year.

“By 2026, the annual installed petrochemical capacity is planned to reach 140 million tons,” she said.

Underscoring the participation of renowned international companies in Iran’s petrochemical industry after the lifting of sanctions in January, she said expanding petrochemical exports, opening up banking channels and negotiations with foreign investors have resulted from the nuclear deal with six world powers.

Shahdaei announced that Iran has signed memoranda of understanding with the French oil and gas giant Total and the German Linde Group, stressing that the agreements should pave the way for contracts in about a year.

“Plans call for signing MoUs with two other international petrochemical firms,” Shahdaei said without providing details.

The NPC chief noted that Iran exported 10 million tons of petrochemicals, worth $9 billion, in the first 10 months of the current fiscal year.

"The lion's share of outbound petrochemical consignments went to Asia, Europe and South America," she said, adding that export of petrochemicals saw a rise in terms of weight compared with the same period of the previous year, but declined in value.

According to Shahdaei, Iran holds 38% of the petrochemical market in the Middle East, but only produces 4.8% of the world's petrochemicals despite sitting on some of the world's largest crude oil and natural gas reserves.

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screwball · January 11, 2017

Ahigh-level international commission that oversees the 2015 nuclear deal convened on Tuesday to address Iran's complaint over the extension of a US sanctions law for another 10 years.

A US bill to renew the Iran Sanctions Act won unanimous congressional approval and became law last month without requiring a presidential signature, IRNA reported.

ISA was first adopted in 1996 to target Iran's energy sector and would expire by the end of 2016, if it were not renewed.

The meeting, held in Vienna, Austria, at the request of Foreign Minister Mohammad Javad Zarif, was co-chaired by his deputy for legal and international affairs, Abbas Araqchi, and EU political director, Helga Schmid.

Schmid and Araqchi and another Iranian deputy foreign minister, Majid Takht-Ravanchi, held talks hours before the meeting of the Joint Commission, a panel of representatives from all parties to the historic pact tasked with monitoring it and addressing issues that arise from its implementation.

Top Iranian officials have railed against ISA, denouncing it as a violation of the accord, which was negotiated between Iran and the six powers and put in place a year ago to lift international sanctions in return for curtailing Tehran's nuclear program. They have threatened to retaliate.

***No Toleration for Violations

"We will not tolerate that a state party to the JCPOA violates its commitments under various pretexts. The Islamic Republic of Iran will provide appropriate response to such moves," Araqchi told IRNA on Monday.

Iran's nuclear deal is officially known as JCPOA, which stands for the Joint Comprehensive Plan of Action.

Delegations from the US and Iran, the main parties to the ISA dispute, had discussed the issue at the level of experts on Monday, following a meeting at the same level between all seven parties to the agreement.

Based on the dispute resolution mechanism envisaged in the deal, Iran can take its grievances to the Joint Commission and if the issue remains unresolved, to foreign ministers of the parties to the accord and finally to an advisory board, which would consist of three members, one independent and the other two appointed by each of the participants in the dispute.

If the issue is still not resolved and Iran deems it as constituting a breach of the nuclear deal, it could treat it as grounds to cease performing its commitments in whole or in part and/or notify the UN Security Council that it believes the issue constitutes a significant non-performance.

In response to the US sanctions move, President Hassan Rouhani has ordered the Atomic Energy Organization of Iran to start developing systems for setting up a nuclear-powered marine system and the fuel to power it.

Rouhani has tasked Zarif with using the deal's mechanism to counter any breach committed by the other side to the accord and report to him monthly.

A committee on the action plan under the Supreme National Security Council that comprises top Iranian officials convened on December 7 to decide how to respond to the US legislation.

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screwball · January 11, 2017

54 Projects for Payment Industry Overhaul

The Central Bank of Iran has devised 54 projects and platforms as part of its 2021 Roadmap that outlines an innovative, flexible and strong future for the banking system, announced the bank’s deputy for innovative technologies.

“A total of 54 strategic projects have been defined in the 2021 Roadmap, which include platforms to improve the infrastructure of information technology and payment in the country,” Ali Kermanshah also said in a talk with IBENA.

Kermanshah last week announced in the Sixth Conference on E-Banking and Payment Systems held in Tehran that the blueprint is set to define an appropriate role for fintech companies in the Iranian banking system.

“CBI plans to develop a number of electronic systems, mainly to upgrade Iran’s banking system and put customers at the center of banking services,” he had said at the time.

He had also mentioned that the platforms of the roadmap are concerned with conducting banking operations, implementing monetary policies, offering payment services and enhancing ITC services.

In his latest remarks, the official said the central bank has been at work for the past few years to develop the roadmap centered on information technology, therefore the bank has decided to overhaul the sector.

Referring to the 54 projects, Kermanshah said they “include all areas of banking operations from monetary policymaking to supervision and economic reviews, as well as improvement of information technology and payment infrastructures”.

Kermanshah noted that overhauling the information technology has become one of the most serious tasks of the central bank, which will be centered on devising rules, regulations and standards “based on knowledge” to explore the full potential of the sector.

Overhaul of Regulations

Noting that the current regulations in the country are not in line with the latest banking technology, the CBI official added that at times technology progresses faster than laws and “therefore we need to develop regulations and regulators in this sector”.

“Under the prevailing ambiguous regulations, banks, clients and supervisory entities cannot do their work and they cannot set the course of their activities for meaningful development in a collaborative atmosphere,” he said.

To stop the expansion of this regressive trend, Kermanshah added that the 2012 Roadmap has also been steered in this direction and will include a number of projects that aim to reform and improve the regulations.

The CBI had previously announced plans to launch a new regulatory body specifically for fintech firms. Shaparak Company, a CBI-affiliated entity in charge of supervising payment networks, will help the CBI in training, implementing and supervising innovative firms.

Unofficial reports show more than 50 fintech firms are operating in Iran, all of which have developed in the past three years.

The CBI official referred to the recent expansion of these firms, but warned that “we are behind in terms of standards, regulations and safety” as a result of being cut off from the international community that took place after western-imposed sanctions.

According to Kermanshah, the Iranian payment sector must undergo a significant change to create a modern and effective system.

“This is needed so that its players, big and small, can reap its benefits through constructive interaction,” he said.

screwball · January 11, 2017

The Coordination Council of Public-Sector Banks announced on Sunday it will waive late payment penalties for those who repay their loans by the end of the Iranian year on March 20.

Alireza Qeitasi, the council’s secretary, said the measure is in line with Majlis plans for removing the production sector’s hurdles and "aims to promote the banking sector and increase the bank's role in boosting employment in the country”, IBENA reported.

The official added that the measure includes all debtors [irrespective of the amount owed].

Bank Melli Iran became the first lender on Monday to announce the measures.

Back in September, Majlis Speaker Ali Larijani asked bankers to set easier repayment terms for debtors and waive fines for late loan repayment, especially for creditworthy customers, noting that regulations allow the banking sector to ease loan terms.

Valiollah Seif, Central Bank of Iran’s governor, on Sunday announced that the ratio of non-performing loans in Iran’s banking sector stood at 11% by September 20, down from 13.6% in September 20, 2014. However, he called on bankers to continue taking calculated measures “until the ratio reaches the 5% goal”.

The top banker required lenders to revise their methods of assessing applicants’ creditworthiness along with an efficient mechanism for supervising the implementation of reforms in all their units and branches, mainly to prevent the growth of bad debts in the key banking sector.

It was reported that the NPLs of banks have more than quadrupled from 204.87 trillion rials ($6.4 billion) in 2007 to 863.42 trillion rials ($27.1 billion) in 2015. Banks have recovered 203 trillion rials ($6.3 billion) of their non-performing loans in the past three years.

The government has repeatedly warned bad debtors of strict measures if they do not immediately repay their debts to the banking system.

Judiciary Spokesman Gholamhossein Mohseni Ejei this week announced that it has arrested three major debtors. They collectively owe about 30 trillion rials ($762 million at the market exchange rate) to the banking sector.

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screwball · January 11, 2017

Just now, screwball said:

said the measure is in line with Majlis plans for removing the production sector’s hurdles and "aims to promote the banking sector and increase the bank's role in boosting employment in the country”

screwball · January 11, 2017

Majlis plans? Hmmmm...they Re the ones that will approve the delete zeros one or four!

screwball · January 11, 2017

Considering majlis want four and cabinet want one, this will be interesting...

screwball · January 11, 2017

Iran to Launch First New-Style Oil Tender in 4 Weeks: Official

News ID: 1293261 Service: Economy

January, 10, 2017 - 19:54

TEHRAN (Tasnim) – A senior Iranian oil official announced that the development of a big oilfield in the southwestern province of Khuzestan will be put to tender for the first time under a new model of oil contracts, known as Iran Petroleum Contract (IPC), within up to four coming weeks.

The project to develop South Azadegan oilfield, would be Iran’s first international tender, the deputy head of the National Iranian Oil Company (NIOC), Gholamreza Manouchehri, said on Monday.

Fortunately, the documents of the tender have been almost finalized, he said, adding according to the schedule, the development project of the South Azadegan oilfield will be put out to tender by the next four weeks.

Manouchehri also said Japan’s Inpex Corporation, which has signed a memorandum of understanding (MoU) with the NIOC to carry out studies on the development of the South Azadegan oilfield, has submitted its first phase of the studies.

He added that the company is well qualified to participate in the upcoming tenders, including the tender for the South Azadegan oilfield.

The new oil and investment contract for international firms, known as the IPC, will replace Iran’s buyback oil deals. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

Iran worked on the oil contract model for two years. The country hopes to draw as much as $50 billion a year from major oil companies such as Italy’s Eni SpA and France’s Total to develop its oil and gas fields in the wake of a lasting nuclear deal between Tehran and world powers.

There has been growing enthusiasm for ties and cooperation with Iran since a lasting nuclear deal between Iran and the Group 5+1 (Russia, China, the US, Britain, France and Germany) took effect on January 16, 2016.

The deal, also known as the Joint Comprehensive Plan of Action (JCPOA), terminated all nuclear-related sanctions on Iran and prepared the ground for a much-anticipated economic boom.

screwball · January 11, 2017

Newly-purchased Airbus to land in Tehran tomorrow

News ID: 3874241 - Wed 11 January 2017 - 13:32

Economy

TEHRAN, Jan. 11 (MNA) – Iran Air spokesman had announced that the first Airbus A321 aircraft will arrive at Mehrabad International Airport on Thursday January 12 at 14:30 local time.

Shahrokh Nushabadi made the announcement adding that the airplane had been scheduled to leave Hamburg Airport of Germany for France’s Toulouse Blagnac Airport on Tuesday after going through technical tests.

“According to the timetable, the Airbus A321 aircraft will be guided by Iranian pilots from Toulouse to Tehran on Thursday before landing in Mehrabad International Airport at 14:30,” he continued.

Spokesperson of Iran Air, the Iranian national flag carrier, recalled that a receiving ceremony will be held in Tehran with a number of military and government officials at attendance.

Following implementation of the Joint Comprehensive Plan of Action (JCPOA) and removal of cruel sanctions, Airline of the Islamic Republic of Iran managed to sign a contract for purchasing 180 aircraft from Airbus and Boeing and the French company will deliver three aircraft by the end of the current Iranian calendar year (to end March 21).

The Airbus A321 is a member of the Airbus A320 family of short- to medium-range, narrow-body, commercial passenger twin-engine jet airliners manufactured by Airbus.

Iran Air has announced that the 190-seat Airbus will be exploited in domestic flight routes after delivery.

screwball · January 11, 2017

P5+1 must honor Iran bans removal commitments: Joint commission

The Iran-P5+1 commission monitoring the implementation of the 2015 nuclear deal has emphasized the need for all relevant parties to honor their obligations under the accord, particularly those related to the lifting of anti-Iran sanctions.

In a Tuesday press release following its sixth meeting in Vienna, the Joint Commission said “all sides reaffirmed their strong commitment to continued full and effective implementation of the JCPOA,” using an acronym for the nuclear accord, called the Joint Comprehensive Plan of Action.

“The Joint Commission underscored the sanctions lifting commitments contained in the JCPOA, in particular as they relate to the Iran Sanctions Act (ISA),” read the statement, referring to the US sanctions law which has been in place against the Islamic Republic since 1996.

The body also “recognized the United States’ assurance that extension of the Iran Sanctions Act does not affect in any way the sanctions lifting Iran receives under the deal or the ability of companies to do business in Iran consistent with the JCPOA.”

The JCPOA was clinched in July 2015 between Iran and the P5+1 group of countries, which gathers the US, the UK, France, Russia and China plus Germany.

As per the accord, which came into force in January 2016, the six world powers committed to lift the nuclear-relation sanctions, while Iran agreed to limit its nuclear work in certain aspects.

However, in a highly controversial move, the US Congress voted last December to extend the ISA for another 10 years. The law authorizes the US president to re-impose the bans. It was first adopted in 1996 to punish investments in the Islamic Republic over its nuclear program and its support for anti-Israeli resistance groups.

Outgoing US President Barack Obama later withheld his signature from the bill. White House Press Secretary Josh Earnest said, though, that the US commander-in-chief had allowed the proposed legislation to be signed off into law forgoing his signature. US President-elect Donald Trump has also threatened to scrap the deal.

This is while the International Atomic Energy Organization (IAEA), which monitors the technical implementation of the Iran deal, has repeatedly confirmed Tehran’s compliance.

Tehran views the ISA’s extension as a violation of the JCPOA, but Washington argues the measure will have no impact on the deal’s implementation.

The Vienna meeting focused on the concerns raised by Iran’s Foreign Minister Mohammad Javad Zarif over Washington’s move in a message to the European Union foreign policy chief Federica Mogherini, who coordinates the commission’s work.

Following the talks, Iranian Deputy Foreign Minister for Legal and International Affairs Abbas Araqchi, who headed Tehran’s delegation, said the Islamic Republic “explained its concern on the extension,” adding, “I think the joint commission took Iran’s concern very seriously.”

screwball · January 12, 2017

The research arm of the Iranian Parliament has published a report on fluctuations in the foreign exchange market during the past few months, advising the Central Bank of Iran to do what it takes for free-floating the rial against other currencies.

The Majlis Research Center points out that the sudden surge in foreign exchange rates against the rial has rocked the money markets every now and then from the start of the last decade, IBENA reports.

The latest such volatility came in November in which "the nominal value of rial weakened against many foreign currencies and gave rise to many questions and much confusion among economic policymakers and businesses, especially the parliament", MRC's report states.

The US dollar began its rally against the rial from November steadily, with the threshold of 40,000-rial per dollar being broken in December. The rial has since gained some ground, with rial at 39,700 to $1 as of Wednesday.

In examining the history of currency market unrest in the country, the parliamentary body concluded that "in the past few years, the fundamental settings for an increase in forex rates have gradually formed and therefore fluctuations in the currency market are not compatible with fundamental variables".

However, the research body adds that a global increase in the value of the greenback, the US elections, a seasonal hike in demand for businesses and a surge in foreign trips and lack of distribution of non-oil foreign exchange during autumn may have influenced the issue.

MRC reports that "the root of recurring fluctuations in the currency market" can be traced back to a policy adopted by the administration and the central bank to "hold on to nominal exchange rates" in exerting its control over the market.

This policy will entail certain repercussions, states the report, such as weakening government control over monetary variables even as the administration tries to maintain a specific value for the rial.

"This will in turn prepare the ground for inflation and the rise in real exchange rates will bring about a gradual increase in demand for foreign currency and hurt domestic industries' competitive edge against their foreign rivals. As a result, with the passing of a number of years, demand for currency will go beyond the capabilities of the central bank and the market will experience fluctuations," the report said.

The research center proceeds by concluding that "the right policy will be to maintain the stability of real exchange rates" which has been referred to in the Fourth and Fifth Five-Year Development Plans.

It also presents other solutions for the government, the central bank and the Securities and Exchange Organization, including improving transparency in the foreign exchange market, decreasing demand for paper currency by free-floating the rial, creating new entities such as the currency futures market and implementing currency swap agreements.

"Considering the totality of fundamental and short-term factors mentioned in the report, MRC predicts that fluctuations in the currency market will abate in the final two months of the current fiscal year (January 20-March 20), but this should not prevent policymakers from implementing major reforms in the currency market."

Focus on Production, Unified Rates

Asadollah Asgaroladi, the head of Iran-Russia Chamber of Commerce, believes that the country must part ways with outdated thinking and push for a unified exchange rate.

"What we are witnessing in the country is a bias over maintaining the value of the national currency. We have no choice but to abandon this thinking and see what the world is doing for fostering production," Asgaroladi said in a talk with Exim News website.

The prominent businessman also suggested that the government unify Iran's dual exchange rates by setting a baseline of 40,000 rials for the greenback.

"We have to remove the current rates such as the 32,000-rial official dollar rate and the parliament must change the 33,000-rial rate devised for the dollar in the annual budget," he said.

"Considering the situation of the market, a rate of between 38,000 rials and 40,000 rials per dollar would be a suitable rate for the dollar and we must move toward rate unification on that basis."

Iran currently uses two official and unofficial currency rates. The central bank and several administrations have discussed the issue of unifying these rates as they pave the way for corruption, but the plan is yet to be implemented.

This is while central bank and top-tier administrative officials have repeatedly promised the plan's implementation by the end of the current fiscal year in March, which seems less than certain now.

screwball · January 12, 2017

he Central Bank of Iran has issued licenses for 200 credit cooperatives since the beginning of the current Iranian year (started March 20, 2016), CBI’s deputy for supervisory affairs announced on Wednesday.

“The central bank has also finalized the plan for authorizing about 3,000 interest-free funds … Both measures are in line with CBI’s plans to regularize the informal money markets,” Banker.ir also quoted Farshad Heydari as saying.

“CBI’s permission is required for the operation of credit cooperatives,” he added.

As per the law, each credit cooperative should have at least 50 founders and a minimum capital asset of 200 million rials ($7,000) to receive a permit.

Based on a memorandum of understanding signed between the CBI and the Ministry of Cooperatives, Labor and Social Welfare last year, 600 credit cooperatives will be authorized to operate in the money market.

CBI currently issues licenses for leasing companies, exchange operators, interest-free funds, credit cooperatives and credit institutions. About 7,000 financial institutions are active in Iran’s money market and a majority of them are not authorized yet.

Rating Banks

Referring to plans for rating domestic banks, Heydari said banks are currently rated according to international standards.

“By rating lenders, CBI seeks to promote a healthy banking sector. Rating helps us quickly recognize problems in banks’ operations,” he said.

The official added that the CBI has informed bank executives of some problems in their operations, giving them some time to address the issues.

Heydari did not provide more details about the outcome of rating procedures.

In early September, Heydari had announced that the rating process for Iranian banks will commence in late October and lenders would be classified into four main groups.

However, later in another statement, he said banks’ rankings would not be made public.

The rating of banks has long been overdue, considering that certain unruly banks and rogue financial institutions had in the past decade disrupted the money market, giving the whole banking system a bad name.

In mid-July, representatives from international rating agencies visited Tehran to begin negotiations regarding the rating of Iranian banks and companies.

At the time, Ali Divandari, the head of Monetary and Banking Research Institute, emphasized the importance of rating by credible international agencies, calling it a prerequisite to normal ties between Iranian and major international banks.

screwball · January 12, 2017

For Islamic banking, the opening up of Iran is a huge development, as Iranian banks make up the world’s largest financial system based on Islamic law, with Islamic banking assets totaling $500 billion.

A large number of sukuk and other Islamic securities from Iran are expected over the next few years. Estimations are that there are over 150 Iranian companies considering Islamic sukuk sales.

Iran also requires funds for its infrastructure development programs estimated at around $1 trillion over the next decade, according to a report published by Forbes.

Industry projections for Islamic banking are generally positive, driven by the significant unmet demand, despite the prevailing macroeconomic and political challenges across the region.

Credit expansion in the region has been impacted by the low oil price, although Islamic financing has continued to grow. Key public sector corporations and private real-estate developers have considerable appetite for Islamic financing both at bank and capital market levels. Retail banking will continue to expand aided by technology developments and, on the wholesale front, large-scale corporate financing, project finance and debt capital market deals also represent growth opportunities.

In the past, Islamic banks were lagging behind their conventional banking counterparts in terms of innovation, technology and service, which are not only important to defend market franchises but also crucial as a differentiator in a competitive market environment.

However, many banking entities in the Persian Gulf and the Middle East, which have performed well over the last few years, have become early investors in technology, targeting product and service innovation as a central theme of their strategy. Technology is changing rapidly in the banking sector and the intermediary link between institutions and customers has become less direct as other non-bank players enter the market.

Product innovation and the increasing use of mobile banking and apps are helping Islamic banks in the region to widen their reach to customers, particularly those that were previously un-banked or under-serviced.

Technology and product innovation is removing the service and delivery distinction that was present in the past between Islamic and conventional banks. Increasing product launches for Islamic banks are providing customers with a wider range of financing solutions that were previously not available, forcing some to turn to conventional banking when otherwise they would not. This is helping to support growth in the sector.

Islamic banks in the region are building their activities in key sectors of the economy. Retail banking has traditionally been the mainstay of Islamic banking in the region. Here, investment in digital and smartphone banking will be crucial in future.

In the region, attitudes and expectations have changed at a rapid speed due to a young population that is increasingly mobile and has greater access to media and technologies.

According to Ernst & Young, the boards of most of the important Islamic banks in the region have been generous in sanctioning spending on digital initiatives—between $15 million and $50 million over the next three years—well aware that inaction could cost up to 50% of their retail banking profit in the next few years.

Another major development for Islamic banks in the region is the flurry of capital increases, with Islamic banks building their capital and liquidity bases for Basel III purposes and to support future growth.

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screwball · January 12, 2017

An Airbus A321 is due to land in Tehran’s Mehrabad International Airport today at 2:30 p.m. local time, which marks the first delivery from the 100 jetliners state carrier Iran Air ordered from the French planemaker in January last year.

Iran Air Spokesman Shahrokh Noushabadi said on Wednesday the plane was expected to fly to Airbus headquarters in Toulouse, France, after final technical tests were carried out in Hamburg, Germany, where the jet was assembled, IRNA reported.

The delivery comes days before the anniversary of the implementation of Iran’s landmark nuclear deal with the world powers on January 16, 2016, when the US, EU and the UN lifted sanctions against Iran. In exchange, Iran agreed to scale back its nuclear program.

Soon after the deal’s implementation, President Hassan Rouhani travelled to France where Iran Air CEO Farhad Parvaresh signed a draft agreement for the historic order from Airbus. The deal was finalized on December 22, after almost a year of shuttling between Airbus and Tehran.

The airbus deal, including 46 of the narrow-body A320 family that includes the A321 model, 38 long-haul A330s and 16 of Europe's newest long-range model, the A350, has an estimated catalogue value of $18-20 million, though Iran says it is paying no more than $10 billion to Airbus.

Although the first jets use an Airbus backdrop financing, Iran says it has reached agreements with major financiers in Persian Gulf states and China to finance the rest of the planes.

It is widely believed that once the Airbus deal makes progress, it will pave the way for major companies and large financial institutions to start doing business with Iran.

> Airbus Officially Books Iran Order

Airbus has placed the Iran order in the list of its firm deals.

Reuters said on Wednesday the French company has officially booked a deal to sell 98 aircraft to Iran Air, part of a surge in new orders at the end of last year.

The European planemaker said it won 731 net aircraft orders in 2016, including 321 in December alone. This allowed it to beat American planemaker Boeing in the race for new orders.

Iran Air has also placed a deal with the American company to purchase 80 aircraft worth $17 billion.

Both companies have received permits from the US Treasury Department to sell jets to Iran. However, the deals are expected to go through, despite the potential opposition of the incoming US President Donald Trump, which has been a staunch critique the nuclear deal. Trump has prioritized job generation.

The Airbus deal’s success is also expected to sharpen efforts by Boeing to persuade the Trump administration to allow the trade to go ahead, aviation experts believe.

The two planes manufacturers are arch-rivals. Nonetheless, their dealings with Iran go hand in hand, as each is contingent on continued US clearances for the sale of planes built with US parts.

Boeing needs a powerful lobby to push against efforts by Republicans belonging to the Israeli lobby in the US House of Representatives, who have pledged to cancel the deals at any point.

On the domestic front, President Rouhani is banking on the first deliveries to show tangible results of the nuclear deal, also known as Joint Comprehensive Plan of Action, which in turn would help him secure a reelection in the next presidential elections in May.

Iran expects the delivery of a total of eight Airbus planes, including one A321 narrow-body and two long-range A330s, along with ATR planes before March 20.

Local media have heartily welcomed the upcoming delivery of the new plane. The Persian newspaper Shargh wrote on Wednesday: “The delivery will in effect end 40 years of sanctions against Iran."

Another Iranian newspaper Etemad wrote: "It seems like Iranian aviation authorities have kept their word. Now we can be more optimistic about their promises in the future."

Iran is in dire need of the new planes to rejuvenate its dilapidated air fleet of about 250 planes. But the new delivery’s symbolic value outweighs its technical one.

Despite isolation, the Islamic Republic has operated and maintained its aging fleet for four decades. In 2016, Kish Airlines received three secondhand Airbus planes to help reduce its fleet age.

Today, Iranian officials have planned a ceremony in Mehrabad Airport to receive the newly purchased plane painted in Iran Air livery and carrying the Iranian flag, to show off the first tangible benefit of the nuclear deal.

screwball · January 12, 2017

Silence best strategy of Airbus on ambiguities of Iran Air deal

News ID: 3874312 - Wed 11 January 2017 - 15:43

Opinion > Interview

TEHRAN, Jan. 11 (MNA) – Despite the need for compensation payment to Iran in case sanctions are reapplied, Airbus Middle East Regional Director Fouad Attar uses silence as the best tactic in the face of present uncertainties in Airbus-Iran Air contract.

With almost one year after implementation of the nuclear deal between Iran and the 5+1 group of countries and promises made by Iranian officials that restrictions on various economic sectors have been removed, the first out of one hundred Airbus aircraft is slated to land in Iran tomorrow on Thursday January 12. The airplane, which is of Airbus A321 type, will leave Hamburg Airport for Toulouse Blagnac Airport and will depart France tomorrow before arriving at Tehran’s Mehrabad International Airport at 14:30.

Piecemeal delivery of aircraft to Iran begins as of tomorrow while the delay in issuance of OFAC license casted doubts to achieving a final agreement between the two parties for several times. According to the preliminary schedule, eight Airbus planes were to be delivered to Iran in 2016 though the process was postponed to 2017 and the first aircraft is arriving in Tehran only half-way through January 2017.

Nevertheless, Airbus enjoys better conditions than Boeing for sales of aircraft to Iran since a larger number of Airbus airplanes have received necessary finances as well as that the French company has agreed to undertake financing of 19 aircraft.

If truth be told, 42 out of 100 Airbus aircraft and only 5 out of Boeing airplanes have received financial resources and estimations reveal that the Airbus contract will enjoys a smoother implementation than that of Boeing.

The significance of delivery methods for 100 Airbus products, financing issues and required warrantees for repayment of installments not to mention arrival of the first Airbus A321 all paved the way for an exclusive interview with Fouad Attar, Managing Director of Airbus Middle East in a bid to shed light on certain details of the deal which, so far, have not received media coverage.

Fouad Attar, in his interview with Mehr New Agency, stressed that his companies contract with Iran had become finalized. The official however left a number of questions unanswered using a sparkling wittiness and on the account that the provisions of the contract were ‘confidential’. One of the questions that remained unresolved pertained to venues for paying compensation to Iran in case International sanctions against Iran were reapplied.

The deal predicted delivery of 8 passenger planes by the end of 2016; however, no such delivery became realized; apart from OFAC permissions, what other problems would be at work?

Now that OFAC licenses have been granted to us and that we have signed a firm contract with Iran air, consequently we will now start preparing for delivery. We are looking forward to deliver Iran Air’s first aircraft on 11 January 2017.

How Iran would receive 100 remaining planes by 2024; when would Iran receive the first of the planes?

We are pleased to announce that a delivery ceremony for the first Aircraft is now planned for 11 January 2017. More details to come in due course.

Which financial institutions and banks will finance the purchase deal?

These financial details are customer confidential.

Iran and Airbus have reportedly signed an MoU which allows Iran to receive license from Airbus to develop some specific spare parts. Would you elaborate more on this?

In parallel of initial commitment signed in January 2016 in Paris, we have also signed with Iran’s Minister of Roads and Urban Development, a comprehensive co-operation agreement as part of the country’s modernization of its civil aviation sector, to support the development of air navigation services (ATM), airport and aircraft operations, regulatory harmonization, technical and academic training, maintenance, repair and industrial cooperation.

What will be the mechanism for payment and other liabilities Iran has to Airbus?

Payment mechanism is the same as for all our customers, in full compliances with applicable laws & regulations including with the JCPOA (Joint Comprehensive Plan Of Action).

What guarantees and measures have been considered to prevent any delay or lack of payments?

We do not discuss or comment on contractual details.

What sort of additional services would Iran Air be eligible to provide in Airbus planes (for passenger welfare, for example)?

We are delighted that Iran air has decided to modernize and build its fleet with Airbus products, the firm contract of 100 aircraft spans from Airbus’ single-aisle A320 Family to the wide body A330 Family and the A350 XWB. This will provide Iranian flag carrier with a modern, highly efficient fleet capable of meeting its full air transport needs – from regional routes to high-density, long-haul operations.

Airbus cabins are designed to offer passengers and airlines the highest levels of comfort, services and efficiency. All Airbus aircraft – from the single-aisle to the wide body family – are designed for today’s comfort standards, benefiting travelers and the airlines that carry them.

How many planes would be delivered to Iran within the deadline set by OFAC?

Our agreement with Iran air covers 46 A320 Family, 38 A330 Family and 16 A350 XWB aircraft, first aircraft delivery is planned for January 11th 2017.

Would Iran-Airbus agreement be called a binding deal or is it still a deal on paper? If it is still on paper, when would a binding final deal be expected?

Yes, the deal with Iran Air is a binding deal, we have signed a firm contract for 100 aircraft and the first delivery is planned for 11 January 2017.

If sanctions snap back, Boeing will return back Iran the net amount of money plus the interests accrued. Is there any such article in deals with Airbus as well?

Airbus coordinates closely with regulators in the EU, US and elsewhere to ensure understanding and full compliance with the JCPOA (Joint Comprehensive Plan of Action). We do not discuss or comment on contractual details.

Why in the deal with Airbus, wide-body A380 is missing from the list?

As Airbus we are proud to be offering a full family of aircraft per size category and generally overtime we see a strong global trend for customers sizing up their commitments.

Fouad Attar joined Airbus Middle East in 2006 as Deputy President - head of commercial. He graduated from the Ecole Nationale Superieure de L’Aeronautique et de l’Espace (Sup’Aero) as an aeronautical engineer and holds a business and management degree from IAE Toulouse. Attar started his career at Airbus in 1984 as a flight simulator engineer at the Airbus Training Centre in Toulouse. With over 25 years of aviation experience, Attar has considerable aviation industry experience and has contributed to the growth of the sector in the region.

Interview by Zohreh Alami, Hamid Reza Gholamzadeh

markb57 · January 12, 2017

22 hours ago, screwball said:

Ahigh-level international commission that oversees the 2015 nuclear deal convened on Tuesday to address Iran's complaint over the extension of a US sanctions law for another 10 years.

A US bill to renew the Iran Sanctions Act won unanimous congressional approval and became law last month without requiring a presidential signature, IRNA reported.

ISA was first adopted in 1996 to target Iran's energy sector and would expire by the end of 2016, if it were not renewed.

The meeting, held in Vienna, Austria, at the request of Foreign Minister Mohammad Javad Zarif, was co-chaired by his deputy for legal and international affairs, Abbas Araqchi, and EU political director, Helga Schmid.

Schmid and Araqchi and another Iranian deputy foreign minister, Majid Takht-Ravanchi, held talks hours before the meeting of the Joint Commission, a panel of representatives from all parties to the historic pact tasked with monitoring it and addressing issues that arise from its implementation.

Top Iranian officials have railed against ISA, denouncing it as a violation of the accord, which was negotiated between Iran and the six powers and put in place a year ago to lift international sanctions in return for curtailing Tehran's nuclear program. They have threatened to retaliate.

***No Toleration for Violations

"We will not tolerate that a state party to the JCPOA violates its commitments under various pretexts. The Islamic Republic of Iran will provide appropriate response to such moves," Araqchi told IRNA on Monday.

Iran's nuclear deal is officially known as JCPOA, which stands for the Joint Comprehensive Plan of Action.

Delegations from the US and Iran, the main parties to the ISA dispute, had discussed the issue at the level of experts on Monday, following a meeting at the same level between all seven parties to the agreement.

Based on the dispute resolution mechanism envisaged in the deal, Iran can take its grievances to the Joint Commission and if the issue remains unresolved, to foreign ministers of the parties to the accord and finally to an advisory board, which would consist of three members, one independent and the other two appointed by each of the participants in the dispute.

If the issue is still not resolved and Iran deems it as constituting a breach of the nuclear deal, it could treat it as grounds to cease performing its commitments in whole or in part and/or notify the UN Security Council that it believes the issue constitutes a significant non-performance.

In response to the US sanctions move, President Hassan Rouhani has ordered the Atomic Energy Organization of Iran to start developing systems for setting up a nuclear-powered marine system and the fuel to power it.

Rouhani has tasked Zarif with using the deal's mechanism to counter any breach committed by the other side to the accord and report to him monthly.

A committee on the action plan under the Supreme National Security Council that comprises top Iranian officials convened on December 7 to decide how to respond to the US legislation.

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seems this US sanction is still holding things up. hopefully they can come to an agreement. I'm surprised the other nations involved in the 5+1 will tolerate the US sanctions.

screwball · January 12, 2017

Maersk Line has expanded its footprint in Iran by adding a second port of call less than three months after it resumed services to the country following the lifting of sanctions imposed on Tehran because of its nuclear program.

The Danish carrier, which suspended services in 2012, has added the port of Bushehr to its Iran coverage, which was relaunched with calls to Bandar Abbas in October, the US-based biweekly magazine The Journal of Commerce reported on its website.

Maersk, which also has an office in Tehran, the Iranian capital, said it selected the port because it is the largest gateway for transportation of goods in the province of Bushehr, with an annual throughput of 7 million tons.

The port of Bushehr can provide all containerized cargo services and, most significantly, refrigerated products.

The port has 400 reefer plugs and cold-storage warehouses with a total capacity of 5,000 tons and has easy access to local markets and is a short distance from ports in neighboring countries, including Saudi Arabia, Qatar and Bahrain, Maersk said.

The first direct weekly feeder sailing from the port of Jebel Ali in the UAE to Bushehr, the 3,400-TEU containership Inter Sydney, was launched on January 4.

When Maersk first resumed service to Iran, the company said the market was estimated at about 700,000 forty-foot-equivalent units.

Iran’s largest trading partners in first 11 months of 2016 by value were China, the UAE, South Korea, Turkey and Germany, according to Global Trade Atlas, a sister product of JOC.com within IHS Markit.

China and the UAE were by far the largest trading partners with Iran, amounting to 24.3% and 15.9%, respectively, of Iran’s international trade volumes, according to GTA. South Korea accounted for 8.1%, Turkey was 6.9% and Germany 5.5%.

Maersk’s 2M partner Mediterranean Shipping Company resumed full service to Iran much earlier than the Danish carrier, with a ship with a capacity of 9,000 TEU units calling at Bandar Abbas on Dec. 31, 2015.

MSC partially resumed service to Iran in April 2014, employing a third-party feeder service that enabled cargo to be transshipped at Jebel Ali.

Container lines, not just Maersk, have been struggling since the 2010 financial crisis, when the GDP multiplier, which refers to the rate of growth in container shipping as it relates to global GDP growth, evaporated.

The multiplier from 2000 to 2008 was 2.2x with x being global GDP growth, which had averaged around 4%. The multiplier since 2010 has shrunk to 1.1x while GDP growth fell to an average of 2.9%. That slower rate of growth dovetailed with a surge of mega-ship newbuilds that have created an enormous capacity surplus

Given these difficult conditions, other container lines have also looked to Iran for volume growth. CMA CGM, for example, teamed up with IRISL to share vessel capacity and jointly operate routes and marine container terminals.

screwball · January 12, 2017

Iran eyeing return to global debts markets

Thu Jan 12, 2017 7:20PM

A report by Reuters says Iran is pushing ahead a plan to help local firms sell bonds abroad - what is eventually expected to help expedite the country’s economic growth.

Serious indications are appearing that show Iranian authorities are taking steps to help local firms sell bonds abroad.

This appears to be part of a plan to encourage local firms to explore alternatives to domestic lending, where rates remain above 20 percent.

The plan – as a report by Reuters showed – has been devised by the Securities and Exchange Organization (SEO).

"There is a big project to help big listed companies or even the government itself to issue bonds in other countries, the first of which is Korea," said Bahador Bijani, ‎Vice Chairman for International and Foreign Investment Affairs at the SEO.

"Additionally, the SEO is facilitating the process of listed companies issuing bonds in international markets like London."

Iranian international bond issuance has been virtually non-existent since the late 1970s, the time of the country's Islamic Revolution, Reuters added in its report.

Now, issuing bonds in international markets could help Iran alleviate another problem: A lack of expertise in syndicating foreign currency debt after being shut out global capital markets for some two decades.

In an article in August 2016, Iran’s Persian-language newspaper Donya-ye Eqtesad described using the current tools in international debts markets as an appropriate post-sanctions solution for the Iranian government to expedite its economic growth.

Donya-ye Eqtesad emphasized that the government could use the international debt markets, specifically those in London, Hong Kong and New York, to support parts of its international needs now that the sanctions against the country have been lifted. It added that an immediate tool to the same effect was to use the dollar-nominated bonds.

This policy should be specifically encouraged for companies that are mainly exporters of Iranian goods and make revenues in dollars, the daily wrote. Nevertheless, it is not free from its own risks and the government needs to be aware about them.

screwball · January 13, 2017