Page 20 - IRANRptSep19

CBI has over €70bn in hard currency reserves
The Central Bank of Iran (CBI) has more than €70bn in hard currency reserves, according to the National Development Fund of Iran (NDFI). However, as restrictions continue on trade and withdrawal of cash from forex reserves, the country is looking for ways to find new revenues of hard currency.
5.2 FTA, multilateral agreements
Officials say more than $611mn was invested in Iran’s FTZs in 2018/2019 Persian year
Iranian, Indian officials holding out hope for PTA by 2020
More than IRR67tn ($611mn at the free market rate) was invested in Iran’s free trade zones (FTZs) in the 2018/2019 Persian calendar year (ended March 20), marking growth of 40% y/y, IRIB has reported.
Iran has several free trade zones situated along the periphery of the country, including on two Persian Gulf islands, Kish and Qeshm. Free zones are strategically located at border points with all of Iran’s neighbours to assist in the development of trade. The FTZs are essentially in-country tax-free havens, often set up near airports.
In the 2017/2018 Persian calendar year, overall FTZs investment reportedly amounted to IRR48tn.
According to Iran’s Supreme Council on Free Trade Zones, some 1,400 businesses are now operational in the country’s FTZs.
Iran’s annual export value via free trade zones and special economic zones (SEZs) is reportedly running at $18bn. The FTZs are said to be providing around 25,000 jobs. Iranian exports have benefited from the severe weakening of the Iranian rial caused by US sanctions imposed since last year.
Since Hassan Rouhani became president in 2013, Iran has exported around $120bn worth of goods, while importing items worth around $30bn, according to Morteza Bank, director of the Supreme Council on Free Trade Zones.
Officials of Iran and India are working on concluding a short-term preferential trade agreement (PTA) this year, Live Mint reported on August 29. Tariff cuts on specific products are under discussion.
India has an agreement with Tehran to develop Iran’s only oceanic port, Chabahar on the Sea of Oman. As the port expands, shipments sent across the Indian Ocean should help push up India’s trade with Iran, the Central Asian nations and Afghanistan. Thanks to the importance Chabahar could have in building up war-torn Afghanistan’s economy, the US has chosen not to sanction Iranian and Indian investments made in developing it.
The PTA is to contain a bartering agreement. Goods exchanges involving no cash transactions might help the trading parties bypass payment gateways that could be targeted by the US in its push to throttle Iran’s economy with heavy sanctions. It is too early to tell whether the PTA could include Iranian oil exports—which the US is attempting to entirely force off world markets—but it is likely that Iran will attempt to make the exchange of crude oil and petrochemicals for food items, including rice, part of the agreement.
India and Iran have held four rounds of talks on the PTA so far. Progress has been slow.
The Iranian ambassador to New Delhi, Ali Chegeni, is working on arranging the PTA and also on formalising a proposed Bilateral Investment Protection Agreement (BIPA). This is to be signed by both sides at some point after the PTA is in place.
A Double Taxation Avoidance Agreement (DTAA) is also on the cards. It has the approval of the Indian government while the approval of the Iranian cabinet is pending.
20 IRAN Country Report September 2019 www.intellinews.com