21 39 127 The lifting of economic sanctions The Governor of the Central Bank Falling oil prices, government has opened up increased discusses Basel III requirements, ambitions, and a diverse possibilities for trade and fiscal policy, and economic offering are supporting the 2016 investment. forecasts for the year ahead. rebirth of Iran’s tourism sector. £60 IRAN 2016

6 Year in review • Iran In partnership with:

Ministry of Industry, Mine 10 DIPLOMACY and Trade 10 The fruits of diplomacy • Review

11 HE Abdalla S. El-Badri, Former Secretary General, Organization of the Petroleum Exporting Countries (OPEC) • Column German-Iranian Chamber of Industry and Commerce(AHK Iran) 14 HE Dr. , President of the Islamic Republic of Iran • Inside perspective

16 Johann N. Schneider-Ammann, Iran-Switzerland President of the Swiss Confederation Chamber of Commerce • Guest speaker

اتاق بازرگاني ايران ̶ سوئيس

Iran Switzerland Chamber of Commerce 17 Jacob Zuma, President of the

Republic of South Africa • Guest 10 speaker

18 Echoes of the JCPOA • Focus: 26 Linking with the future • Focus: 41 Dr. Ali Ashraf Afkhami, JCPOA Vision 2025 Chairman & Managing Director of 20 Ministerial relations • Forum Bank of Industry and Mine 27 Dr. Farhad Zargari, Managing • Interview Director & Chairman of Iran Foreign 21 ECONOMY Investments Company (IFIC) 44 Seyed Ahmad Taheri, CEO of • Interview Saman Bank • Interview 21 Oh how Iran • Review 28 Dr. Ahmad Reza Nikkar, CEO of 45 Back in the game • Focus: 22 Seyed Kamal Seyed Ali, Atiyeh Saba Investment Co. International banking Chairman & CEO, Export Guarantee • Interview Fund of Iran (EGFI) • Column 46 Trade financing • B2B 29 Chambers of commerce • B2B 24 David Lipton, First Deputy 47 Opening up • Forum Managing Director, International 30 Roadmap to reconnection: Iran- 48 The future of growth • Review: Monetary Fund (IMF) • Column Europe Cooperation after the JCPOA Capital markets • Roundtable 25 Dr. Mohsen Jalalpour, former 50 Securities regulation • B2B Chamber of 34 Treaty of trade • Focus: Chabahar Commerce, Industries, Mines & free zone 51 Capital clarity • B2B Agriculture (ICCIMA) • Interview 35 Why Iran? • Forum 52 Investment banks • Forum

53 Field of opportunities • Vox 36 FINANCE populi

36 A swift account • Review: 54 A new dawn • Review: Banking Insurance

37 Behzad Golkar, CEO, Sina 55 Dr. Abdolnaser Hemmati, Financial & Investment Holding President & Head of High Council of • Column Insurance of Bimeh Markazi Iran (Central Insurance of IR Iran) 39 Dr. Valiollah Seif, Governor of the • Interview Central Bank of Iran • Interview 57 Dr. Younes Mazlumi, CEO of Razi 40 HE Dr. Majid Ghassemi, CEO and Insurance • Interview Vice Chairman of Bank Pasargad 28 • Interview 58 Dynamic for life • B2B 4 THEBUSINESSYEAR IRAN 2016

69 INDUSTRY & MINING

69 Manufacturing tomorrow, today • Review: Industry

71 Hossein Tanhaee, Vice Chairman, GoldIran • Column

72 HE , Minister of Industry, Mine and Trade • Interview

73 Dr. Mansour Moazami, Deputy 40 Minister of Industry, Mine and Trade & Chairman of the Industrial 59 ENERGY Development & Renovation Organization of Iran (IDRO) 59 Boon time • Review • Interview

60 Dr. Mohammad Kasaeian, Vice 75 Catalin Sfrija, General Manager Chairman & Managing Director, of Henkel Pakvash & President of Rosemond E.M.I.• Column Henkel Iran • Interview 59

61 Dr. Ali Misagh, Managing Director 76 Dr. Bahram Sobhani, CEO & 83 Metallurgy • B2B 101 & Chairman, Tavana Energy Managing Director of Mobarakeh • Column Steel Company • Interview 84 At the end of the tunnel CONSTRUCTION • Focus: Steel, copper, and 62 Piping hot • Focus: The pipeline 78 On the road • Focus: Automotive & REAL ESTATE aluminum exports network 79 Industrial applications • B2B 101 Can we build it? • Review 64 Team players • B2B 80 Digging deeper • Review: Mining 85 TELECOMS 103 Ali Hossein Asadi, Chairman & 65 Staying ahead • B2B CEO, Diplomat Group • Column 81 A. Amini Kafiabad, CEO, Shahid & IT 66 Dr. Bahman Salehi, CEO of Bahonar Copper Industries Co. 106 Morteza Lotfi, Managing 85 Making connections • Review SUNIR • Interview • Column Director & Board Member of Fars & 87 Kasra Mohaghegh, Managing Khuzestan Cement Company (FKCC) 67 Dr. Ali Hatami, Founder & 82 Naser Taghizadeh, Managing Director, Asia Telecommunications • Interview Managing Partner of Hatami & Director & Member of the Board of • Column Associates International Law Firm Golgohar Mining & Industrial Co. 107 Engineering • B2B • Interview • Interview 88 Seyed Iman Miri, CEO & 108 Dr. Gholamreza Ansari, Chairman of HiWEB • Interview Chairman of the Iran Housing 89 E-commerce • B2B Investment Company (Khanehsazi) • Interview 90 Thirsty for e-commerce • Focus: The emergence of e-commerce 109 Prick the bubble • Focus: Iran housing market

93 TRANSPORT 110 Infrastructure • B2B

93 Royal roads • Review

94 Jean-Pierre Loubinoux, General Director, International Union of Railways (UIC) • Column 69 96 Dr. Mohsen Pourseyed Aghaei, Vice Minister of Roads and Urban Development & Chairman of the Board and President of the Railways of the Islamic Republic of Iran (RAI) • Interview

97 An air battle for the Gulf • Focus: The aviation industry

98 Air travel • B2B

99 Mehrdad Fakher, CEO of Tipax Holding • Interview 80 85 100 Logistics • B2B THEBUSINESSYEAR 5

Editor-in-Chief Leland Rice 111 FOOD 115 HEALTH Country Manager Cristiana Di Filippo & AGRICULTURE & EDUCATION Assistant Country Managers Ainhoa Cid Remesar, Ioana Popa 111 A package deal • Review 115 Surgery now open • Review: Country Editor Health Sergio Ripollés 112 Hassan Varshochi, Managing Project Assistant Director, RANA Agro-Industry 117 Dr. Seyed Amir Mohsen Ziaee, Elika Shahverdi Corporation • Column President of Iranian Red Crescent Advisor Dr. Ali Mohammad Goudarzi Society (IRCS)• Interview Ministry of Industry, Mine and Trade 113 Agrifood • B2B 118 Pharmaceuticals • B2B Chief Executive Offcer 114 Filling the basket • Focus: Ayşe Hazır Valentin Iranian food industry 119 Land of health • Focus: Health Chief Operating Offcer Laila Bastati tourism 114 Younes Zhaeleh, President and Senior Editor Chairman of the Board, Shirin Asal 120 Research • B2B Peter Howson 72 Associate Editor • Column Terry Whitlam 121 Educating for the 21st century Sub-Editors • Review: Education Jared Kimball, Emily Casswell, Kevin Mataraci, Shireen Nisha, 123 Dr. Mahmoud Fotuhi-Firuzabad, Nathan T. Jefferson, Evan Phieffer President of Sharif University of Editorial Assistant Aleksandra Fabia Tugal Technology • Interview Assistant Web Editor 124 Enrolled with the future Belemir Ece Çolak • Focus: Universities Contributors Mark Szawlowski, Cain Day, Emily Mallis, Aidan McMahon 125 Professional training • B2B Transcribers Susan Barrett, Heather Conover, Nikolai Davis, Gillian Dochery, 127 TOURISM Attila Pelit, Jeffrey Rogers, Jason Shaw, Deanne de Vries, 127 Qom & have a look • Review Pronto Publishing Services Acting Art Director 128 Amir Kazem Noormohammadi, Bahar Kara Chairman, Dorsa Leather & Luxury Senior Designers Ceren Bettemir, Dan Le • Column Graphic Designer Lara Nasifoğlu 130 Seyed Hassan Mousavi, CEO, Acting HR Manager Mega Pars Mall • Column Burcu Yüce PR Assistant 111 131 HE Dr. Masoud Soltanifar, Berna Köse President of the Iranian Cultural Operations Manager Heritage, Handicrafts & Tourism Semiha Elkıran Organization (ICHHTO) and Vice Operations Executive Öznur Yıldız President of the Islamic Republic of Operations Assistant Iran • Interview Gamze Zorlu Finance Director 132 Aliasghar Safari, CEO & Vice Serpil Yaltalıer Chairman of Tourism Bank Finance Executive Janine Escobar • Interview Circulation & Marketing Director 133 Dr. Ebrahim Salami, Managing Amy Burtin Director of Tourism Holding of Social Publisher Peggy Rosiak Security Organization (HEGTA) • Interview The Business Year is published by The Business Year International, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. Printed 134 Dr. Reza Samizadeh, CEO of by Tor Ofset, Osmangazi Mahallesi. 3112. Sokak. Iran Mall Commercial Company No:2 Esenyurt, İstanbul, Türkiye. The Business Year is a registered trademark of The Business Year (IMCC) • Interview International, Copyright The Business Year In- ternational Inc. 2016. All rights reserved. No part 135 Tourism services • B2B of this publication may be reproduced, stored in a retrievable system, or transmitted in any form or by any means, electronic, mechanical, photocopied, 136 Holy future • Photo essay: recorded, or otherwise without prior permission of Mashhad The Business Year International Inc. The Business Year International Inc. has made every effort to ensure that the content of this publication is accu- rate at the time of printing. The Business Year In- 127 ternational Inc. makes no warranty, representation, 138 EXECUTIVE or undertaking, whether expressed or implied, nor does it assume any legal liability, direct or indirect, GUIDE or responsibility for the accuracy, completeness, MANY OF THE INTERVIEWS PUBLISHED HERE HAVE BEEN ABRIDGED. or usefulness of any information contained in this 138 Ground work • Review: Doing publication. THE ORIGINAL, FULL-LENGTH INTERVIEWS CAN BE READ AT business ISBN 978-1-908180-79-7 THEBUSINESSYEAR.COM www.thebusinessyear.com 139 When in Iran... THEBUSINESSYEAR 21 27 30 35 TBY talks to Dr. Farhad Zargari, TBY partnered with the German- Foreign companies with a Managing Director & Chairman Iranian Chamber of Commerce to longstanding presence in Iran of Iran Foreign Investments host a roundtable with banking are poised to benefit following Company (IFIC). and industry leaders. the lifting of sanctions. Economy REVIEW

The lifting of economic sanctions against Iran has placed the attention of spectators and participants alike on the next moves the country will take in this ever-so-crucial moment in its own genesis. OH HOW IRAN t is no rare occur- in the MENA region, trailing rence in the areas only Saudi Arabia, while its I of modern-day Iran 79.1 million-strong population for the fortunes of makes it the second-largest the many societies that have country in the region behind called the region home to Egypt. seemingly change on a dime Though GDP per capita in as if by dramatic intervention. Iran, which stands at approx- Since the country’s Islamic imately USD17,365 at inter- Revolution of 1979, when the national purchasing power regime of Western-backed parity, has long outpaced the Mohammad Reza Shah Pahla- regional average, its country vi was replaced with the theo- ranking fell in the World Eco- cratic government of its cur- nomic Forum’s 2016-2017 rent form, the Islamic Republic Global Competitiveness Re- of Iran has not had a particu- port (GCR) to 76th, down two larly easy time partaking in the spots from 74th in the 2015- increasingly globalized mod- 2016 edition of the report. ern economy while retaining While the direct role played a firm position on defining the by the state in managing its contours of its own socio-po- commanding heights and litical identity. Harsh econom- the central importance of the ic and diplomatic sanctions local hydrocarbon sector is put in place between 2012 similar to numerous MENA and 2013 triggered a severe economies, Iran’s differs from recession that saw the loss of many of its regional peers in roughly 27.57% of the nation’s the level of diversification. Its economic output, with GDP Image: Iran Daily GDP is supported by services, falling from USD587.209 bil- agriculture, and manufactur- lion in 2012 to USD425.326 bil- ing and mining, all accounting lion in 2014. Despite the crip- for significant portions of the pling burden of the sanctions, With the severe sanctions that country’s economic output. Iran’s estimated USD393.7 led to a national economic recession According to an annual report billion GDP in 2015—down from the Central Bank of Iran, 7.44% YoY from 2014—made a thing of the past, Iran enters a new the services sector contribut- it the second-largest economy era of great economic potential. ed 1.5% to GDP growth in the 22 THEBUSINESSYEAR IRAN 2016

2013/2014 fiscal year, while manufacturing and dens on several of the country’s most sensitive mining contributed 1.3% and the oil sector add- areas of production. GDP growth reached just ed a further 0.5%, making them the three largest 0.5% during 2015, which, although low, marks contributors to economic growth. a much-needed turnaround from several years The 17th-largest country in the world by area, of rapid contraction in the country’s GDP. Em- Iran sits atop a wealth of hydrocarbon resources, ployment, on the other hand, has not enjoyed with the world’s fourth-largest proven crude oil such a speedy turnaround, with unemploy- reserves and second-largest natural gas reserves. ment increasing from 10.6% in 2014 to 11.7% in The state budget, and in turn a sizable portion 2015. With increasing portions of the national of overall economic activity, still relies heavily labor force struggling to find employment op- on hydrocarbon revenues. This has exposed the portunities, inflation has thankfully dropped Iranian economy to a great deal of volatility in from the 34% high in 2013 to single digits in recent years. In large part due to declining oil 2016. Annual changes in the consumer price prices, the country’s fiscal deficit increased from index have dropped dramatically from a 45.1% 1.2% of GDP in 2014 to 2.7% in 2015, while the peak in October 2012. Containment in 2015 of SEYED KAMAL national current account surplus fell to approx- the hyperinflation that plagued the country in SEYED ALI imately 0.6% of GDP in 2015 from 3.8% of GDP recent years was largely attributed to the stead- in 2015. However, these effects of declining oil fastness of the Central Bank of Iran in its posi- Chairman & CEO, and gas prices have been somewhat mitigated, tion on monetary policy. Export Guarantee as international sanctions limiting access to The removal of sanctions that came with the Fund of Iran (EGFI) global markets forced Iran to enact significant signing of the Joint Comprehensive Plan of Ac- structural reforms in response to the downward tion (JCPOA) in July 2016 is projected to boost price pressures of lower oil revenues many years production and exports of oil, while in theory What are the most important ahead of other oil-exporters in the region. Gross decreasing the costs of both international finan- sectors in Iran’s economy for national savings stand at an impressive 30.1% of cial transactions as well as commercial trade. EGFI? GDP, while government debt sits at just 17.1% The lifting of sanctions brought with it an enor- Oil is certainly the most im- of GDP, putting the country at 22nd and ninth mous boost in confidence among both local and portant sector, and we need to place, respectively, in the GCR. In addition to foreign investors rushing to capitalize on the continue to ensure that we can the buffering effects of economic sanctions, the myriad opportunities made available by the re- export and sell our oil competi- country’s financial and capital accounts have re- opening of economic channels with the global tively around the world. Banking mained comparatively unresponsive to shocks marketplace. Another immediate benefit of the is the second most important in the external macroeconomic environment. JCPOA for the government of Iran will be the re- sector, followed by insurance, Its lower exposure to volatility in international newed access to heretofore frozen foreign-held shipping, and automotive. In capital markets has provided it a serendipitous assets, around USD30 billion of which have terms of export markets, during layer of added protection from developments already been made available. On top of these the sanctions we did not have any such as hikes in the US Federal Reserve interest windfall assets, the government hopes to im- problems exporting certain pe- rate, which have had an immediate impact on prove the operational effectiveness of expendi- troleum products. Now, we sell a the performance of many other similarly struc- ture activities by instituting large-scale reforms great deal of goods and products tured emerging market economies. of its subsidy programs, looking in particular to Europe. We also export food Although Iran has been able to reap second- to reevaluate its policies on issuing subsidies items like pistachios and saffron, ary benefits from the sanctions, the resulting for key products such as electricity, water, and a considerable part of which is economic recession has placed significant bur- bread. During the 2007-2008 fiscal year, indi- exported to Europe, our largest rect subsidies reached an estimated USD77.2 market. billion, the equivalent to approximately 27% of the year’s total GDP. Continued reduction of What investments have you STATE BUDGET (CURRENT USD BILLION) significant subsidies like those for fuel through made abroad? SOURCE: CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN adaptive policies, like the government’s new We have a power plant in direct cash transfer programs and increased Tajikistan worth more than 54.11 collection and mobilization of national tax reve- USD350 million. We also have nues, are now key to further narrowing the fiscal investments in Sri Lanka worth 45.59 deficit and containing mounting stresses on real USD450 million. In Armenia we exchange rates and forex markets as well as on have a USD100 million power 37.97 imported inflation. plant project and similar projects 35.62 Not content to wait for market movements in Senegal and Cuba. In Iraq we 30.99 to dictate its policy, the leaders of Iran have developed more than 25 projects 28.21 formulated a comprehensive policy framework in the last three years worth 22.74 centering on market reforms through the sixth more than USD1 billion, including 18.01 development plan for 2016-2021 as well as a the new Iraqi parliament. Those 20-year long-term strategic vision. The devel- projects are mainly power plants opment agenda is based on the three tenets of and construction projects, espe- reinforcing the resilience of the national econ- cially dams, stadiums, roads, and omy, achieving an 8% annual GDP growth rate, housing. Many Iranian contrac- and supporting domestic innovations in science tors can now compete globally 2012 2013 2014 2015 and technology. The cause for focusing on better and are active in many neighbor-

Revenues Expenditures leveraging available knowledge-based assets is ing countries.* *Read the full interview at thebusinessyear.com 24 THEBUSINESSYEAR IRAN 2016

illustrated by Iran’s standing in the GCR, which world—gives further credence to the optimism Despite the crippling ranked the country 48th and 44th for the quality among many that the removal of economic burden of the of its math and science education and the local sanctions is key to turning around the country’s sanctions, Iran’s availability of scientists and engineers, respec- regressive economic trajectory of late. Though estimated USD393.7 tively, yet put it at just number 89 in the world increased production and exports of oil and gas in terms of its capacity to innovate. The plan will relieve pressure on the state budget, one of billion GDP in 2015— also calls for reconfiguring state oil revenues the real keys to sustainable long-term growth in down 7.44% YoY and implementing deep-reaching restructuring the post-JCPOA era will be bolstering the com- from 2014—made it in many key nationalized enterprises, including petitiveness of the country’s non-oil sector. the second-largest those in the capital markets and financial ser- This will also be crucial for new job creation, a economy in the MENA vices sector. linchpin for the future of a society characterized region, trailing only Though Iran has the 19th largest domestic by the youth of its population, more than 60% market in the world, the prevalence of foreign of which was estimated as recently as 2013 to be Saudi Arabia. ownership was ranked just 137th best in by the under the age of 30. GCR, while the business impact of FDI regu- The 2017/2018 fiscal year’s budget represents lations earned Iran 133rd place in the report. a further opportunity for Iran’s leaders to set a The signing of the JCPOA will give Iran access to unified direction for Iran’s economic course by the global marketplace, help it establish a more establishing a strategy to reduce the deficit for competitive national business environment, the non-oil sectors and maintain the current and fuel in large part an increase in GDP growth, levels of low inflation. The strategy stands to po- which the IMF’s First Deputy Director expects to sition the country to better navigate the uncer- reach 4.5% in 2016, before it levels off to an aver- tain macroeconomic environment to which it is age rate of roughly 4% over the medium term. In now increasingly exposed, particularly in terms addition to a return to the years of higher GDP of enduring depressed oil prices and increasing growth rates, increased oil revenues are expect- debt service costs. One implication of this is the ed to shrink the fiscal deficit to approximately impetus on heads of both the public and private 1.8% in 2016 before falling to just 1% in 2017, sectors to secure a reliable and diversified mix of while driving the current account balance back capital funding to support the increased public into the green by 2017. spending needed to drive consolidated efforts The benefits of the JCPOA are expected to to reorient the national economic structure. In bring about noticeable immediate improve- the post-sanctions era, the greater involvement ments to prosperity at the household level, with of the international business community is per capita welfare projected to improve by 3.7% expected to enhance productivity, create new thanks to the growth opportunities made avail- jobs, improve the standard of living, and extend able by the ongoing trend of liberalization and investments in entrepreneurial endeavors. A privatization of transport and financial services flourishing Iran could represent a guiding force as well as the increased oil income expected to for regional stability and long-term prosperity. follow the end of the oil embargo put in place Continuing the steps taken thus far to improve by the EU. That exports measured just 18.7% the economic and legislative environment are of GDP in 2015—one of the lowest levels in the top on the country’s strategic agenda. ✖

DAVID LIPTON First Deputy Managing Director, International Monetary Fund (IMF)

What measures should Iran apply to drive Ira- What is the IMF’s outlook on Iran’s economic nian banks toward meeting Basel III require- performance? ments? Our outlook remains favorable, with Iran benefting The severity of the challenges facing Iran’s from a strong rebound in the oil sector and gradual banking system requires immediate action. Iran’s recovery in the non-oil sector. Growth is expected to banks are undercapitalized, asset quality is weak, reach 4.5%, while infation should remain in single and credit is costly amid high real interest rates. digits. Improvement in Iran’s growth rate will de- Banks need to be placed on a sound fnancial pend on non-oil prospects. Achieving the 8% growth footing. This requires resolving non-performing target requires reforms that protect macroeconomic loans, recapitalizing and restructuring weak stability through prudent monetary and fscal poli- banks, strengthening bank supervision by bringing cies that minimize infation and stabilize exchange unlicensed banks under the Central Bank of Iran rates as well modernize and liberalize the economy, (CBI) supervisory umbrella, and increasing the creating a more export-oriented and competitive CBI’s enforcement powers. economic model that can create jobs for the large youth population, and build the confdence of foreign

businesses to expand trade and investment.* *Read the full interview at thebusinessyear.com