Privatization in Iran
In 2007, Supreme Leader Ayatollah Khamenei requested that government officials speed up implementation of the policies outlined in the amendment of Article 44, and move towards economic privatization.
[5] According to the Article 44 of the Iranian Constitution, the economy of Iran is to consist of three sectors: state, cooperative, and private; and is to be based on systematic and sound planning.
A strict interpretation of the above has never been enforced in the Islamic Republic and the private sector has been able to play a much larger role than is outlined in the Constitution.
At the same time, all the car-making, copper, steel and aluminum industries, as well as the assets of 51 capitalists and major industrialists and their next of kin were declared nationalized by the government.
After the Iran–Iraq War in 1988, the Iranian government under Rafsanjani, declared its intention to privatize most state industries in an effort to stimulate the ailing economy.
The majority of heavy industry—including steel, petrochemicals, copper, automobiles, and machine tools—was in the public sector, while most light industry was privately owned.
Elements of the constitution (article 44) that decreed that core-infrastructure should remain state run were eliminated,[9] and private banks were launched.
A common criticism of the privatization effort by investors was the only local Iranian organizations that are capable of buying the large share blocks are themselves government owned.
Also analysts have blamed international fears about the Iranian nuclear programme and an absence of transparency and information reporting for the lack of enthusiasm for state assets.
While the rest have earned an average profit of 5.5 percent in recent years, that figure does not take into account the extensive political and economic incentives and monopoly protections that they enjoy.
[4] In July 2006, Supreme Leader Ayatollah Khamenei decreed a renewed effort to privatize the economy and said in his order that “ceding 80 per cent of the shares of large companies will serve to bring about economic development, social justice and the elimination of poverty”.
The decree is also an effort to revive Iran's stalled privatization programme and kick-start the country's many uncompetitive industries, which are heavily protected by subsidies.
[13] In 2009 it was reported that 30 percent of the revenues obtained from ceding the ownership of state entities within the framework of Article 44 of the Constitution are allocated to the nationwide cooperatives.
[citation needed] However, privatization through the Tehran Stock Exchange has tended to involve the sale of state-owned enterprises to other state actors such as pension funds.
[clarification needed] Those covered by charity services rendered by the Imam Khomeini Relief Committee and the State Welfare Organizations as well as the jobless war veterans are prioritised in the first phase of the justice shares initiative.
In December 2006, the Government informed that some 4.6 million low-income Iranians had received Justice shares worth $2.5 billion as part of the privatization scheme.
[27] As of 2020, shareholders have the new option to either directly gain the ownership of their shares and sell it in the stock exchange, or let the investment companies manage their portfolio as in the past.
The Justice Share portfolio includes 49 state-owned companies in the auto, metal, mining, and agriculture, petrochemical and banking sectors.
[28][29] The Ministry of Economic Affairs and Finance (Iran) has announced that it was forming a special committee to facilitate the process of making Justice Shares tradable on the stock exchange.
[21] As part of a policy of transferring shares of state firms to employees (5% of privatization proceeds),[citation needed] 20 million shares valued at 18.5 billion rials were transferred during September and October 2008, including to employees of Satkab, Iranian Mines and Mining Industries Development and Renovation Organization, and subsidiaries of the Industrial Development and Renovation Organization.
Multinational companies, particularly Iranian firms mostly owned and controlled by Islamic Revolutionary Guard Corps, are involved in export of goods into the country from Dubai.
There are differing estimates of the expatriates' total capital (1.3 trillion dollars[31]), but what is clear is that it is so huge that it will be enough to buy shares of all state companies.
[34] Nevertheless, FIPPA provisions apply to all foreign investors, and many Iranian expatriates based in the US continue to make substantial investments in Iran.
[35] The government has proposed setting up a joint investment fund with $5 billion in basic capital and an economic union to serve Iranians living abroad.
[10] Iran has announced it will begin to allow foreign firms to purchase Iranian state-run companies, with the possibility of obtaining full ownership.
According to the same survey, while 67 percent of the firms have experienced a decline in profit margin, car manufacturers, cement factories, investment institutions and banks have had an increase in the same index.
[44] Insurance companies Asia, Dana and Alborz will be listed on the stock exchange in 2009 after review and improvement in their financial accounts, internal regulations, organizational structure and dispersion nationwide.
[13][52] All domestic power plants will be privatized gradually, except those the government feels it should run to ensure security of the national electricity grid.
Power plants of Damavand, Mashhad, Shirvan, Kerman, Khalij-e Fars, Abadan, Bisotoon, Sanandaj, Manjil and Binalood, which have been turned into public limited firms, are ready for privatization.
