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Privatization law comes into effect

Source: Press TV

The long-awaited Iranian privatization law has come following its publication in the Official Gazette in late August and is expected to invigorate the private sector.

Iranian economic life has been dominated by a centralized economy and major government corporations for nearly three decades. reports the law was passed by the parliament on January 28, 2007 but because of objections to certain clauses by the Council of Guardians, the constitutional vetting body; it was referred to the Expediency Council which subsequently ratified it on June 14, 2008.

Tehran Stock Exchange


The precise title of the law, the framework of which was outlined by the general policies of the Leader of the Islamic Revolution of Iran, Ayatollah Seyyed Ali Khamenei, is "The Law Amending Certain Articles of the Fourth Economic, Social and Cultural Development Plan of the Islamic Republic of Iran and Implementation of the General Policies of Principle 44 of the Constitution."

Article 2 stipulates that: "Economic activities in the Islamic Republic of Iran consisting of production, purchase or sale of goods and services are divided into the following groups:
Group One - All the economic activities except the instances mentioned in Group Two and Group Three of this Article.
Group Two - The economic activities mentioned in the beginning of Article 44 of the Constitution except the instances mentioned in Group Three of this Article.
Group Three - Activities, establishments and companies subject to this group are:

1) Mother telecommunication networks and issues related to provision of frequencies.
2) The central networks for sorting, exchange and distribution of basic postal services.
3) Military, police and security products at the discretion of the Commander General of the Armed Forces.
4) National Iranian Oil Company and the companies engaged in extraction and production of crude oil and natural gas.
5) Oil and gas fields.
6) Central Bank of the Islamic Republic of Iran, Bank Melli Iran, Bank Sepah, Bank of Industry and Mine, Export Development Bank, Agriculture Bank, Housing Bank and the Cooperative Development Bank.
7) Central Insurance and Iran Insurance Company.
8) Primary grid networks for transfer of electricity.
9) Civil Aviation Organization and the Ports and Shipping Organization of the Islamic Republic of Iran.
10) Dams and large water networks.

According to Article 3 ownership, investment and management of the government in the companies and corporations acting in the area of Group One is prohibited. This is while the government is bound to transfer 80 percent of the value of the shares of governmental companies active in Group Two activities, except roads and railways, to the private, cooperative and non-governmental public sectors.

Any privileges granted to governmental companies acting in the areas of Group One and Group Two shall be extended to the private, cooperative and non governmental public corporations engaged in similar activities.

Articles 9 to 12 of the Law deal with the cooperative sector with a view to increasing the share of this sector in the national economy to 25 percent by the year 1393 (2014). In all instances wherein the government protects and gives incentives to the non-governmental sector, these instruments will be 20% higher for the cooperative sector except in matters of taxation.

The capital resources of the cooperative sector are to be provided by establishment of the Cooperative Bank.

Articles 17 to 33 detail the process of transfer of governmental companies to the non-governmental sectors. The Privatization Organization is charged with selling companies to the private sector.

The newly conceived "Justice Share" is defined in Articles 34 to 38. As outlined in Article 34: "for materialization of the policy of expansion of public ownership and enabling the establishment of social justice, the government is permitted to transfer up to 40 percent of the companies of Group Two to Iranian nationals. The poorest strata of society shall receive the "Justice Share" at a 50 percent discount and will pay the said amount in 10 year installments. Villagers and nomads shall have priority in this respect."

Promoting competition and prohibiting the formation of monopolies is also part of the privatization law. Article 44 bans any kind of collusion which may cause disorder in normal competition and lists the specifics of such actions, like price fixing, restricting or controlling the quantity of production and purchase and sale of goods and services in the market, imposing discriminatory conditions in transactions, hoarding, discriminatory pricing, dumping, making misleading statements etc.

The law in Article 53 has envisaged formation of the Competition Council for attaining the goal of an economy free from unfair competition. The Council has special powers for combating anti-competitive practices in the market. Penalties and the remedy of damages have been foreseen for violators.

... Payvand News - 09/28/08 ... --

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