Iran woos local investors as US sanctions loom, currency falls

Iranians walk inside Tehran’s ancient Grand Bazaar in Tehran on July 28, 2018. (AFP)
Updated 28 July 2018
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Iran woos local investors as US sanctions loom, currency falls

  • The probable return of sanctions has triggered a rapid fall of Iran’s currency
  • The new Iranian plan appears to be aimed at easing concern over the US decision

DUBAI: Iran plans to offer price and tax incentives to private investors to take over idle state projects and help boost the economy, state media reported on Saturday, as the country faces likely US sanctions and the exit of many foreign companies.
In May the United States pulled out of a multinational deal to lift sanctions against Iran in return for curbs on its nuclear program, and Washington has told countries they must halt all imports of Iranian oil from Nov. 4 or face US financial measures.
The new Iranian plan, along with action against alleged financial crime, appears to be aimed at easing concern over the US decision.
The probable return of sanctions has triggered a rapid fall of Iran’s currency, protests by bazaar traders usually loyal to the Islamist rulers, and a public outcry over alleged profiteering.
The plan will offer attractive prices and flexible terms as well as tax holidays for investors who agree to take over some of the 76,000 government projects which are unfinished or idle, Vice President Eshaq Jahangiri said on state television.
“Over the past few months, the country’s liquidity has gone into housing, foreign exchange and gold coins, raising prices and provoking public concerns,” Jahangiri was quoted as saying by the website of the state broadcaster.
“A main issue in the meeting ... was to find solutions to push liquidity toward employment and activating manufacturing,” Jahangiri added after the meeting attended by President Hassan Rouhani, and the heads of parliament and the judiciary.

PULLING OUT
The sanctions start to come into effect in August but some European companies investing in Iran and with big US operations have already announced they will pull out of business deals with Tehran.
The Iranian rial plunged to a record low against the US dollar on the unofficial market on Saturday. The dollar was offered for as much as 97,500 rials, compared to about 85,500 a week ago, according to foreign exchange website Bonbast.com.
The currency has lost more than half of its value this year because of a weak economy, financial difficulties at local banks and heavy demand for dollars among Iranians who fear the effects of sanctions.
Judiciary spokesman Gholamhossein Mohseni Ejei said on Saturday that 18 people had been arrested over alleged profiteering from foreign exchange dealings and the illegal importing of luxury cars, state television reported.
In late December, demonstrations which began over economic hardship spread to more than 80 Iranian cities and towns. At least 25 people died in the unrest, the biggest expression of public discontent in almost a decade.
Demonstrators initially vented their anger over high prices and alleged corruption, but the protests took on a rare political dimension, with a growing number of people calling on Supreme Leader Ayatollah Ali Khamenei to step down.


Hong Kong economy cools as trade tension mounts

Updated 16 November 2018
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Hong Kong economy cools as trade tension mounts

HONG KONG: Hong Kong’s economic growth slowed in the latest quarter and the government warned it could face headwinds from US-Chinese trade tension and higher interest rates.
Government data Friday showed the Chinese territory’s economy expanded by 2.9 percent over a year earlier, down from the previous quarter’s 3.5 percent.
Exports rose 5 percent over a year earlier, but the government said the impact of trade tension and weaker global demand “has begun to surface” and is “likely to become more apparent in the near-term.”
The government said Hong Kong also faces a drag from higher interest rates. The Hong Kong dollar has a fixed exchange rate with the US dollar, which requires the central bank to raise interest rates along with the US Federal Reserve even though economic growth is slowing.