Business in Iran and Pakistan. Economy, Foreign Trade, Foreign Direct Investment

Course contents (Business in Asia)

Summary

Business in Iran

The Iranian economy enjoying a stable condition. Despite crude oil price fluctuations in the world markets in aftermath of the September 11 tragic events, the considerable surplus in the oil stabilization fund and government adherence to implementing non-expansionary fiscal policies brought about public confidence in economic policies and helped realize a 4.8 percent growth of the economy.

In the external sector, efficient foreign reserve management was pursued with relaxation of foreign trade regulations, extension of Rial and foreign exchange facilities to export sector, exemption of exports from taxes and charges, and gradual elimination of non-tariff barriers. Increasing the number of foreign currencies traded on the TSE and bringing a relatively mild stability in foreign exchange market led to the reformation of inflationary expectations and enhancement of trade performance.

Giving more freedom to banks in allocating resources, considerable reduction in the reserve requirement ratios aiming at raising the potential capability of extending facilities, and reduction in the banks' rate of deposits were among the important monetary and credit policies. In order to mop up excess liquidity, Central Bank issued participation papers in this year as a short-term instrument of liquidity management.

The Third Five year Development plan is formulated with a view top various aspects of the existed realities of the country, the challenges that the economy faces and the emphasis on having a comprehensive and balanced plan. The3rd FYDP is a package of articles, policies, and guideline covering 26 sectoral and intrasectoral areas and provides a comprehensive frameworks for resolving structural impediments and economic difficulties during the plan period.

The Railway network is particularly expected to play a crucial role in Railways earnings as it links Central Asian States to the Persian Gulf and consequently to Europe. Thus the European nations can now transit their goods in less than 10 days to the Central Asian nations through this reliable and economical railway system, while being able to know of their whereabouts at any given time via advanced telecommunication facilities. During the recent years, the convenience, comfort, punctuality and dependability of the three railway companies have increasingly been urging passengers to prefer railway to road travel. The railway is also linking Tabriz to Istanbul in Turkey through Sharafkhaneh, making land traveling convenient from Europe to Pakistan. Total length of the Iranian railway network is 9,800 km, 5,800 km of which comprise the main route, over 2,000 km industrial, business and subsidiary, 146 km (Tabriz-Julfa) is electricity powered and the remainder are maneuvering lines. In 1375 approximately 9 million passengers and 23 million tons of cargo were transported by railway (against the 9,306,000 passengers flown by air).

The first law on foreign investment was ratified in 1955, which, is still honored, and in 1993 the law for the administration of Free Trade and Industrial Zones(FTZ), and Special Zones was approved by the parliament. According to the law "Attraction and Protection of Foreign Investment" ratified in 1955, foreign investors can invest in all the economic sections, in which private sector in Iran is permitted to have activities, in the form of "joint venture" with Iranian partner.

Business in Pakistan

The signs of economic recovery and macro-economic stability of Pakistan are evidenced by the improving economic indicators and the continued support by the IFI's (International Financial Institutions) for the reform agenda of the regime led by Chief Executive of Pakistan.

To mitigate the negative impact of stabilization program on growth, the program was supplemented by a series of wide-ranging structural reform measures that were needed to enhance economic incentives and improve resource allocation, as well as to remove impediments to private sector development.

A sharp reduction in budget and current account deficits along with lower-than-targeted inflation in the midst of several exogenous shocks have marked the high points of the stabilization effort in the outgoing fiscal year, FY July-June 2000-2001. These developments have contributed in improving overall macroeconomic environment in the country.

Not withstanding a major success on the stabilization front, Pakistan's growth performance was adversely affected by the worst drought in the country's history and also by weaker external demand, falling commodity prices, and the persistence of higher oil prices in the international market.

The non-agriculture GDP grew by 4.3 percent.

The non-agriculture GDP, however, grew by 4.3 percent as against 3.1 percent last year. Besides agriculture, the value addition in electricity & gas distribution has also been adversely affected by drought.

After adjusting the impact of drought i.e. excluding agriculture and electricity & gas distribution, the real GDP growth provisionally estimated at 4.8 percent this year, as against 4.0 percent in the last year.

Real GDP at market prices grew by 3.3 percent in 2000-01, as against 2.6 percent of last year. The major contributors to GDP growth include manufacturing (1.2 percentage points) and services sector (2.2 percentage points). The contribution of agriculture was negative to the extent of 0.7 percentage point, it being the main victim of the unprecedented drought conditions. Agricultural growth declined by 2.5 percent in current fiscal year as against an impressive growth of 6.1 percent last year.

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Master in Asia business

Business in Iran and Pakistan. Economy, Foreign Trade, Foreign Direct Investment, Doing Business, Iranian economy, Teheran, Islamabad, foreign trade regulations, Foreign investors, Manufacturing, services sector, Master, International Business