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Iran economy official seeks investment stability

TEHRAN: The head of Iran's Plan and Budget Organisation has demanded an end to tax exemptions for the country's huge para-statal foundations and called on officials to guarantee the security of foreign and domestic investments.

Iranian newspapers on Sunday quoted Mohammad Ali Najafi as saying he had addressed a letter to Iran's supreme leader, Ayatollah Ali Khamenei and other leaders to request "decisive and effective steps" to create economic and social security. Najafi also called on parliament and the judiciary to support measures aimed at protecting investment, which he said was vital to achieving Iran's ambitious growth targets.

And he said political instability, fuelled by last month's attempted assassination of a key reformist leader and the prosecution of newspaper publishers, had to end. "With (increased) economic, political and social security the private sector will increase investments, and this will help allay unemployment problems," the daily Ham-Mihan quoted Najafi as saying. Other newspapers carried similar reports.

"The executive and the government are a small part of Iran's political structure and their attempts to create economic security must be enhanced by support from other state bodies, such as the judiciary and parliament."

Najafi said he had appealed to the leader to permit taxation of the biggest foundations, which control billions of dollars worth of assets seized after the revolution from the former shah, his closest associates and foreign owners.

Earlier, parliament had backed government plans to end tax exemptions on the foundations, including the giant Bonyad-e Mostazafan, but a conservative board vetoed the decision, saying only the leader could approve such a step.

"We hope that with the leader's approval tax exemptions and other policies favouring institutions under his supervision may be ended," Najafi said.

Iran's conservatives, who control the foundations and the resulting patronage, have long resisted government demands that they be taxed like ordinary commercial concerns.

Najafi said foreign investment would lag as long as Iran's political and legal environment failed to meet investors' expectations. The new five-year economic plan calls for an average anual growth in foreign investment of 8.5 percent.

"When the right to ownership is not fully respected in our country, laws are changed every three to six months and tensions exist in foreign relations, problems are created in attracting foreign investments," he said.

Najafi also lamented what he said was a move by the conservative out-going parliament to effectively increase Iran's reliance on oil exports, its leading source of hard currency.

He said parliament erred in rejecting a government bid to increase heavily-subsidised domestic fuel prices by 20 percent, and by cutting other sources of revenue that will require the state to sell additional oil to close the resulting budget gap.-Reuters