A MARKET FOR U. S. PRODUCTS U.S. DEPARTMENT OF COMM ERCE/Bureau of International Commerce A SUPPLEMENT TO International Commerce ... the weekly news magazine for world traders published by the Bureau of International Commerce and sold by the Superintendent of Documents, U.S. Government Printing Office, Washing- ton, D.C. 20402, and by Department of Commerce Field Offices for $16 a year. C- H A Market for U.S. Products in IRAN **"***. S *ATES O* * U.S. DEPARTMENT OF COMMERCE John T. Connor Secretary Alexander B. Trowbridge Assistant Secretary for Domestic and International Business BUREAU OF INTERNATIONAL COMMERCE Lawrence A. Fox Director For sale by the Superintendent of Documents, U.S. Government Printing Office, Washingtoi Price 50 cents Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://archive.org/details/marketforusproduOOseve By Roger D. Severance Bureau of International Commerce U.S. Department of Commerce Mr. Severance is Iran Desk Officer, Near East-South Asia Division, Bureau of International Commerce. He obtained information for this report during a recent trip to Iran in interviews with local businessmen and Government officials. He also drew upon reports prepared by the American Embassy and Consulates in Iran and on articles in official and unofficial Iranian publications. John K. Hagemann, Commercial Attache, and Ismail Ghobadi, Economic Advisor, U.S. Embassy, Tehran, provided valuable assistance and advice. This market survey was prepared under the direction of David E. Westley, Chief, Near East Section. FOREWORD Developing countries often are overlooked by U.S. suppliers even though the irresistible thrust of nations such as Iran toward economic and social development creates a market for a wide range of products and technology. Iran is fortunate in being the recipient of large oil revenues. A major part of these revenues is being spent on import purchases to implement a comprehensive development program. This expenditure has created an expanding market in which many U.S. firms are sharing. More could participate. This report is intended not only to familiarize exporters with the nature and institutions of the Iranian market but also to identify those product areas offering the best potential for U.S. export sales. Lawrence A. Fox Director, Bureau of International Commerce April 1966 CONTENTS Foreword Market Profile. Chapters I. Market View The Economy Import Market ,. Trade Policy II. Market For Selected Products Agricultural Products Paper, Pharmaceuticals, Chemicals Textiles and Textile Machinery Ceramics and Metals Machinery Motor Vehicles and Parts III. Distribution Representation Import Financing Retail and Wholesale Market Areas Government Purchasing Oil Company Purchasing Advertising Ports, Storage, and Transportation Banking IV. Economic Development Plans Projects Appendixes A. Ministry of Health Pharmaceutical Import License Application... B. Principal Government Purchasing Entities C. Commercial Facilities D. Banks Operating in Iran as of May 1965 E. Notes to Business Travelers F. Bibliography 1. Imports, Total and by Principal Items or Groups, 1965 2. Imports, Total and by Principal Countries of Origin, 1963-65... 3. Imports of Principal Animal and Vegetable Items, 1963-65 4. Imports of Principal Pulp, Paper, and Paper Items, 1963-65 Tables, Continued 5. Imports of Principal Chemical and Pharmaceutical Items, 1963-65 6. Imports of Principal Textile Items (Raw and Semifinished), 1963-65 7. Imports of Principal Items of Textile Machinery, 1963-65 8. Imports of Principal Glass and Ceramic Items, 1963-65 9. Imports of Principal Iron and Steel Items, 1963-65 10. Imports of Principal Copper and Aluminum Items, 1963-65 11. Imports of Principal Items of Agricultural Equipment, 1963-65 12. Imports of Principal Items of Pumping Equipment, 1963-65 13. Imports of Principal Items of Electrical Equipment, 1963-65 14. Imports of Principal Items of Radio, Television, and Telephone Equipment, 1963-65.. 15. Imports of Principal Items of Refrigeration Equipment, 1963-65 16. Imports of Principal Items of Office Machinery, 1963-65 17. Imports of Principal Items of Handtools, 1963-65 18. Imports of Motor Vehicles and Parts, 1963-65 19. Imports of Principal Rubber Items, 1963-65 20. Plan Organization Program Budgets, 1963-66 21. Imports of Items Valued Over $500,000 of Which the United States Had Less than 10 Percent of Market, 1965 22. Plan Organization Expenditures Compared With Total Plan Budget, 1963-68 23. Selected Data on the Expansion of Major Industries Distribution of Gross National Product Total Gross National Product in Current Prices, 1961-65 Total Foreign Exchange Receipts and Receipts From Oil and Foreign Loans Total Imports by Years, 1959-65 Grants. 1961-65 Imports, Total and by Country of Origin, 1965 Imports of Machinery, Vehicles, Base Metals, and Chemicals, 1961-65 Maps Location... Political- Many of the photographs in this report were supplied by the Embassy of Iran, Washington, D.C., and by the International Bank for Reconstruction and Development, Washington, D.C. The map of Provinces is modified from one by Foreign Areas Studies Division, the American University, Washington, D.C, from Area Handbook for Iran, Washington, D.C, May 1963. uTgoZZL. ~' h /Qlte™^ IRAN ~~ ® — NatiTna t | c n a a pita| Undary Railroad <&&> Paved road Other road or track Mudflat Swamp Salt waste 50 100 150 200 Miles 50 100 150 200 Kilometers f ®AD DAWHAH Market Profile— Iran Foreign Trade Imports— 1965 ! imports valued at $750 million (1964 1 — $519 million). Major suppliers: West Germany (19.2%), U.S. (17.5%), U.K. (13.7%). Major imports: machinery, iron and steel, chemicals and drugs. Exports — 1965 1 exports valued at $1,140 million, including $988 million in petroleum (1964 *— $1,015 million, with $888 million in petroleum). Major markets for non-petroleum exports: U.S.S.R. (14.8%), West Germany (13.2%), U.S. (13.2%). Major exports: petroleum, carpets, raw cotton, dried fruit, and nuts. Industries — Apart from petroleum, industrial development still at early stage. Major industries, cotton and woolen textiles, flour milling, sugar refining, building materials, and tires and tubes. Assembly plants have been established for vehicles and a number of consumer durables. Commerce — The traditional bazaar remains principal re- tail outlet, although small shops and department stores out- side the bazaar area becoming more important. Development Program — Third development plan;' covering the 5%-year period ending March 1968, calls for a public investment outlay of $2.66 billion, about three-fourths for development of agriculture, transport and communications, power and fuel, and industry and mines. Foreign Investment U.S. direct investment is estimated at over $200 million, the bulk in petroleum. Government policy designed to attract investments. Investment guaranty agreement with United States. Finance Currency— Rial, equals US$0,013. Domestic Credit — Short-term credit available through 19 private and 9 public banks and the bazaar at high rates of interest. Domestic Investment — One industrial development bank makes long-term industrial loans. Capital market not developed. National Budget— FY ending March 20, 1965: revenue $1,879 million; expenditures $1,925 million, 25% allocated for public investment projects. Balance of Payments — Large oil revenues permit sizable trade deficit in other commodities. Gold and foreign ex- change reserves sufficient to cover imports of nonluxury Economy Economy basically agrarian, although petroleum production and refining are the principal sources of foreign exchange and Government revenue. Agriculture accounts for about 30% of GNP, which is estimated at $4 billion, or about $180 per capita. Petroleum production and refining account for another 10-15% of GNP. Agriculture — Crops are wheat, rice, barley, fresh, and dried fruits and vegetables. Mining — Petroleum most important natural resource and mainstay of the economy. Over 600 million barrels produced in 1964, and production increasing each year. Bituminous coal and iron ore, only other major proven mineral resources. 1 Year ending March 20. Basic Economic Facilities Transportation — 3,800 miles of asphalted roads, 750 miles are under construction; 10,000 miles of gravel roads. 1,350 miles of railroad track, main line from Abadan to Tehran. Regular international air and sea services. Communications — Present limited facilities being ex- panded. Radio broadcasting stations in major cities; TV stations in Tehran, and Abadan. Power — Deficiencies in generation and distribution are found throughout the country. Natural Resources Land — 628,000 square miles. Dominant feature is a great central plateau, bounded on all but the east and southeast by mountainous areas. Climate — Largely arid; semiarid in other areas, except in the Caspian littoral where rainfall is abundant. Forestry — Forests comprise 44.5 million acres, or 11% of total area. Fisheries — Aside from caviar, fisheries minor industry. Average annual catch estimated at 20,000-25,000 metric tons. People Population — Estimated at 22.5 million, increasing 2.5% a year. Tehran is Capital City, population 1,513,000. Major Provincial cities are Tabriz, Isfahan, Meshed, and Abadan. 68% of population rural. Language — Persian (Farsi). Many Kurdish dialects and Arabic also spoken. Labor — 75-80% of the population directly or indirectly dependent upon agriculture for livelihood. Industrial em- ployment estimated at 200,000 — with 60,000 in petroleum, 40,000 in textiles, 36,000 in railways, and 21,000 in foodstuffs. CHAPTER Market View Oil income and development spending mark the expanding Iranian market of the midsixties. Record oil revenues being put to work by the Iranian Gov- ernment on economic development projects have created a climate of prosperity and an important market for U.S. products. In 1965 1 . Iranian imports reached a record high. With increased purchases for public sector projects and heavy private imports, total imports that year rose 30 percent over that in 1964 to almost $750 million, of which $131 million came from the United States. Government spending and the easing of credit and import restrictions imposed from 1960 to 1962 also served to strengthen business confidence and to provide an increased market for U.S. exports. The sharp upswing in imports has recently led to precautionary measures aimed at firmer governmental control over private imports in order to ensure the stability of the economy. The current sales outlook in Iran is especially good for machinery, equipment, and the engineering services necessary to implement development plan projects. Semimanufactures, such as steel mill products, and essential consumer goods should continue to sell well while increasing private investment in small general industry is expected to provide a market for selected industrial equipment. In spite of relative economic prosperity, however, Iran is not a wide-open market. Competitiveness and aggressive salesmanship alone do not determine whether a product can be sold in Iran, although these are important factors. The level of foreign exchange earnings as well as Government development spending, credit, and import policies are vital factors in deter- mining salability of a product. The Iranian consumer goods market, for example, is limited by Government import restrictions. Less essential consumer goods are subject to high import duties and taxes while the import of items which are competitive with locally produced goods may be prohibited. THE ECONOMY In 1964 2 , the Iranian economy emerged from a 3- year recession that had resulted from steps undertaken in 1960 to counter inflation and balance-of-payments problems. With the cooperation of the International Monetary Fund — IMF, an economic stabilization pro- gram was instituted under which credit was restricted, imports were curtailed, and public investment was reduced. The program had the desired effect of build- ing up foreign exchange reserves and reducing the Government's foreign debt. It also stifled business activity. Government efforts to simulate the economy by easing credit and import restrictions and by in- creasing public expenditures during the latter part of the recession, had little effect until 1963; not until 1964 did the economy show an appreciable gain. Be- ginning that year, imports rose sharply and by 1965 it was deemed desirable to dampen the pressure for increased imports without, however, putting the brakes on the economy. As a result, selective controls, far less severe than those in force during the economic stabilization program, were imposed. These took the form of increased Central Bank deposit requirements for commercial banks and heavier prior-deposit re- quirements for goods imported on a letter-of-credit basis. The oil industry dominates the money economy of Iran which is the sixth largest producer of crude oil in the world (626,000,000 barrels in 1964). In the year ending March 20, 1965 receipts from oil royalties and from oil company expenditures within Iran ac- counted for $754 million, or 81 percent of the coun- try's total foreign exchange receipts of $933 million. Even excluding the nonrecurring receipt that year of $185 million in bonuses for new concessions, oil revenues represented 76 percent of the total. The oil industry is the largest employer of industrial labor in Iran and the major exporter. Further, it will be a major supplier of raw materials for other planned domestic industries, such as petrochemicals, fertilizers, and sulfur. The operating and expansion requirements of the foreign oil companies in Iran along with those of the National Iranian Oil Company offer a significant market which is not subject to the usual restrictions or the variables of the general economy. Thus, direct shipments to oil companies are free of import duties, taxes, and exchange controls. With the expansion of existing oil company facilities and with the recent award of new concessions in the Persian Gulf to six groups of international oil companies, this multi- million-dollar oil company market should expand. Aside from petroleum and natural gas, Iran has substantial and varied mineral resources which are largely unexplored. Deposits of coal, iron, copper, lead, manganese, chrome, nickel, cobalt, sulfur, and sodium salts are potentially important. Textiles, sugar milling, cigarette manufacturing, and cement are the leading manufacturing industries. Cot- ton spinning and weaving is the most important seg- ment of the textile industry although woolen textiles are produced also. Locally grown sugar beets and imported raw sugar as well as cane sugar are refined. There are many other small industries as well as planned or actual assembly and processing of semifinished imported materials. Cottage industries also are important. Iran's Third Economic Development Plan, Septem- ber 1962 through March 20, 1968 (see chapter IV) which places a high priority on such basic industries as steel, aluminum, and petrochemicals, also em- phasizes the private development of smaller industries. The third plan presents numerous opportunities for U.S. suppliers. Expenditures for the SV-j-year period Agriculture Contributes More Than Oil to the Gross National Product. The National Economy Continues to Grow Percent of Toted 1961 1962 1963 1964 1965 Year Ending March 20 (September 1962 through March 1968) are pegged at $2.66 billion with the emphasis in Government spending being placed upon infrastructure projects — roads, railroads, and electric power — and on agricul- tural development. While oil gives the major impetus to the Iranian economy, agriculture contributes more than oil to the gross national product — GNP and employs 70 to 80 percent of the total labor force in the country. Wheat is the principal crop and cotton the major cash crop. Under the Land Reform Law, landholdings are being reduced to one village, and farmers are being provided with credit to purchase their own land. Agricultural development also has an important place in the de- velopment program, and new needs and sales oppor- tunities are opening up as conditions change. Iran's fishing industry, the major source of the world's caviar, currently employs about 12,000 persons and is expanding. Sturgeon, white salmon, white fish, carp, bream, pike, catfish, and herring are found in the Caspian Sea while sardines, tuna, bream, snappers, mackerel, and shrimp are caught in the Persian Gulf. Iran also has some 44.5 million acres of forest, principally around the Caspian Sea, which are largely unexploited. Much of it consists of oak, ash, elm, beech, popular, pine, box cypress, maple, walnut, and honey-locust. Other than petroleum, Iran's principal exports are carpets, cotton, and fruits. These three items accounted for 59.5 percent, or $99.7 million, of total nonoil THE MIDDLE EAST exports of $151.6 million in 1965. Total exports, including oil, amounted to $1.1 billion for that year. Major markets for nonpetroleum exports include the U.S.S.R., the United States. West Germany, and the United Kingdom. IMPORT MARKET Iran must import virtually all of its requirements of machinery and equipment, motor vehicles, many semimanufactured products, chemicals, and pharma- ceuticals. For the year ending March 20, 1965, imports of industrial and electrical machinery totaled $160 million or 21 percent of total imports. Iron and steel mill products and manufactures comprised another 10 percent. Motor vehicles and parts including ve- hicles imported for local assembly amounted to $43 million in 1965, while imports of chemicals and pharmaceuticals totaled $63 million for the same year. Table 1 identifies principal product categories im- ported during the vear ending March 20, 1965. Only a small portion of the total population can be considered as a market for less-essential consumer Oil Revenues Outdistance All Other Sources of Foreign Exchange Revenue (millions of dollars) 1961 1962 1963 1964 1965 11965 includes $185 mill jroceeds, invisibles, for, goods. This is so (in spite of familiarity with and keen interest in many imported consumer items) because of low purchasing power and Government import controls on many consumer imports. The consumer goods market consists of professional and higher paid business and Government persons living in Tehran and those associated with the oil industry in the South. The estimated two-thirds of the total population in rural areas cannot be considered as a market for most imported products. The rural residents generally conduct trade on a barter basis and, except for sub- sistence goods, can afford only such items as tea, sugar, and clothing. No one country dominates the Iranian market and in only a few instances does one country dominate the market for a particular product. West Germany and the United Kingdom are the principal competitors of the United States for the Iranian market (see table 2 ) . Together with the United States, these nations have had approximately 50 to 60 percent of the market since 1960. The United States was Iran's second leading sup- plier in 1965. Imports from the United States in- creased from $82.1 million in 1964 to $131.1 million in 1965. That increase amounted to 59 percent and exceeded the rate of increase in total Iranian imports. Principal imports from the United States in the year ending March 20, 1965, were, in thousands of dollars: Total, United States. Wheat Soybean oil, raw or refined Passenger c£ rs, exceeding $1,220 but nol exceeding 12,640 Ian ded value Agricultural tractors Parts, motor vehicles, n.e.s Patent medicines Cottonseed < il, raw or refined Antibiotics Vanettes, truck Animal oils, n.e.s Parts for well drilling equipment Motor-car engine, parts Machinery parts, n.e.s Wheat flour Truck tires Shifting machinery, n.e.s Shifting machinery, parts Internal combustion engines, stationary... Deep well pumps Parts, tractor, n.e.s Wrapping paper Others 3,722 3,548 3,404 2,897 2,749 2,709 2,693 2,175 1,876 1,856 1,790 1,775 1,723 1,478 1,467 1,424 1,415 61,765 Source: Ministry of Economy ^f'tistic- . Form,,, Trade Statistic. Note: n.e.s. — Not elsewhere spec Yet, Australia sells more wheat, West Germany more automobiles, and Switzerland more pharma- ceuticals to Iran than does the United States. The United States is the leading supplier in the truck and 1 \ \ z < < ; 3 / 1 x "-~"-,^- id < CO _, v. --'" ) \ 2 < ' / — V 1 tractor markets but other countries, such as West Germany, Sweden, and the United Kingdom, offer substantial competition. In 1965, West Germany with sales of $144.1 million was Iran's leading supplier. West Germany was par- ticularly strong in the structural steel, steel pipe, and automobile markets. A considerable amount of textile machinery and related materials, electrical equipment, and most telephone equipment in the country is of West German origin. Principal Iranian imports from West Germany in the year ending March 20, 1965, were, in thousands of dollars: Total, West Germany 144,079 Iron and steel beams 9,503 Iron and steel pipe 6,617 Truck chassis, without cab 4,910 Passenger cars, not exceeding $1,320 landed value 4,678 Patent medicines 4,519 Artificial textile fibers 4,510 Passengers cars, exceeding $1,320 but not exceeding $2,640 landed value 4,374 Machinery parts, n.e.s 3,552 Artificial silk thread 3,490 Parts, telephone apparatus 3,011 Truck chassis, with cab 2,934 Parts, motor vehicle, n.e.s 2,850 Agricultural tractors 2,482 Motorcar engine, parts 2,175 Dyes, vat 1,877 Iron and steel sheets, finished 1,602 Storage batteries 1,378 Parts, stationary internal combustion engines 1,329 Others 81,288 SnuiTc: Ministry of Economy, General Department of Trade Statistics. Forrhm Trade Statistics of Iran, 1943, Tehran. Note: N.e.s. — Not elsewhere specified. Imports from the United Kingdom amounted to $102.5 million in the year ending March 20, 1965, and were, in thousands of dollars: Total, United Kingdom 102,485 Chemical products, n.e.s 6,281 Iron and steel sheets, finished 3,276 Internal combustion engines, stationary 3,226 Motor pumps, with suction pipe diameter of more than 3 inches, excluding deepwell 3,185 Agricultural tractors 3,041 Wool fabrics, weighing between 250 and 300 grams per square meter 2,797 Truck chassis, with cab 2,598 Lumps, slabs, waste; gold 1,977 Patent medicines 1,878 Iron and steel sheets, semifinished 1,795 White granulated sugar 1,744 Machinery parts, n.e.s 1,659 Iron and steel pipe 1,625 Parts, stationary internal combustion engines 1,607 Passenger cars, exceeding $1,320 but not exceeding $2,640 landed value 1,547 Truck tires 1,287 Razor blades 1,280 Taps, cocks, valves, fluid control 1,177 Others 60,505 Source: Ministry of Economy, General Department of Trade Statistics, Forcitm Trade Statistics of Iran, 1943, Tehran. Note: N.e.s.— Not elsewhere specified. Still other countries offer strong competition to U.S. suppliers in particular products. For example, French and Australian wheat, Swiss and French pharma- ceuticals, Japanese pipe, and Italian artificial textile fibers and threads are sold in large amounts. The United Kingdom is also the major source of supply for the oil consortium. The consortium was formed following the crisis which was the result of the nationalization of the oil industry in 1951, a consor- tium was formed to take over the operations of the Anglo-Iranian Oil Company. The participating com- panies operate on a lease, with 50% of the profit going to Iran. The 40 year concession, signed in 1954, cov- ers about 100,000 square miles in southern Iran. The following are the participating foreign oil companies and the amount of their participation: British Petro- leum Co. Ltd. (40), Royal Dutch Shell Group (14), Compagnie Francaise de Petroles (6), Standard Oil Company of New Jersey (7), Standard Oil Company of California (7), Texaco Inc. (7), Gulf Oil Company (7), Socony Mobil Oil Co. (7), and Iricon Agency, Ltd., composed of eight U.S. companies (5). Locally produced goods offer competition to U.S. exports only in a few product categories. Imports similar to some Iranian manufactures are prohibited, including cotton textiles, tires, most petroleum lubri- cants, cigarettes, and electric refrigerators. These prohibitions are listed in the annual Iranian export- import regulations. In addition, the Ministry of Health has the authority to prohibit the import of those pharmaceutical products that compete with pharma- ceuticals mixed or packaged locally. The import of agricultural products is also subject to special restric- tions and prior Government approval. Other products are assembled locally but not in quantity sufficient to meet the current demand. Local assembly of automobiles, trucks, tractors, water-cooled air conditioners (all of which may be imported) now offers only limited competition to U.S. exporters of those products. Iran's capacity to absorb a large volume of imports depends primarily on its oil revenues from foreign oil companies operating in the country. For the next several years, this revenue should expand gradually as oil production by the oil consortium expands. Any large increase in oil income will depend upon the success of the oil companies which hold the newer concessions. Throughout the duration of the third plan, agricul- tural tractors and implements, irrigation pumps, power generating and transmission equipment, roadbuilding and construction equipment, and steel mill products should sell well. As general manufacturing and as- sembly industries are developed, there will be more imports of raw materials, semimanufactured goods, and knock-down products. Currently, there is a good market for plastic raw materials, tinplate waste, copper sheets, and aluminum ingots and sheets. In the con- sumer goods market, the best prospects are for pharmaceuticals and agricultural products. TRADE POLICY The Iranian Government has indicated that its current import policy will continue in effect until 1968, the end of the third plan. The Government permits imports for use in development projects but restricts less essential imports that compete with locally produced goods. The general import trade policy in effect for the duration of the third plan is aimed at reserving the foreign exchange necessary for essential imports. Imports of foreign products which are not produced in Iran, or are not produced in sufficient quantity to meet domestic demand, are permitted. Imports of luxury and nonessential goods, however, have been restricted in order to save foreign exchange reserves. Both import duties and commercial profits taxes are imposed on imports. Generally, the less essential the product, the higher is the duty and tax. Import duties and taxes are lower on machinery and equipment, raw materials for local industry, and essential manufac- tures than on consumer products. The Government specifies that certain products may be imported on a letter-of-credit basis only and requires a certain percentage of the value of the letter of credit to be deposited in advance. This deposit requirement is often increased or decreased as a means of controlling foreign exchange. The amount of the deposit re- quired varies with the product. The Government also specifies that only certain goods may be imported on a time draft basis. SHANAZ DAM: The Shanaz Dam near Hamadan in western Iran controls water to irrigate crops and to produce electric power. Iran has a trade agreement with the European Economic Community — EEC. 3 The agreement pro- vides for EEC tariff preferences and quotas for Iranian exports of carpets, dried raisins and apricots, and caviar. No tariff preferences are given by Iran to EEC exports. Bilateral trade and payments agreements currently are in effect with Hungary, Rumania, Czechoslovakia, Poland, and the U.S.S.R. Transactions must be made through agreement accounts denominated in U.S. dol- lars. These agreements are primarily designed to promote Iranian exports which have difficulty in find- ing markets elsewhere. Iran is a member of the Central Treaty Organiza- ind Luxembourp tion- — CENTO, which has undertaken a number of economic projects in Turkey, Iran, and Pakistan. Railroads, roads, and telecommunications projects under CENTO have been completed or are under construction in these countries. These projects are financed partly by the regional countries and partly by loans and grants from the United Kingdom and the United States. Iran, Turkey, and Pakistan established in 1964 the Regional Cooperation for Development — RCD organ- ization. Although paralleling the activities of CENTO in some areas of regional development, this organiza- tion is intended to widen the areas of economic coop- eration among member countries. The RCD is cur- rently studying means of integrating development plans, lowering tariffs, and establishing joint air and shipping lines. CHAPTER a Market for Selected Products Marketing information on various products is sup- plied in this chapter. In addition, products and product groups offering the best opportunities for U.S. export sales are analyzed. Marketing informa- tion on economic development projects which are being implemented under the third plan is reported in chapter IV. Import requirements for these projects offer a substantial market for U.S. goods and services. Although there are many items which U.S. firms cannot now supply competitively, there are other products which U.S. suppliers might supply. United States exports of synthetic textiles, raw plastic ma- terials, road rolling equipment, and certain medicines, for instance, could be sold in greater quantities in Iran. Total imports and imports from the United States for the years 1963, 1964, and 1965 as well as the principal suppliers in 1965 of selected products are shown in tables 3 through 19. Some of the countries listed as principal suppliers are not actually the country of origin or manufacture but rather the country of shipment. More detailed marketing information on individual products may be obtained on request from the Near East-South Asia Division of the Bureau of Interna- tional Commerce or from the Business and Defense Services Administration — BDSA, U.S. Department of Commerce, Washington, D.C., 20230. AGRICULTURAL PRODUCTS Iran has the potential to be self-sufficient in agricul- tural products with the exception of such items as coffee and spices. At present, however, imported cultural products include vegetable oil, wheat, sugar, tea, butter, poultry, and powdered milk (see table 3) Wheat and vegetable oil currently offer the most at tractive markets for U.S. exporters. The level of Iranian imports of wheat, the principal agricultural export of the United States to Iran, varies with the amount of the Iranian crop. Thus, Iranian imports of wheat rose from $5.1 million in 1964, a good crop year, to $38.7 million in 1965, a year of poor harvests. Most of the shipments of United States wheat have been under the Public Law 480 program. Currently, these shipments are being made under Title IV of Public Law 480. Title IV shipments coyer sales to foreign governments or private entities under long term dollar credits. In the past, Title IV wheat agreements with Iran have been made both with the Government of Iran and with Iranian private entities. Besides providing for shipments under the agreement, Title IV agree- ments also require the Iranians to purchase additional tonnage from free world sources. Therefore, U.S. wheat does have a commercial market in Iran. Data on Public Law 480 shipments to Iran, in cal- endar years 1962-64, by title, were, in thousands of dollars: Title 1962 1963 1964 I 10,413 1,984 11,462 IP 2,431 10,487 1,648 III 3,611 1,712 2,294 IV 2 = 1,383 1 Title II shipments are valued at cost to the Commodity Credit Corporation. Shipments under other titles are valued at market - None. Source: U.S. Department of Agriculture, Washington, D.C. The importation of some items, such as citrus and deciduous fruits and nuts, is prohibited. Imports of wheat, barley, oats, and flour, except wheat flour, must have the prior approval of the Minister of Economy. The additional approval of the ministries of Agriculture and/ or Finance is required for wheat imports. Government monopolies import and fix domestic prices for tea, tobacco, and sugar although import licenses are sometimes granted to individuals for tea and sugar. Municipal governments commonly set retail prices for meat, fruits, and vegetables, and the Government sets the price for bread. The market for processed foodstuffs is not large and is confined principally to the foreign population and the more well-to-do Iranians. In Tehran, food products are distributed by wholesalers and importers to small neighborhood foodstores. There are, how- ever, several supermarkets which have facilities com- parable to but not as extensive as those in U.S. super- markets. A Danish-Iranian firm maintains several frozen food storage plants. PAPER, PHARMACEUTICALS, CHEMICALS Iran depends on imports for virtually all its paper and paper products (table 4). In 1965, imports of paper, excluding books and printed matter, amounted to $18.7 million. Japan was the principal supplier of the $5.6 million writing and printing paper market. Iran's newsprint requirement is 7,700 tons per year. In 1965, this market was supplied primarily by the U.S.S.R., Austria, and Finland. Iranian importers report that U.S. suppliers are not competitive price- wise in these markets. U.S. firms are active in selected sectors of the market. Wrapping paper imports totaled $2.9 million in 1965 of which $1.4 million came from the United States. In addition, facial tissues are produced locally under license from a U.S. firm. Specific duties are assessed on most paper products. With the exception of newsprint, which may be im- ported when paid for by draft, imports of paper products require letters of credit. The Iranian Tobacco Monopoly is the sole buyer of cigarette paper. Total imports of pharmaceuticals amounted to $33 million in 1965. Most major foreign manufacturers are represented in Iran and there is some local manu- facture (i.e. mixing, packaging, tabletizing) of phar- maceutical products. More local processing is planned. Many European, United States, and Japanese firms sell in the market, and the competition is keen. The leading foreign manufacturer (Swiss) has 10 percent of the market. To import pharmaceuticals, local importers must obtain a special license from the Ministry of Health. (Appendix A contains an unofficial translation of the license application.) Licenses are issued on a 3-year basis for each foreign product to be imported. The current policy of the Iranian Government is to en- courage local manufacturing of pharmaceuticals. Ac- cordingly, there is a reluctance to grant import licenses for certain products if the Ministry of Health believes local manufacturing is possible. The Government also is seeking to limit the number of brands of a given product being sold in the country. In spite of the difficulties which Iranian importers are currently having in obtaining import licenses, there is a signifi- cant market for imports of pharmaceuticals, par- ticularly for those firms which arrange local packaging and mixing of their product. There are 200 retail pharmacies in Tehran. In addi- tion to the maintenance, by local distributors, of a sales force to call on the pharmacies, some manufac- turers' representatives have a force of technically qual- ified representatives (detail men) who call on the med- ical and dental profession to explain the nature and specifications of their products. Other foreign manu- facturers give their distributor an allowance to train detail men. Most importers have their own wholesale distribu- tion department. A few independent wholesalers do buy from importers. Distributors generally receive extended payment terms from foreign manufacturers (90 days) and in turn pass this on to the retail outlets which commonly repay the distributor by postdated check or by note over a 2-to-4-months period. The Government sets the retail price for pharmaceuticals, allowing a 40-percent profit which is split among the importer, wholesaler, and retailer. Dyestuffs, plastic raw materials, and fertilizers cur- rently could be exported to Iran from the United States in increasing amounts. Total imports of these products from all countries amounted to $20 million in 1965, and the U.S. share was $1.5 million. Data on these imports are presented in table 5. West Germany is the principal supplier of dye- stuffs to the textile industry, the main consumer. West German suppliers are so well entrenched in the dyestuff market that U.S. firms will have difficulty in entering that market without good local representation or repeated contact with textile manufacturers. The Import Trend is Up Imports, Total (millions of dollars) 1959 1960 1961 1962 1963 1964 1965 ars Ending March 20. Production of plastic products has increased rapidly; a few large and many small plants produce a wide range of plastic articles. Urea formaldehyde, polyvinyl chloride compounds, phenolic polystyrene, polyethyl- ene, and polyamid are currently being imported for domestic industry. Plans for local production of these raw materials to meet local needs are underway but will require several years to complete. In the past, actual use of fertilizers has been limited, but the Iranian Government now recognizes the need for increased use of fertilizers in order to meet de- velopment plan goals. Although imports of chemical fertilizers in 1965 totaled only 38,500 tons, imports could increase rapidly when modern farming tech- niques become more widely used. Chemical fertilizer is produced at Shiraz in a factory which will eventually have a capacity of 88,000 tons of urea and ammonium nitrate. The Chemical Institute of the Ministry of Agriculture currently imports and subsidizes the resale of fertilizers to farmers. Imports of paints, varnishes, pigments, and related chemicals totaled $4.4 million in 1965: West Germany, the United Kingdom, the Netherlands, Denmark, and the United States were the principal suppliers of these materials. Local production in 1963 of linseed oil- based paint was estimated at 2,750 tons, which was about 70 percent of domestic requirements. Chemicals produced locally include sulfuric acid, caustic soda, sodium sulfate, stearine, glycerine, sulfur, and iron oxide. Only small amounts of them are made. No One Country Dominates Among the Iranian Suppliers Value of Impt TEXTILES AND TEXTILE MACHINERY The second largest industry in Iran is textiles. Many of the larger mills are located in the Isfahan area, which accounts for 60 percent of the total production of the country. The annual capacity of the industry approximates 500 million yards, but current production is estimated at 350 million yards. About 60 percent of this production is cotton piece goods, 25 percent synthetic fibers, 12 percent silks, and the remainder woolens. Selected statistics on the Isfahan textile industry are: Employees number 16,738 Cotton Spindles do 245,151 Looms do " 3,822 Production Cloth yards 59,933,608 Yarn bundles .. Consumption Cotton tons Viscose do Wool Spindles Woolen number... Worsted do Looms do Production Cloth; woolen and worsted ■1.779,981 Blankets do Consumption, wool tons. Note: 1 bundle = 5 pounds. yards 2,840,207 280,829 3,073 Imports of some textile raw materials and fabrics are prohibited, including raw silk, silk thread (except for retail sale), many silk fabrics, certain artificial silk fabrics, wool blankets, certain cotton threading, and cotton fabrics. Special approval of the Ministry of Economy is required for imports of raw cotton, cotton waste, and carded and combed cotton. Imports of used clothing are banned. Synthetic thread, fibers and waste, raw wool, wool yarns and threads, and wool fabric may be imported (see table 6). Imports of these products amounted to $57.8 million in 1965. Although the market is currently supplied by Japan, West Germany, and Italy, it offers good prospects for U.S. exporters in the immediate future. About 75 percent of cotton piece goods consumed are of the light, inexpensive, calico type. Of all textile fabrics sold for wearing apparel, 80 to 90 percent are sold as piece goods; the remainder, as ready-to-wear. Readymade items include stockings, ties, undergarments, and an increasing amount of men's shirts and suits. Much of the clothing is manu- factured in small, two- or three-man tailor shops. In buying fabrics, merchants give preference to color, design, price, and width of the goods. There is little brand recognition and quality seems to be a secondary criterion. A large amount of cloth is purchased by govern- mental and private institutions. About 25 percent of the cotton cloth purchased by these institutions is distributed to employees as a bonus before the Iranian New Year. Imports of most wearing apparel are prohibited. Exceptions include hosiery, overcoats, underwear, neckties, corsets, brassieres, belts, and hats, but import duties and taxes on these products range as high as 150 percent. Since Iran is self sufficient in many textiles, no overall expansion such as occurred during the Second Economic Development Plan (1955-62), is now planned for the textile industry. Thus, the market for textile machinery consists principally of replace- ment equipment although a few mills are planning in- dividual expansion projects. Much of the machinery already in the country is of West German and British manufacture; additional machinery tends to be pur- chased from the same sources unless price and credit terms make another country's products significantly more competitive. In addition, the competitiveness of Japanese firms makes the textile machinery market a difficult one for U.S. firms to enter. Total imports of textile machinery and spare parts, including sewing machines, amounted to $10.9 million in 1965, up from $7.4 million in 1964. Data on im- ports of principal items of textile machinery in 1963- 65 are shown in table 7. CERAMICS AND METALS Among the glass products manufactured in Iran, glassware, containers, and sheet glass are not sufficient to meet local demand. Imports of those items are reported in table 8. Total imports of glass including chinaware amounted to almost $7 million in 1965. Importers of glass products generally act as whole- salers and distributors as well as sales agents for local manufacturers. Their sales offices often are located in the Tehran bazaar which is also the major retail outlet for that city and the distribution center for the country. With an increase in construction activity, the de- mand for sanitary fixtures has improved. At the present time, however, these fixtures are imported primarily from Eastern and Western Europe at prices averaging 20 percent below those of comparable equip- ment from the United States. Total imports of sanitary fixtures amounted to $2.6 million in 1965. There are no metal smelters currently operating in Iran; the bulk of the country's metal requirements must be imported. Principal imports are listed in table 9. There is, however, significant local fabrica- tion of handicraft and household items. Machinery, Vehicles, Base Metals, and Chemicals are Among the Principal Imports. Millions of Dollars 120 ^^^^^ Base Metals «. ^^^ 100 ^^^^ \ ^^^ 80 60 .-___ — — «»^^ »»♦*** ~~ „...-- — '*»!:," — ■'"'"' \ Chemicalsand /* '""»».„ Pharmaceuticals %% »*° 40 ^ — Electrical Machinery V ^^^w^-* - """ 20 ^ — Motor Vehicles 1 1 1 1 1 1961 1962 1963 1964 1965 J/ Year Ending March 20. Sou '"' hXTTwSS^i j»Ti34S 0f Tr ° de S,aHs,iCS ' Imports of steel mill products totaled $50 million in 1965. The Republic of China (Taiwan) was the principal supplier of bars, angles, and rounds while West Germany was the major source for beams, channels, wire, and pipe. The United Kingdom was the principal supplier of plates and sheets. United States suppliers have not been competitive in this market except for tinplate waste and uncoated pipe. Imports of steel products for general industrial purposes are made by commission agents. Sales are made either direct to end users on large orders or to small warehouses on other orders. Several steel industry projects are in various stages of planning or construction. In January 1966 an agreement was signed with the Soviet Union for the construction of a 600,000 ton integrated steel mill which will be located near Isfahan and will use iron ore and coal from deposits near Kerman. A rolling mill is under construction in Ahwaz which will have a capacity of 65,000 tons of finished products. A steel pipe mill is also being planned. Imports of ingots and semifinished copper and aluminum products totaled $7 million during 1965. The principal imports are reported in table 10. Copper sheet and plates are used in making handicrafts. Both copper and aluminum are fabricated into utensils. An aluminum extrusion mill outside Tehran produces custom bars, tubes, and rods. The best prospects for U.S. products in this market appear to be copper tube and aluminum ingots. MACHINERY Agricultural Equipment. — One of the best mar- kets in Iran is for agricultural machinery and irriga- tion equipment. With Government emphasis on agri- cultural development and with only a few districts of the country even partially mechanized, there should be a strong, continuing demand for tractors, farm implements, and irrigation pumps. In 1965, imports of agricultural tractors totaled $13.5 million, with the United States, United Kingdom, and West Germany holding the major share of the market. The principal suppliers are listed in table 11. Thirty-five foreign manufacturers of agricultural ma- chinery are represented in Iran. Local assembly of tractors is being undertaken by a Swedish firm, but the Government does not now restrict tractor imports. The Ministry of Agriculture estimates that under its mechanization program 20,000 tractors, 1,950 combines, 6,800 small tractors, and 40,000 various types of implements will be needed by 1970. At the end of the calendar year 1964 there were an estimated 6,479 tractors and 1,105 combines in Iran. Imports of agricultural implements amounted to $6.1 million during 1965. Small, hand-driven mech- anized equipment for rice cultivation is being sold in increasing amounts, particularly by the Japanese. The market for disc plows, rotary hoes, and seed drills has good potential. In selling agricultural im- plements, there is a need for educating farmers in both the use of the equipment and the methods of modern farming. Most importers of foreign equipment import for their own account and also act as distributors. They maintain spare parts and servicing facilities. The markup on sales ranges from 20 to 30 percent. Iranian Government policy toward the agricultural sector is an important influence on the type of farm equipment that can be sold. Farm equipment of small size sells best. This is so because the land reform program limits the size of the farmer's holdings and because the Government finances a greater .portion of the cost of small equipment than of large equip- ment. The Agricultural Machinery Bongah (institute) finances part of the cost of the farmer's purchase of certain types of equipment, thus: tractors up to 45 horsepower (hp.), Rls. 150,000; tractors 46 to 60 hp., Rls. 200,000; tractors 61 to 90 hp., Rls. 300,000; trac- tors over 91 hp., none; implements, 75 percent of value; and combines, Rls. 400,000^ The loan is payable in six years at six percent. The farmer may obtain a loan from the bongah only if the foreign manufacturer from whom he buys the equipment is registered with the bongah. In addition, the distributor often finances the farmer for a por- tion (usually up to 50 percent) of the balance not eligible for a bongah loan. Some sales are financed entirely by distributors but this is costly to the farmer. On a 2-year installment loan, with 15 to 20 percent down, the farmer may be charged interest as high as 20 percent per year. Much of the farmland in Iran is irrigated and this is done principally through ditches or underground conduits (qanats). United States manufacturers sup- plied 70 percent of the $2 million worth of deep well turbine pumps sold in 1965 (see table 12) while the United Kingdom was the principal supplier of cen- trifugal pumps. Pumps are not now manufactured locally although there are plans for their local assembly. The Ministry of Water and Power, which distributes pumping equip- ment to farmers, is a major purchaser of pumps. Import duties are not levied on agricultural ma- chinery or deep well pumps, nor are there any ex- change restrictions on imports of agricultural ma- chinery. For pumps sold on a sight draft basis, the draft must be paid within 2 years. Food Processing Equipment. — Food processing is an infant industry in Iran. But. with Government emphasis on agricultural development, the market for food processing machinerv should increase. Firms in- terested in selling this machinery equipment should be flexible in their sales approach. Sales often have to be made on a turnkey basis. In other instances, some equity participation in the venture may be nec- essary on the part of the equipment supplier. In any event, suppliers should be prepared to provide tech- nical assistance for the installation and operation of their machinery. Progress has been made in the development of vege- table oil processing, sugar refining, fruit and nut dry- ing, and date packing. Local production of vegetable oils, based almost entirely on locally grown oilseeds, amounted to 38,500 tons in 1965. The current demand for vegetable oil is estimated at double this amount. Sugar beet production in 1965 was estimated at 1.1 million metric tons from which 159,500 tons of cane sugar were produced. An additional 22,000 tons were refined from sugar beets. Date production for Khuzi- stan Province, the principal producing region, approx- imates 82,500 tons a year. To meet local demand and increase exports, the Government envisages the expan- sion of each of these industries; their expansion will require processing machinery. The vegetable and fruit canning industry is also expanding. Currently, many of these products are available only on a seasonal basis and production is limited. Approximately 50 million units of canned vegetables and fruits are produced annually by 20 canning factories of which 8 are of relatively large size. Although processors have difficulty in obtaining a constant flow of raw materials, total production is expanding every year. Less sophisticated and semi- automatic equipment is most suited to this market. Some alcoholic and nonalcoholic beverages are man- ufactured locally. There are three milk pasteurization t *l{ at"** WB\\*. ABADAN REFINERY: One of the world's largest crude oil refineries. It's located at Abadan, Iran, at the head of the Persia) Gulf. plants and several ice cream plants in Iran. The major U.S. soft drink manufacturers have bottling plants; the present production of soft drinks is sufficient to satisfy the demand. There are two breweries and some wine is produced locally. The import of alcoholic bev- erages is prohibited except by permission of the Min- ister of Economy for the consumption of tourists. Electrical Equipment and Appliances. — Electri- cal equipment requirements are expected to rise dur- ing the next several years because of the electrifica- tion program which is being carried out under the third plan. In addition to providing a market for power generating and transmission equipment, the electrification program, by bringing adequate power to many Provincial towns for the first time, will pro- vide an increased market for electric appliances and electrical industrial equipment. In addition to steam and hydrogenerating units, the sales outlook is par- ticularly good for diesel generating units. Imports of electrical equipment, including appli- ances, amounted to $40 million in 1965. West Ger- many was the principal exporter of generating and transmission equipment while U.S. suppliers are most competitive in heavy power generating equipment. United States exporters face import barriers and stiff competition in the electric applicance market. Electric refrigerators are assembled locally and their importation is prohibited; nonelectric refrigerators may be imported. Cooking stoves and small space heaters, although manufactured locally, may also be imported. In 1965, over $1 million worth of small electric fans were imported; two-thirds of these were supplied from Japan. Electric shavers, flat irons, vacuum cleaners, and hair dryers are also imported in small, but increasing amounts. Import data on some of these products are contained in tables 13, 14, and 15. Radio and television receiving equipment is assem- bled locally and its importation is prohibited currently. Only component parts may be imported. Imports of component parts for radio receivers totaled over $3 million in 1965 and were supplied principally by the Netherlands, France, West Germany, the United States, and Japan. There is a potential market for television OIL MONEY: Revenues from oil are greater than fi other one source. Here is a tank farm located near Tehran, Iran. transmission equipment for a Government-owned proj- ect in Tehran that has been in the planning stage for several years and for radio transmission equipment. The market for air-conditioning equipment should continue to expand. Water-cooled equipment is assem- bled locally and has proved popular in the Tehran area because the cost is lower than gas-cooled, im- ported equipment. Gas-cooled equipment is more pop- ular in the South because it is more effective in the 125° F. temperatures of the summer months. With increased construction activity in Tehran, there is also market for central air-conditioning systems. Office Equipment. — All business machines, type- writers, and office supplies are imported. On the other hand, office furniture is manufactured locally; since production meets demand, imports are restricted. Imports of business machines and typewriters to- taled $2 million in 1965. West Germany, Sweden, and the United States were the principal suppliers (see table 16). While less sophisticated automatic data processing machinery has been sold primarily to the banking community, importers indicate that there is an untapped market for this type of equipment in the governmental and commercial sector. Importers of office machinery buy for their own ac- count and act as distributors, maintaining showroom and service facilities. Most major foreign suppliers are represented. Tools. — Machine tools are not produced locally. Both machine tools and hand tools are imported. Total imports of these tools approximated $10 million in 1965. With increasing industrialization, the mar- ket for machine tools, in particular, is expected to expand. West Germany is the most important tool supplier, but competition is increasing from Japan and Eastern European countries. United States firms are competi- tive in some lines, such as welding equipment. Data on handtool imports appear in table 17. Of the hundred shops selling machine tools, half do their own importing. Important buyers of machine tools include the Iranian State Railways, the Iranian Army, and the oil consortium. Central Bank regulations require that some tools be purchased only on a letter of credit basis; others, sight and time draft. Terms of 180 days are com- mon for time drafts. MOTOR VEHICLES AND PARTS Iranian imports of automobiles, which were at a low level during the recession period of 1962-64, rose significantly during 1965 (see table 18). West Ger- many and the United States lead the small and me- dium-sized car market, respectively. Trade sources indicate that the Iranian market can absorb 20,000 passenger cars per year. Major foreign manufactur- ers maintain dealers with service facilities in Tehran. A list of Iranian imports of items valued at over $500,000 of which the United States had less than 10 percent of the market in 1965 appears in table 21. The passenger car market is, however, inhibited by high import duties and commercial profits taxes — CPT, which are levied on the c.i.f. value under the Iranian customs tariff as follows: Landed Cost Import duty, Commercial profits $1,333.33 or less $1,333.34 to $2,000.00... $2,000.01 to $2,666.67... $2,666.68 to $4,000.00... Over $4,000.00 tax, per pound $0.36 50 Thus, the duty and tax on a $2,500.00 car weigh- ing 2,200 pounds would be $1,806.00. Italian passenger cars as well as U.S. and U.K four-wheel drive vehicles are now being assembled. Some 1,500 units were assembled in 1964. West Ger- man, British, French, and U.S. manufacturers are ne- gotiating with Iranian partners for joint venture senger car assembly operations. These operations, at capacity, may supply most of the market. West Ger- man and British firms are assembling trucks and buses, several other firms have been given licenses for local assembly. Imports of motor vehicle spare parts were valued in 1965 at $25 million of which the United States supplied 30 percent. Since there are over 200 im- porters of spare parts, the market is competitive. Al- though there is some preference for genuine and well- known brand parts, the emphasis is on price. For instance, Japanese fan belts which are currently sell- ing for 50 to 60 percent less than some U.S. brands now dominate the market. Most imports of spare parts are on a letter-of-credit basis. Imports of service and maintenance equipment are not large primarily because of a small repeat busi- ness. Hydraulic and mechanical jacks, lubrication equipment, and headlight adjusting equipment sell reasonably well. There is less of a market for the more sophisticated items, such as engine testing equip- ment, because of the initial cost of the equipment and the training required in its use. There are only two tire-recapping operations in Tehran. Automobile and truck tires are manufactured lo- cally by two U.S. firms. Consequently, imports of many sizes, including common passenger car sizes, are prohibited. Imports of truck tires amounted to $7.8 million in 1965 but will decrease. Data on imports of tires and other principal rubber products appear in table 20. CHAPTER m Distribution Most foreign firms with significant sales in the Iranian market are represented locally by a distribu- tor or agent. Branch offices are not used to a large extent. Iranian regulations do not require that a foreign firm be represented locally to sell in Iran and so, theoretically, it is possible to do business on a direct basis without the use of an agent or dis- tributor. REPRESENTATION Foreign firms selling successfully in Iran, however, invariably have local representation. Knowledge of local trading practices and customs is very often essen- tial to making a sale. From its inception, a project or piece of business often takes a long period to ma- terialize — too long for someone from the home office to spend profitably in Iran. Both Government officials and private businessmen tend to rely on a local rep- resentative in drawing up specifications for goods. Then, there may be continuing problems on quota- tions, financing, import regulations, and collections which are best solved by a local representative. Distributorships are the most common form of rep- resentation for machinery, motor vehicles, consumer items, and other products which require servicing and the maintenance of stocks of original equipment and spare parts. Distributors act as principals and buy on a letter-of-credit basis when required by Govern- ment regulations or foreign suppliers. They also buy on extended credit terms. In the view of the Iranian merchant, terms of credit are a vital factor in his relationship with the foreign manufacturer because of the high cost of financing in Iran. Agency relationships are used primarily when bulk commodities are traded. Agricultural items, iron and steel, and raw material are sold on an agency basis. It is common practice for an importer to hold sev- eral agencies and at the same time to buy for his own account. The majority of distributorship agreements are made on an exclusive basis for the entire country. Therefore, any direct inquiries received from other merchants are referred by the manufacturer to his distributor. Agencies may be either on an exclusive or nonexclusive basis. Local firms usually hold more than one agency or distributorship in noncompeting or allied lines. It is not unknown, however, for firms to have agencies in competing lines. Most importers have their principal offices in Tehran and, when necessary, branch offices or subagencies in Provincial capitals. The Government encourages im- porters in the Provinces to do their own importing directly. This is evident in Isfahan, for instance, where textile manufacturers may purchase their re- quirements directly if the foreign manufacturer is not represented in Iran. Other importers have their prin- cipal offices outside of Tehran and a branch office in that city. One large importer of agricultural equip- ment has his main office in Meshed, with a branch in Tehran. Foreign manufacturers are not usually represented in Iran by branch offices unless they have manufac- turing or assembly operations or unless they are do- ing construction or engineering work. Foreign firms opening branch offices in Iran may have to pay regis- tration fees on their entire capital not merely on capi- tal invested in Iran. Exceptions to this regulation are industrial companies which fall under the Law on At- traction and Protection of Foreign Capital of 1955 and those organizations that are formed for scientific, literary, or charitable purposes. The basic Iranian legislation covering the organiza- tion and operation of business entities, commission agents, brokers, attorneys, and other persons doing business as a principal or agent is the Iranian Com- mercial Code of 1932. Other subjects covered by the code include instruments, bankruptcy, and trustee- ship. Although there have been no changes since 1932. the code is currently under revision. IMPORT FINANCING Financing an import transaction can be expensive for the Iranian merchant. The cost of money in Iran ranges from 8 to 25 percent, depending upon the assets and reputation of the borrower. To some extent, Central Bank regulations control the payment terms under which goods can be imported. The bank requires that certain goods be imported only on a letter-of-credit basis and specifies the per- centage of advance deposit required when the letter of credit is opened by the importer. Certain chemicals, including plastics, dyes, and fertilizers, synthetic tex- tiles, and semimanufactured metal products currently require a 15-percent advance deposit; other chemi- cals, certain steel products, office machines, appliances, and precision equipment entail a 40-percent deposit; less essential goods, such as some clothing, washing machines, and musical instruments require a 100-per- cent deposit. All other goods, unless they are permitted to be imported on a collection draft basis, are re- quired to be imported under a letter of credit with a 70-percent advance deposit. The Central Bank also specifies some goods that may be imported on draft basis and stipulates the maximum maturity period for the draft. Pharmaceu- ticals may be imported on drafts of up to 4 months. Parts for assembling radios, television sets, electric refrigerators, and motor vehicles may be imported on drafts with a maximum maturity period of 6 months. For most industrial machinery, including agricultural, roadbuilding, food processing, and tex- tile machinery as well as electrical and railroad equip- ment, the maximum maturity period is 2 years. Ma- chinery for factories may be granted extensions of the maturity date, and agricultural machinery sold through the Plan Organization may have a maximum maturity of 3 years. When goods are allowed to be imported on a collection draft basis, but actually are imported under a letter of credit, a 15-percent advance deposit is required. Exceptions to all these require- ments may be made by the Central Bank. For all goods imported on a draft and letter-of-credit basis, a 2-percent advance deposit is required. The deposit is returned when the goods are cleared through cus- toms. Importers and distributors may give extended pay- ment terms to retailers and end users. Credit is also extended by commercial banks and professional money lenders. Terms vary with the product — 30 to 90 days for nondurables to 4 years for heavy machinery. The financing of retailers is often accomplished by means of postdated checks dated when the installments are due. Notes payable are more commonly used. Dis- counted short-term notes, called softeh, are redis- counted several times, particularly in the bazaars. The financing of retailers is a problem for the im- porter. He cannot sell without financing, yet he spends an excessive amount of time on collections. Late pay- ments are an accepted hazard of the Iranian business world, and one importer estimated that over 50 per- cent of his time is spent on collections. Usually, this requires a trip to the place of business of the delin- quent account. For goods that do not have to be imported under a letter of credit, payment terms are an important cri- terion in placing business. Because of the high cost of obtaining money locally, Iranian merchants under- standably favor the exporter who can supply expert credit. RETAIL AND WHOLESALE The principal retail outlet for light industry goods throughout the country is the bazaar. Almost all cities, towns, and villages have one. Retailing, wholesaling, financing, storage and light manufacturing take place there. The bazaar is a labyrinth of alleys lined with small shops or stalls piled high with a profusion of mer- chandise. Public areas are crowded with jostling shop- pers, beasts of burden, and an occasional motor scooter. The selling sections of the bazaar are broken into market areas whose shops deal in particular lines of merchandise. Thus, all the shoe stores are found in one area, the jewelry shops in another. Often, one merchant may own several shops in close proximity and sell almost identical merchandise in each of them. There is an active interchange of goods among re- IRANIAN BUSINESSMAN: A typical, well-to-do bazaar mer- chant in his office in a caravanserai. A caravanserai was originally an inn consisting of a large courtyard surrounded by rooms for lodgers. Merchants often have offices in the tailers; if an item is not in stock in one shop, it is obtained from another. While the bazaar was once the principal location of business offices in Tehran, today many firms have moved their main offices out of the bazaar to more spacious quarters. Importers of capital goods, appli- ances, vehicles, and other goods requiring showroom and service facilities generally are located in one of the many modern buildings uptown from the bazaar. It is common for importers of competitive products to be located on one street or in one area, as are im- porters of automobile parts or plumbing supplies. The Tehran bazaar is still the principal retail outlet for the city, but there are also many small stores as well as a large Government department store outside the bazaar. The department store is a modern four- story establishment in downtown Tehran complete with a basement housewares department and a gift shop on GOVERNMENT AND INDUSTRY while the general manager of the j t the opening of a dry-cell plant in Tehran, Iran, the Min > plant explains the composition of the batteries. of Economy, left listem the top floor. Merchandise is attractively displayed both in display cases and on counters. Prices are fixed, unlike those in the smaller shops where they are negotiable. Most of the merchandise is of local origin. Several other stores are called department stores but are, in reality, clothing stores which han- dle a relatively complete line of wearing apparel. MARKET AREAS The population of Iran is estimated at 22 million. Most of the inhabitants live in the north and north- west part of the country; they are concentrated in Tehran, in the Provinces of Azerbaijan, and along the Caspian Sea. THE SHAH AS A TEACHER: His Imperial Majesty the Shahanshah of Iran visits a school and examines a student. The Shah frequently visits school classrooms to inspect the progress of education programs in Iran. Approximately 68 percent of the population live in rural areas and 30 percent in places of over 5,000 inhabitants. Almost half the urban population of 5.4 million lives in the five largest cities. The following are population statistics for Iran's 10 largest cities: 7956 1963 Census Estimate Tehran 1,512,082 2,317,116 Tabriz 289,996 387,803 Isfahan 254,708 339,909 Meshed 241,989 312,186 Abadan 226,083 302,189 Shiraz 170,659 229,761 Kermanshah 125,439 166,720 Ahwaz 120,098 128,434 Rasht 109,491 118,634 Hamadan 99,909 114,610 Source: Adapted from Iran, Ministry of Interior, Public Statistics Department, National and Province Statistics of the First Census of Iran, November 1956, and Echo of Iran, Iran Almanac, Fourth Edition. Tehran. — Tehran, with a population of over 2,300,- 000, is the major business center and the major market in Iran. General industry is concentrated around Teh- ran because commercial facilities, transportation, and communications are readily available. Most representa- tives of foreign firms are located in Tehran, and most of the import and Government buying is done in that city. The central business district, which spreads out- ward from the bazaar, is located in the southern part of the city. Many of the larger business estab- lishments are located north in the area of Takhte Jamshid Street. Many of the newer industrial estab- lishments are located to the west, along the road to Kharaj, in the vicinity of Mehrabad Airport. Some Government offices are located directly nortlT of the bazaar; others, in various parts of the city. It is the leading market in Iran for consumer goods because family incomes are higher than in other ur- NURSES' TRAINING: Iranian girls are being trained Organization, a counterpart to the Red Cross. nurses and medical assistants ban areas. In 1960, the average annual income of a Tehran family was reported to be approximately $1250 while that of the average urban family was $875. Only 7.8 percent of the urban families earned more than $165 per month whereas 14 percent of the families living in Tehran earned more than $165 per month. 1 ' It is estimated that there are 1,100,000 ur- ban families in Iran of which 500,000 live in Tehran. Secondary Marketing Areas. — The following areas are important as markets for locally produced products. Most businessmen in these areas generally purchase their imports through importers in Tehran. Many of the larger firms in the Provincial areas, how- ever, purchase their imports direct from foreign sup- pliers. Tabriz is the distribution center for Azerbaijan in northwest Iran. Carpets, textiles, and matches as well as agricultural products are produced in the area. Tabriz is linked by road and railroad to Tehran and will soon be connected by rail to Van on Lake Van in eastern Turkey. Isfahan, the principal center of the textile indus- try, has 24 major spinning and weaving mills. It is a marketing center for the central part of the country and also a tourist center. There is no railroad to Isfahan. The establishment of a steel mill in the Isfahan area will add significantly to this market. - Bank Markazi Iran, Bulletin; January-February 1963. Tehran, SUGARCANE: Its investment in machinery, such as this U.S.- made tractor-loader, has helped Iran with its development of the cane sugar industry. Development of this Iranian industry in Khuzislan is aided by the Development and Res poration, New York, N.Y. CABINETMAKERS: Output of sawed lumber per man hour could be increased hundreds of times in this Iranian woodwork shop with a U.S.-made half-horsepower electric saw. Shiraz is a market center for south central Iran. Carpets and agricultural products are produced in the area. A modern chemical fertilizer factory is located outside the city on the road north of Persepo- lis. It also has several textile mills, sugar refineries, and a cement plant. Khuzistan Province is the second most important marketing area in Iran. Abadan, the principal city of Khuzistan Province, is the location of the oil con- sortium's large refinery and the center of the oil worker population. Khorramshahr, the principal port of Iran, is located a few miles upstream from Abadan. Ahwaz, with electric power from the nearby Pahlavi Dam, promises to become an important industrial cen- ter. The principal cities of Khuzistan Province are connected by road and rail to the north. Meshed is the principal city in the northeast and the capital of Khorasan Province. It is the center of a large wheat, sugar, and fruit producing area. The city is the eastern terminal of the railroad from Tehran and the south. Kermanshah, the center of an important agricul- tural area, is the site of the second largest oil refinery in the country. The city is in the western part of the country, 327 miles southwest of Tehran on the highway from Tehran to Baghdad in Iraq. Hamadan is 118 miles east of Kermanshah in the western part of the country. It is also in the center of an agricultural area. Located near the Caspian Sea and its principal port of Bandar Pahlavi, Rasht is the largest city in Gilan Province. It is the center of a tea and rice pro- ducing area and is a summer resort. GOVERNMENT PURCHASING Although Iran is basically a free-enterprise econ- omy, the Government purchases many items in addi- tion to its day-to-day operating requirements. State monopolies are responsible for importing tea, tobacco, and sugar although the monopolies may authorize pri- vate firms to import these products. The Government also operates over 200 manufac- turing and processing plants in the food, textile, chem- ical, mining, and other industries. Although the over- all administration of Government factories has been consolidated in one company, the Iran Factories Com- pany, purchasing is done by the separate establish- ments. The Foreign Transactions Company, an agency of the Ministry of Economy, purchases the operating re- quirements of some Government agencies and depart- ments. Other departments purchase their requirements direct. The Iranian State Railways, the Tobacco Mo- nopoly, and the Irrigation Bongah (Institute) of the Ministry of Water and Power purchase railroad equip- ment, cigarette paper, and irrigation pumping equip- ment, respectively. The names and addresses of prin- cipal Government procurement agencies are contained in Appendix B. Purchasing by Government agencies may be done either by closed or open tender. Small requirements are purchased through direct negotiations. Local agents of foreign manufacturers should be registered with applicable local Government agencies in ordei to qualify to receive and bid on tenders. BOTTLING MACHINE OPERATORS: Men at their filling and capping machines in this plant prepare milk for meals in Tehran, Iran. «.•_, PRIMITIVE COTTON GIN: The mechanized cotton gin has not yet altogether displaced the hand-operated ones such as these men operate in an Iranian workplace. Many Government agencies require bidders to post performance bonds. The amount of the bond may be 5 to 10 percent of the bid or it may be a specified amount, depending on the tender. Tender documents also specify the form for posting the bond, i.e., bank guarantee, Iranian Treasury bonds, or cash. The Gov- ernment agency may require an inspection of the goods prior to their shipment by an independent sur- veillance company. The Government generally requires C and F quo- tations. In addition, Iranian law requires that Gov- ernment purchases be insured by the Iranian Govern- ment Insurance Company (Bimeh Iran). Purchasing is done by the individual companies of the Pahlavi Foundation. The foundation, which en- gages in charitable and social welfare activities, and is endowed with assets of the ruling family, has a signi- ficant equity interest in hotels, banks, and manufac- turing companies. Trusteeship of the foundation is held by the Shah who appoints a ten-man body to supervise the endowment. The foundation holds equity interests in the following manufacturing companies: Kermanshah Sugar Factory Hamadan Sugar Factory Darupaksh Pharmaceutical Plant Fars and Khuzistan Cement Plants Kovar Sugar Factory Ahwaz Sugar Refinery Iranit Factory (asbestos and cement products) B. F. Goodrich Tire Factory Gohestan Sugar Factory Tehran Cement Plant Fariman Sugar Factory OIL COMPANY PURCHASING With the award of offshore concessions to six new groups of international oil companies in the first half of 1965, the already significant purchases by oil com- panies operating in Iran should increase even more. Construction of petroleum installations will continue to offer major opportunities for services of American contracting and engineering firms as well as for Amer- ican suppliers of oilfield and related equipment. Im- ports of the oil consortium operating companies, the Iranian Oil Exporation and Producing Company, and the Iranian Oil Refining Company were $52.9 million in 1965. Other oil companies operating in Iran in- clude the Iran Pan American Oil Company, Societe Irano-Italienne des Petroles, and the Iranian Govern- ment-owned National Iranian Oil Company — (NIOC). In 1965, imports of these three companies were $3.5 million, $2.1 million, and $10.6 million, respectively. Imports for the oil consortium are purchased through Iranian Oil Services, Limited, London, and to lesser extent, through local agents. No import duties or commercial profits taxes are imposed on direct imports to the oil consortium companies or to the other oil companies operating in Iran. NIOC distributes petroleum products within the country, primarily through gasoline stations which it owns. Most of these products are locally refined. In addition, NIOC provides and administers ancillary services required by the consortium in its operations. Most of the imports required by NIOC for the con- sortium are purchased through oil consortium chan- nels. ADVERTISING Modern advertising methods are new to Iran. While newspapers and giveaway items were the only media used 20 years ago, cinemas, radio, television, and a proliferation of signs now also advise the consumer to buy. Of 60 advertising agencies in Iran, 5 account for 75 percent of total industry billings of $4 million per year. There are two major daily newspapers in Iran, Kayhan and Ettelaat, with circulations of 65,000 and 55,000, respectively. In addition to several other smaller Persian dailies, there are also two English, one French, and one Armenian-language daily news- papers. Approximately 25 weekly and 40 monthly periodicals are also published. The effectiveness of newspaper advertising is limited by the high rate of illiteracy, yet newspapers do reach persons with the greatest purchasing power. Column-inch rates vary from $2.80 for the leading newspapers to $1.18 for smaller ones, per insertion. Radio is used by advertisers in Iran to reach the mass market. The Iranian State Broadcasting System operates local broadcasting services. Radio Iran, the principal station, which broadcasts 24 hours a day, allocates one 15-minute and several 2-minute periods each day for advertisers. Rates vary from $1.20 to $2.25 per word depending upon the time of the day IRANIAN RUG: Persian rugs have been made by the same methods and according to the same patterns since the sixteenth century. MAN AND MACHINE: A construction worker mixes asphalt for a road he is helping build north of Malayer, Iran. High- way construction is an important part of the third development plan. 24 NEW TREADS FOR OLD: The U.S. Agency for International Development supplied $95,000 in equipment for this tire re- capping plant in which an Iranian retreads a U.S.-brand tire. CAVIAR FACTORY: On the Caspian Sea, whose shore nearest Tehran is just seventy miles to the north, fishermen display the morning's catch of sturgeon. From Caspian sturgeon come the advertising is placed. The Government awards the total advertising time on the basis of the highest bid to a contractor who then sells the time to adver- tisers. There are no private radio stations in Iran. There are other Government-operated radio stations in most major cities. Advertising time is sold by two private Iranian tele- vision stations, one in Tehran, the other in Abadan. Both stations broadcast during the evening hours only, with advertising rates varying with the time of day. Rates for 60-second spot announcements run from $106.66 to $266.66 per announcement. Although there are only an estimated 60.000 television sets in the country, the total audience may reach 500,000 with many persons watching television in public places or in homes of friends. The use of giveaway items and slides and films in theaters are other popular forms of advertising. A 60- second film may cost $200 for 1 month's showing in a theater. Posters and signs are other, often-used forms of advertising. PORTS, STORAGE, AND TRANSPORTATION Iranian ports are operated either by the Govern- ment or the oil companies. Khorramshahr, the principal general cargo port, is located near the head of the Persian Gulf. Bandar Shahpur, the other principal port on the Persian Gulf, is used for discharging bulk and military cargoes. Minor ports include Bushire and Bandar Abbas in the south and Bandar Pahlavi on the Caspian Sea. These ports are administered by both the Depart- ment of Customs, which is responsible for receiving, handling, and providing storage for cargo, and the Department of Ports and Navigation, which is respon- sible for the berthing of vessels and maintaining ships' facilities, navigational aids, and piloting. The Depart- ment of Customs leases from the Iranian State Rail- ways the railroad equipment for handling cargo within the ports. Total cargo imported through Iranian Government ports amounted to 1,617,966 tons for the year ending December 20, 1964. Of this amount 958,729 tons were imported through Khorramshahr and 622,570 tons through Bandar Shahpur. In most cases, cargo must be offloaded by ships' tackle. Labor contractors supply stevedores who work under the supervision of ships' officers. The labor con- tractors accept no responsibility for damage to ships or cargo. Goods shipped through these ports are sub- ject to rough handling, temperatures of 125° F. in the summer, and driving rains in the winter. Appro- priate packing should be used. The port of Khorramshahr has 860.000 square feet of covered storage space, which has a capacity of 200,000 tons, and 2,475.000 square feet of paved open storage area. Bandar Shahpur has 280.000 square feet of covered storage space with a capacity of 65,000 tons and 860,000 square feet of open paved storage space. A private firm maintains refrigerated storage in Khorramshahr. No separate storage space is re- served for goods in transit. Storage charges are as- sessed thus: Rials Rials Days per day Days per day First 30 free 31-60 5 61-90 _ 6.25 91-120 7.50 121-150 10 151-180 12.50 181-210 15 211-240 .17.50 241-270 20 271-300 25 Goods in transit are charged 75 percent of the above rates and open storage 45 percent. Appendix C contains a list of customhouse brokers, freight forwarders, and shipping lines serving the United States and Iran. The oil company ports of Abadan, Bandar Mashur, and Kharg Island are administered and operated by the oil consortium as integral parts of their total op- erations. Refined products are shipped from Abadan and Bandar Mashur while Kharg Island is a crude oil port. Most general cargo is shipped by truck to inland points. Goods may also be shipped by rail via the Government-owned Iranian State Railways from Khor- ramshahr and Bandar Shahpur to Tehran and onward to Tabriz or Meshed. In 1963, the Iranian Government established a free trade zone on several islands in the Persian Gulf including Shaikh Shuaib, Kish, and Farur. Imports of permissible commodities and all exports are free of any duties and taxes in the zone. There are cur- rently no facilities for handling and storing cargo on these islands. BANKING Banking facilities developed rapidly during 1950- 60. Only 5 of the 26 banks now operating were estab- lished before 1950. The remainder were founded from 1950 to 1960. In 1960, the Government stopped grant- ing authorizations for new banks. The largest com- mercial bank in Iran is the publicly owned Bank Melli Iran, which was established in 1927. Monetary and banking policy in Iran is deter- mined by the Currency and Credit Council, an agency of the Iranian Government established in 1960. The council's membership of 15 includes the heads of several ministries, representatives of the industrial and financial community, and the Governor of the Central Bank, who acts as the chairman of the council. The Government-owned Central Bank of Iran was estab- lished in 1961. The Central Bank issues notes and coins, acts as the fiscal agent of the Government, and controls foreign exchange. Long-term industrial loans are granted by the pri- vately owned Industrial and Mining Development Bank — IMDBI and occasionally by commercial banks. The Government-owned Industrial Credit Bank also fi- nances industrial projects in addition to performing some banking operations for the Plan Organization. The Government Agriculture Credit and Rural De- velopment Bank extends credit for purchases of agri- cultural equipment and supplies. These banks are located in Tehran. Foreign banking in Iran is in the form of minority participation in joint ventures except for the Russo- Iran Bank which is wholly owned by the Soviet Gov- ernment. No foreign banks have branches in Iran. American banking interests are involved in two banks, the Foreign Trade Bank of Iran, in which Bank of America International has a 20-percent interest, and the IMDBI, in which Lazard Freres & Co., Chase In- ternational Investment Corporation, International Basic Economy Corporation, and The First Boston Corporation each has less than a 5-percent interest. Appendix D contains a list of banks operating in Iran, including their ownership and their paid-in capi- tal as of May 1965. SUMMER DAY AT 125°: Another view of Kharg Island, the Persian Gulf, with general office of the Iranian oil operating companies in the foreground. CHAPTER IV Economic Development Since 1964, implementation of economic develop- ment projects has accelerated rapidly particularly in the industrial sector. In addition to the continuing emphasis on the development of agriculture, communi- cations, and electric power, the Government seeks to broaden the industrial base of the country. Iron and steel, glass, paper, and petrochemicals are some of the important industries now being developed. Pri- vate foreign investment is encouraged in Iran but the most important source of financing for economic development is the country's oil revenue. PLANS Post World War II economic planning began in 1948 with the First Seven-Year Development Plan, which was based on a report by a group of American con- sulting firms. Overseas Consultants, Inc. The Plan Organization was established as the Government agen- cy responsible for implementing the plan. Expendi- tures under the first plan totaled $285 million and were made primarily during the first 3 years of the plan. With the nationalization of the oil industry in March 1951 and the consequent cutoff of oil revenues, progress on economic development virtually ceased. Following the oil settlement in 1954, the Second Seven-Year Development Plan was drawn up and promulgated in 1956 for the period September 1955 to September 1962. Expenditures of $1,170 million were principally in the areas of agriculture and irri- gation, transportation and communications, industry and mines, and social improvement. In the latter stages of the second plan, the implementation of develop- ment projects slowed as a result of credit and import restrictions and a decrease in Government spending. Nevertheless, three major power and irrigation dams were built during the second plan, 3,417 miles of roads were constructed, the capacity of textile industry more than doubled, and cement making and sugar refining capacities were increased. The primary objective of the Third Development Plan, 1962-68, is to raise national income by an aver- age of at least 6 percent per year. There are also broad secondary objectives, such as the increase of employment, a more equitable distribution of i and land reform. The implementing legislation for the third plan is the Third Five-Year Development Plan Law which was approved by the Council of Min- isters on September 6, 1962. Expenditures, originally budgeted at $1.87 billion were raised to $2.66 billion during the course of the plan. General responsibility for drawing up, supervising, and administering the plan is vested in the Plan Or- ganization. Actual supervision of the execution of in- dividual projects is assigned to one of the several Government ministries or agencies. The managing director of the Plan Organization is responsible directly to the Prime Minister. The latter is the chairman of the High Planning Council which formulates the development policy executed by the Plan Organization. The High Planning Council also must approve the allocation of funds for development projects. In addition to the Prime Minister, mem- bership of the High Planning Council consists of the ministers of Finance and Economy, the Governor of the Central Bank, and three experienced economists. Development plan projects are financed by oil reve- nues and domestic and international borrowing. The policy is to obtain international credits or loans to cover the foreign exchange costs of individual proj- ects whenever possible. While there has been some shortfall in actual allocations, the law provides for an increasing portion of oil revenues to be allocated to the plan every year as follows, in percent of total oil revenue: 1963 (6 months), 55; 1964, 60; 1965, 65; 1966, 70; 1967, 75: and 1968, 80. The United States and the International Bank for Reconstruction and Development — IBRD have been the principal sources of loans for development plan projects. West Germany, France, the United King- dom, and Japan have also provided credits or loans. These credits generally require import purchases to be made in the country granting the credit or loan. Soviet bloc assistance has consisted of technical as- sistance and credits for machinery and equipment. United States development loans have been for elec- trification, road building, port construction, and rail- road construction and equipment. The IBRD has pro- vided loans for dam construction, road building, and general development. Funds for third plan development projects are budgeted on an annual basis (see table 20) within the framework of a total allocation for the 5y 2 -year pe- riod of the third plan (see table 21). Expenditures for the first 2!/2 years of the plan were 25 percent short of the amount budgeted but are increasing rap- idly. As of the year ending March 20, 1965, $710 million had actually been expended in the third plan. Principal areas of expenditure include irrigation, electrification, telecommunications, and road and building construction. Major outlays have also been made for land reform, agricultural credits, health cam- paigns against contagious diseases, and primary edu- cation. The following analysis is intended to provide in- formation on development projects that require signi- ficant amounts of imported materials. Further infor- mation on the status of individual projects may be obtained from the Near East-South Asia Division, Office of International Regional Economics, Bureau of International Commerce, U.S. Department of Com- merce, Washington, D.C., 20230. PROJECTS The third plan includes many diverse projects. Overall economic planning is the responsibility of the Plan Organization, but the Government ministry or agency in whose area of responsibility a particular project falls usually plans and supervises the execution of that project. This includes the preparation of an nitial feasibility study and tender specifications, which s often done with the assistance of a foreign consult- ng firm, as well as the issuance of the tender, the award of the contract, and the actual construction of the project. An exception to ministry supervision of individual projects is in Khuzistan Province where this function is the responsibility of a Provincial agency. Agriculture. — In the agricultural sector, the over- all objectives of the third plan are to increase produc- tion of the food and industrial raw materials needed to support a 6-percent growth in national income while maintaining price stability, to improve rural living standards, and to adjust the distribution of income. In contrast to the second plan, which focused to a considerable extent on large dam construction, the third plan emphasizes small irrigation projects, such as the digging of shallow and deep wells, the rehabili- NONSCHEDULED PASSENGER AND FREIGHT: Even now in Iran alongside roads under construction, both lrania baggage move by foot and pack animals just as does this Iranian woman with her goods in the Caspian Sea i tation of qanats (ditches), improvement of diversion dams, and the construction of small dams to store ir- rigation water. Four large dams have been completed since 1961, the Karaj, Sefid Rud, Shahnaz, and Mohammed Reza Shah Pahlavi. They provide both electric power and water for irrigation. Three other dams are currently under construction, the Latiyan, the Aras, and the Qaradiz. The latter two are being built under an agreement with the U.S.S.R. which is providing financ- ing for the purchase of machinery and equipment. French contractors are building the Latiyan Dam with a British firm as the consulting engineer. In addition to the dams under construction, the third plan also calls for construction or planning of nine more dams as well as the development of irriga- tion networks connected with the Sefid Rud, Karaj, and Pahlavi dams. It is expected that the completion of these projects will bring 136,000 acres under irriga- tion and improve irrigation on 420,000 additional acres. Under the well-drilling program, up to 2,000 wells will be drilled adding an estimated 74,000 acres and improving irrigation on 49,000 acres of land. Other projects under the water resources development program are expected to bring 346,000 acres under ir- rigation and to improve irrigation on an additional 642,000 acres. The third plan also provides funds for farmers for the purchase of fertilizers, insecticides, and agricul- tural machinery and implements. The Government agencies administering these funds either finance a portion of the cost or subsidize the sale of these prod- ucts to the farmer. Electric Power. — Although the electrification pro- gram was a slow starter in the first years of the third plan, it is currently receiving increased emphasis. The overall objective in the development of the electrifica- tion program is to provide electric power to the major cities in anticipation of industrial growth as well as to rural areas for domestic use. Under the third plan, 794 megawatts (MW) of electric power is scheduled to be added to the power generating capacity of the country. Of this addition, 361 MW is expected to be installed to meet require- ments of both Government and private industries. This includes 39 MW of new capacity to meet the needs of the oil industry. For domestic and commer- cial consumption new capacity is set at 433 MW. Ac- cording to the Plan Organization, the new capacity and budget allocation for generating and distribution 1 - ISLAM IN IRAN: Mosque of the Kings in Isfahan. equipment for the increased domestic and commercial consumption is to be divided as follows: Capacity Cost (MW) ($ millions) Tehran 164 431.9 Eight major centers 1 93 365.9 17 medium-sized towns 56 184.0 Khuzistan Province 65 164.6 167 small towns and rural areas.... 55 255.0 1 Tabriz, Isfahan, Meshed, Shiraz, Kerman, Hamadan, Shahi- Babol-Sari, Rasht-Pahlavi. In the larger cities, the increased capacity will be supplied by both hydro and steam generators while in the rural areas diesel units will be used. It is esti- mated that $15 million in diesel generating equip- ment will be required during the third plan. As of December 1965, commitments had been made under the third plan by the Iranian Government to supply power generating equipment for most of the large cities. The equipment is being supplied by United States, West German, Swiss, French, Austrian, Italian, and Japanese firms. In most instances, long- term financing is being provided by the governments of the countries where the supplying firms are located. It is estimated that 770 miles of power transmission lines will be completed by the end of the third plan. Emphasis is being placed on lines to bring power from Khuzistan Province to Tehran and to send power SCHOOL: In Iran, too, the school teacher makes sure his scholars learn their lessons. Major outlays for primary education < now being made in Iran under the third plan. MOUNTAIN HIGHWAY: Iran continues to improve its I ways such as this one through the Elburz Mountains between Tehran and Babol. Iran is assisted in this task by the International Bank for Reconstruction and Development, Washington, D.C. from Tehran north to the Caspian Provinces. The largest of these projects is the 373 mile 220 or 380 kilovolt line from Khuzistan to Tehran. A feasibility study on this line is being carried out by a French firm. Industry. — The third plan envisages expansion of existing industry as well as the development of several new industries. Gross investment to fulfill the indus- trial objectives of the plan is estimated at $858 million of which 50 percent is expected to come from private sources. The foreign exchange requirement is esti- mated at 40 percent of the total investment. Major new industries planned include steel, paper, wallboard, synthetic fiber, and petrochemicals. The Plan Organization estimates that $220 million needs to be invested in these industries, with $150 million alone for the steel industry. Expansion plans for 15 industries are summarized in table 22. Provision in the third plan is also made for the development of minerals, including coal, iron, potash, sulfur, lead, zinc, asbestos, and borax. Communications. — A number of projects are scheduled to improve communications during the third plan. The emphasis is on roadbuilding. A major part of the roadbuilding program is the construction of feeder roads. The objective is to con- struct a minimum of 11,000 miles of roads to con- nect villages to the major highway network. In addition, several main highways in the southeast and northeast part of the country are being constructed or improved, including the following, in miles: Nain to Kerman, 338; Kerman to Sirjan, 106; Tehran to Babol, 143; and Shahpasand to the Afghanistan border, 462. The IBRD and five U.S. commercial banks recently have made $40.5 million available for the highway development plan. Under the railroad program, the Iranian State Rail- way is buying rolling stock and other equipment, while a Central Treaty Organization project provides for extension of the rail line from Tabriz to Ghatour on the Turkish border. Iran's port capacity is being increased in the South- ern part of the country. The port of Bandar Abbas is being enlarged under a U.S. Agency for International Development — AID loan and the port of Bandar Bu- shire is scheduled for rehabilitation. Petroleum. — Development expenditures in the petroleum industry are made by the oil consortium, foreign companies operating outside the oil consortium, and the NIOC. All investments in the oil industry are legally owned by the NIOC whether or not they are undertaken or financed by the NIOC. Oil industry investments are divided into two cate- gories, basic (production facilities) and nonbasic (all other). The NIOC initiates and finances all nonbasic investments. Basic investments by foreign oil com- panies are made on the initiative of these companies. In the case of the consortium, basic investments are financed by the consortium, with the amortization o: the investment allowed as a cost in determining revenues payable to Iran. With respect to foreign oil companies outside the consortium, the NIOC finances 50 percent of the investment. Under the third plan, the NIOC is allocated $377 million for the 51/o-year period. In addition to explora- tion, major projects include the construction of a refinery at Tehran, a pipeline from Ahwaz to Tehran, and the development of a petrochemical industry. In- cluded in the above amount is $122 million for ancillary services, such as housing, schools, and hos- pitals. Major expenditures are being made by the oil consortium on Operation Cham. This project includes the expansion of facilities on Kharg Island for export- ing crude oil and the conversion of Bandar Mashur into a products loading terminal. With the award of new offshore concession areas in the Persian Gulf in 1965, expenditures on oil com- pany facilities and operations are expected to increase. The following are the operating companies of the international groups which were awarded the conces- sions: Lavan Petroleum Company — LAPCO; Iranian Offshore Petroleum Company — IROPCO; Iranian Marine International Oil Company — IMINOCO; Dash- testan Offshore Petroleum Company— DOPCO; Farsi Petroleum Company — FPC; Persian Gulf Oil Com- pany— PERGO. NIOC owns 50 percent of each of the operating companies; the remaining 50 percent is owned by foreign oil companies. United States oil companies participate directly in LAPCO, IROPCO, and IMINOCO. Khuzistan Province. — The regional concept in development planning is being applied in the south- western Province of Khuzistan. The Khuzistan Water and Power Authority — KWPA has the operational re- sponsibility for development and is being assisted by the U.S. firm, Development and Resources Corpora- tion of New York, N.Y. Projects being carried out in Khuzistan during the third plan include the installation of a third turbo- generator in the Pahlavi Dam, the expanded operation of a sugarcane mill, various agricultural, irrigation, and health programs, and an engineering study for a dam on the Marun River. There are also plans for a petrochemical industry, and an iron and steel rolling mill to be located in Khuzistan Province. Appendixes APPENDIX A. — Ministry of Health Pharmaceutical Import License Application Unofficial translation Questions must be answered fully and the application must be accompained with the required documents. I. Specifications of medicine. Name, formula, form (pill, powder, cap- sule), name and address of manufacturer or laboratory. II. Documents, etc. A. Photocopy of permit given in the country of origin for the manufacturer of the product, certified by an Iranian consulate. B. Photocopy of permit given in the coun- try of origin for the sale of the product, certified by the Iranian consulate. C. Copy of testing certificate of laboratory of manufacture, giving specifications and viscosity of product. D. Five samples of product. III. Specifications of product as sold in the country of manufacture giving the name, formula, quantity of sale, packaging details, of the product. IV. Selling price in country or origin. A. Manufacturer's price to wholesaler in country of origin. B. Wholesaler's price to pharmacies in coun- try of origin. C. Pharmacies' price to consumer in coun- try of origin. V. Selling price in Iran. A. Export price B. Ocean freight charges (including name of port of shipment) . C. Charges for inland freight. D. Insurance costs. E. Customs duties. F. Other itemized expenses. G. Cost price delivered warehouse in Iran. VI. Profit (in rials). A. Profit for importer. B. Selling price to wholesaler (in Iran) . C. Anticipated profit to wholesaler (in Iran). D. Purchasing price of pharmacy (in Iran). E. Profit allowed for pharmacy (in Iran). F. Selling price of pharmacy to consumer (in Iran). VII. The date of validity of guarantee. This date shall be printed clearly on each package with fast, colored ink. VIII. Anticipated minimum consumption in 12 months from date of customs clearance. Notes 1. In the event the product is not imported within a maximum period of 6 months, the import license shall be null and void. 2. In the event the rate of sale does not reach at least 75 percent of the anticipated volume 12 months after customs clearance, the Ministry of Health may cancel the import license. 3. Any change in the specifications of the product for which the import license has been issued shall be subject to the prior approval of the Ministry of Health. 4. If the specifications do not conform with the actual specifications of the product, the importer shall be considered responsible and the import license shall be canceled in accordance with regulations, and actions shall be taken in accord- ance with the law. 5. The importer shall be required to demand a photocopy of the test results carried out on the shipments and four samples of each series of medicines. The importer shall submit the test certificate and samples to the Ministry of Health for clearance. APPENDIX A, Concluded 6. Air freight shipment in exceptional cases may be agreed upon by the Ministry of Health. Certification: This information was compiled from available documents and is confirmed. Signature: Name of manager of importing company. Signature: Name of technically responsible official. APPENDIX B. — Principal Government Purchasing Entities Sherkat Sahami Moamelat Khareji (Foreign Transactions Company) Shah Reza Avenue, Alborz Street, Tehran, Iran. Iranian Tobacco Monopoly, Qazvin Avenue, Tehran, Iran. Supply Department, Plan Organization, 123 Kuche Ramsar, Avenue Shah Reza, Tehran, Iran. Iranian State Railways, Purchasing Department Meidane Rahe-Aban, Tehran, Iran. Sazemane Zowhe Ahan Iran (Iran Steel Mill Organization), 35 Forsat Avenue, Tehran, Iran. Edareh Kol Gomrokat (Customs Department), Ministry of Economy, Davar Avenue, Tehran, Iran. Bongahe Machinalate Keshavarzi (Farm Ma- chinery Bongah), Taghinia Building, Saadi Avenue, Tehran, Iran. Sazemane Dam Pezeshki (Veterinary Organiza- tion), Takhte-Jamshid Avenue, Opposite Takhte-Jam- shid Cinema, Tehran, Iran. Sazemane Damparvari (Livestock Organization), Takhte-Jamshid Avenue, Opposite Takhte-Jamshid Cinema, Tehran, Iran. Sazemane Jangalbani Iran (Iran Forestry Orga- nization), Zahedi Avenue, Tehran, Iran. Institut Pasteur (Pasteur Institute), Avenue Pas- teur, Tehran, Iran. Sazemane Tchay (Tea Organization), Ministry of Finance, Avenue Ark, Tehran, Iran. Bongahe Mostaghel Abyari (Irrigation Bongah), Shah Reza Avenue, Farvardin, Tehran, Iran. Bongahe Shimyayi (Chemical Bongah), Ebtehaj Avenue, 30 Dameshgh Street, Tehran, Iran. Edareh Ghalleh Va Nan (Cereals and Bread De- partment), Avenue Davar, Kakhe Vezarate, Eghtestad, Tehran, Iran. Bongahe Darouie Kole Keshvar (National Phar- maceutical Bongah), Maydan 24 Esfand, Avenue Seametri, Tehran, Iran. Sazemane Ab Tehran (Tehran Water Board), Karaj Boulevard, Maykadeh Avenue, P.O. Box No. 5, Tehran, Iran. Edareh Taslihate Artesh (Army Armament De- partment), Maydane, Jaleh, Tehran, Iran. Edareh Mohandessi Artesh (Army Engineering Office), Avenue Parse, Tehran, Iran. Edareh Tadarokate Artesh (Army Supply De- partment), Sepah Avenue, Tehran, Iran. Edareh Sar-Reshtedari Artesh (Quartermaster's Department), Procurement Section, Imperial Iranian Army, Forsat Avenue, Tehran, Iran. The Ordnance Department, Imperial Iranian Army, Abbas-Abad Avenue, Tehran, Iran. The Supply Department, Imperial Iranian Army, Dorahe Yousefabad, Tehran, Iran. Navy Ordnance, Imperial Iranian Army, Dorahe Yousefabad, Tehran, Iran. The Imperial Iranian Gendarmerie, Ordnance Section, Pahlavi Avenue North of Vanak, Crossroad, Tehran, Iran. Office of Signal Department, Imperial Iranian Army, Jamshidieh District, Tehran, Iran. APPENDIX C. — Commercial Facilities Steamship Lines serving Iran and the United States Admiralty Lines Barber Middle East Line Central Gulf Lines Concordia Line Constellation Line Hansa Lines Hellenic Lines, Ltd. Isthmian Lines Nedlloyd Lines Orient Mid-East Great Lakes Services Nedlloyd and Hoe Customhouse Brokers and Freight Forwarders Skyways Travel Ltd. Ferdowsi Avenue, No. 139 Tehran Asia Travel Agency Villa Avenue Tehran APPENDIX C, Continued Gray MacKenzie and Co., Ltd. Ferdowsi Avenue Amini Building Tehran Cargo and Shipping S.A. 16o Saadi Avenue Vahabzadeh Building Tehran Sea Man Pak Company, Ltd. Takhte Jamshid Avenue, No. 449 c/o Gulf Agency Ltd. Tehran Perse Express S.A. Saadi Avenue. Nemazi Building Tehran Levant Express S.A. Saadi Avenue Tehran Persian Shipping Services 1 14, Ferdowsi Avenue Tehran Iranian Shipping and General Agencies 75 Ferdowsi Avenue Tehran Iran Cargo V.A.S.A. Amir Kabir Avenue, Roudiani Bldg. Tehran Satti Company, Ltd. 95 Roosevelt Avenue Tehran Gulf Travel Agency, Ltd. No. 499 Bahar & Takhte Jamshid Crossroad Tehran Iran-Turkey Transit Company Villa Avenue, No. 72 Tehran Levan-Tour Company Maydan Ferdowsi Tehran Ir-Tuk Company No. 71 Avenue Ferdowsi Tehran APPENDIX D. — Banks Operating in of Mav 1965 Bank Russo-Iran The Russo-Iran Bank Bank Sepah Army Bank Bank Melli Iran The National Bank of Iran Bank Etebarate Keshavarzi The Agricultural Credit & Rural va Omrane Rustai Iran Development Bank of Iran Bank Rahni Iran The Mortgage Bank of Iran Bank Bazargani Iran The Commercial Bank of Iran Bank Omran va Tavon Roustai The Bank of Development and Rural Cooperatives Bank Tehran The Bank of Tehran Bank Bimeh Bazarganar The Merchants' Insurance Bank Bank Saderat Iran The Export Bank of Iran Bank Pars The Pars Bank Bank Etebarate Sanati The Industrial Credit Bank Bank Asnaf Iran The Guilds Bank of Iran Bank Etebarate Iran The Iran Credit Bank Bank Kar The Labor Bank Bank Bimeh Iran The Insurance Bank of Iran Bank Irano-Englis The Irano British Bank Bank Tejarati Irano-Holland The Mercantile Bank of Iran and Holland Bank Etebarat Taavoni Towzi The Distributors' Cooperative Credit Bank Bank Iran va Khavar-Mianeh The Bank of Iran and the Middle East Bank Tejarate Khareji Iran The Foreign Trade Bank of Iran The International Bank of Iran and Japan The Industrial and Mining Development Bank of Iran The Iranians' Bank The Central Bank of Iran The Laborers' Welfare Bank 1 Include foreign shareholders up to 49 percent of the total capit; 2 Formerly the Bank of Iran and the West. 3 The private interest is entirely foreign banking interests ; the p Source: United States Embassy, Tehran, Iran. s Bank Melli Iran whic) APPENDIX E. — Notes to Business Travelers A valid passport, visa, and certificate of vaccina- tion against smallpox are required for entry into Iran. Visas are gratis for American citizens. For a business or a transit visa, three application forms, three photographs, a valid passport, and a letter of introduction from a traveler's company ex- plaining the purpose of his trip are required. Visas are issued for a 12-month period permitting multiple entries, each visit not to exceed 3 months, unless special permission is granted. Iranian visas may be obtained from the Consulates General of Iran in New York or San Francisco, or from the Embassy of Iran in Washington. Tourist visas may be obtained at airports upon arrival in Iran. Smallpox vaccination certificates should be signed by a doctor and be on an acceptable international form. In addition, the U.S. Public Health Service recommends that foreign travelers get typhoid and parathyphoid fever and tetanus innoculations. Com- plete information may be found in Immunization In- formation for International Travel, Public Health Service Publication No. 384, obtainable for 35 cents from the Superintendent of Documents, U.S. Govern- ment Printing Office, Washington, D.C. At the time of entry, all persons are required to declare the amount of foreign exchange in their pos- session — whether in the form of currency, traveler's checks, or other negotiable financial instruments. There is, however, no limit as to the amount of United States or other foreign exchange which may be taken into Iran. The amount and kind of foreign exchange declared is immediately entered on the traveler's pass- port. Declared currency and checks may be sold only to an authorized bank at the bank's buying rate. Upon leaving Iran, the traveler must show receipts from this bank, giving the amount of foreign money cashed. The total of this amount, subtracted from the original sum taken into Iran, must tally with the amount actually on hand. If there is any discrepancy, visitors will be liable to very stiff fines, payable before de- parture is permitted. Used personal effects are exempted from customs duties and taxes when they are brought in for the use of the traveler. Alcoholic beverages, except medicines containing alcohol and one opened bottle of alcoholic beverage, may not be taken into Iran. The Iranian Government is represented in the United States by the Embassy of Iran, 3005 Massachusetts Avenue, Washington, D.C, the Iranian Economic Mission, 2233 Wisconsin Avenue, N.W., Washington, D.C, the Consulate General of Iran, 30 Rockefeller Plaza, New York, New York, and the Consulate Gen- eral of Iran, 3400 Washington Street, San Francisco, California. The United States is represented in Iran by an Embassy in Tehran and Consulates in Isfahan, Kor- ramshahr, Meshed, and Tabriz. The Office of the Commercial Attache is located in the Embassy at 260 Ave, Takhte Jamshid, telephone 60511 or 60711. The principal unit of currency is the rial which has a par value of Rls 75.75=11. There are 100 dinars in one rial. Ten rials equal one toman, a unit business- men often use in quoting prices. The Iranian year is based on the solar calendar of Hejira, which begins on the spring equinox (March 21). The year has 365 days and 12 months. The first six months have 31 days, the next five have 30 days, and the last month has 29 days or 30 days in leap years. The solar year 1343 corresponds to the period March 21, 1964, to March 20, 1965, while the year 1344 began on March 21, 1965, and ends on March 20, 1966. Friday is the Moslem day of rest and all businesses are closed. There also are six national holidays when all businesses are closed. Now Ruz (New Year) holiday— March 21-25 Thirteenth day of Now Ruz — April 2 Constitution Day — August 5 National Uprising Day — August 19 Birthday of the Shah — October 26 Azerbaijan Liberation Day — December 21 There are an additional 38 holidays or days of mourning when some or all businesses may be closed. These holidays often vary from year to year. Business activity also slackens during Ramadan, a month of fasting for Moslems. Business travelers should check holidays before scheduling a trip. In winter, business hours are from 9:00 a.m. to sundown, and Government and bank office hours from 8:00 a.m. to 2:00 p.m. In summer, businesses are closed from noon to 4:00 p.m. and Government offices and banks are open from 7:00 a.m. to 1:00 p.m. The office hours of the American Embassy are from 8:00 a.m. to 4:30 p.m. Monday through Thursday and on Saturday. Air transport is available to the larger cities in Iran via Iranair. There are daily flights from Tehran to Tabriz, Meshed, Shiraz, and Khorramshahr. Pan American has daily flights to and from Tehran. Taxis are available in the larger cities. The service is unmetered so the fare should be established in ad- vance. In June 1965 the taxi fare in Tehran was set at Rls 10 for trips within the city. Additional passen- gers are charged Rls 5 per passenger. APPENDIX F.— Bibliography Iranian Government Publications Bulletin (bimonthly) Bank Markazi Iran, Tehran. Foreign Trade Statistics of Iran, (annual) Ministry of Economy, Tehran. Investors Manual, Bank Markazi Iran, Tehran, 39 pp. Iran, Country for Investment, Bank Markazi Iran and Industrial and Mining Development Bank of Iran, Tehran, 1964, 59 pp. Tax and Customs Regulations and Concessions to Investors, Bank Markazi Iran, Tehran, 53 pp. Laws, Regulations, and Decrees Concerning The At- traction and Protection of Foreign Investments in Iran, Bank Markazi Iran, Tehran, 12 pp. Outline of the Third Plan. Plan Organization, Tehran, 211 pp. U.S. Government Publications Department of Commerce Basic Data on the Economy of Iran. Part 1, No62-48, 12 pp., May 1962. Market Factors in Iran. OBR 63-152, 8 pp., December 1963. Selling in Iran, OBR 64-86, 8 pp., July 1964. Investment Factors in Iran. OBR 63-15, 6 pp., January 1963. What You Should Know About Exporting, 38 pp. 1965. Selling Around the World — How Commerce Helps, 24 pp., November 1965. Foreign Trade Regulations of Iran. OBR 65-82, 7 pp., December 1965. Department of Labor Labor Law and Practice in Iran, 63 pp. 1964. Other Publications Iran Almanac and Book of Facts, Echo of Iran, Tehran, 1965. Sundin, P. F., Iron Smelting in Iran, United Nations Technical Assistance Administration. A survey of foundry facilities and practices in Iran, 1956. Pruppacher, H., Survey of Some Industries of Ir/in. A brief synopsis of 34 industries, 1955. Potentialities for Private Investment in the Chemical Industry in Iran, International Finance Corporation, Washington. A preliminary survey of the invest- ment potential in the following industries: oil, pharmaceutical, viscose, rayon, paper and paper products, plastics, soaps, fats, detergents, glass, sugar, pesticides and insecticides, minerals, and cement, 1961. Management Assistance Project to Private Industry in Iran, George Fry and Associates. A discussion of the present state of manufacturing in Iran. 1962. TV REFUELING: One of the functions of the National Iranian Oil Company is the distribution within Iran of petroleum products. Tables Table 1. — Imports, Total and by Principal Items Groups, 1965 ] [Millions of dollars] Total M:ic-h iiit-i-y and parts Iron and steel uul chemical materials . Paper, cardboard and related products . Oleaginous products Tanninp; and dyeing extracts Truck chassis Woolen and downy textiles 1 Year ending March 20. Source: Ministry of Economy. General Department of Trade Statistics, Foreign Trade Statistics of Iran, 131,3, Tehran, Iran. Table 2. — Imports, Total and by Principal Countries of Origin, 1963-65 1 [Thousands of dollars] West Germany United States .. United Kingdom Other countri- 1 Years ending March 20. PREPARATION OF FOOD: Both the husking and siftin rice is done by hand in a caravanserai. Automation h. long way to go in Iran to displace this man sifting rice. 157 089 518 107 521 633 749 144 673 82 064 131 722 75 728 102 373 37 369 47 209 112 29 22 093 427 37 31 243 24 182 22 112 5 570 22 ,274 16 487 20 950 8 131 20 ,400 109 837 169 Table 3. — Imports of Selected Animal and Vegetable Items, 1963-65 ' [Thousands of dollars] Imports, total Imports from the United States Principal suppliers, 1965 Chickens Milk, powdered Butter Tea, black Wheat Flour, wheat Oils, animal '. Soybean oil, raw Candy sugar Sugar, white granulated Sugar, yellow granulated Meat, beef, veal, mutton, lamb, fresh, chilled, frozen Ni'thci-];inds, Israel United States, Netherlands United States India, Ceylon United States, France United States United States United States U.S.S.R., Belgium Turkey, U.S.S.R. Hungary , Foreign Trade Statistics of Iran, 1341-1343, Tehran, Ira —Imports of Principal Pulp, Paper, i [Thousands of dollars] id Paper Items, 1963-65' Item 1963 Cardboard 252 Wrapping paper 2,516 Newsprint 1,507 Paper in rolls or sheets, n.e.s. 4 3,102 Paper, glassed or gummed 465 Hardboard fiber sheets ( 3 ) Bags, cement 752 Imports from the United States Principal supplie Greece, West Germany United States U.S.S.R., Austria, Finland Japan, Finland United Kingdom Sweden, West Germany, Austria Austria, Finland United Kingdom, United States, Japan Table 5. — Imports of Principal Chemical and Pharmaceutical Items, 1963-65 a [Thousands of dollars] Imports, total n the United States Principal suppliei Soda, caustic Plastics, thermosetting, cellulose, ace tate, viscose, in irregular shapes.... ITasi ir:i, UliTtilOsrUiniJ', rcllljln:'.!-, an tate, viscose, in sheets Plastics, phenol, urea, phthalic acic in irregular shapes DDT powder Disinfectants, insecticides, n.e.s. 2 Chemical compounds, n.e.s. 2 Resins, synthetic Antibiotics Patent medicines Dosed medicines Dyes, vat Dyes, direct and chromium Dyes, sulfur Fertilizer, nitrogenous Fertilizer, phosphatic Fertilizer, nitrogenous, phosphatic, potassium United Kingdom West Germany, Italy United Kingdom, Italy, United States United States West Germany, United States United Kingdom West Germany United States, Italy Switzerland, West Germany United Kingdom West Germany, Switzerland Switzerland West Germany West Germany Italy, United States West Germany Table 6. — Imports of Principal Textile Items (Raw and Semi-finished), 1963-65 J [Thousands of dollars] Imports, total Imports from the United States Item Principal suppliers, 1965 1963 1964 1965 1963 1964 1965 Silk thread, artificial 7,375 7,381 13,958 824 884 788 West Germany, Italy Textile fibers, artificial 10,246 11,760 19,338 104 82 77 Japan, West Germany, Italy Waste thread 289 2,290 1,295 (2) 44 226 West Germany Silk fabrics, artificial 8,650 5,626 1,675 292 216 58 Japan Wool, scoured and bleached 2,932 3,201 3,390 ( 2 ) ( 2 ) (*) Australia Wool, hair, carded and combed 859 1,199 1,719 3 ( 2 ) (?) United Kingdom Yarn, fine 1,463 1,410 1,350 ( 2 ) 4 ( 2 ) Taiwan (Formosa) Wool yarn, mixed 1,995 2,292 3,218 9 9 12 Taiwan (Formosa), Japan Wool yarn, for retail sale 2,702 2,016 1,989 ( 2 ) ( 2 ) ( 2 ) Taiwan (Formosa) Wool fabrics, light 1,239 1,898 2,655 4 16 15 United Kingdom, Japan Wool fabrics, medium 4,645 4,793 7,016 3 3 4 Japan, United Kingdom Wool fabrics, heavy 2,412 1,657 1,913 ( 2 ) 41 25 United Kingdom, Japan Jute bags 426 (") 1,107 ( 2 ) (=») ( 2 ) India 1 Years ending March 20. - Negligible or none. 3 Data not available. Source: Ministry of Economy, General Department of Trade Statistics, Foreign Trade Statistics of Iran, 13il-13i3, Tehran. Iran. -Imports of Principal Items of Textile Machinery, 1963-65 1 [Thousands of dollars] i the United States Machinery, material processing Machinery, spinning, doubling Machinery, winding Parts, textile material processing, spinning, doubling, and winding machinery Looms, cloth weaving Mills, hosiery Machinery, ancillary weaving Machinery, starching, finishing Parts, starching, finishing machinery Machines, sewing Machinery, carding and combing Equipment, parts, spinning and weaving machinery Shuttles, weaving Needles, weaving West Germany, Poland United Kingdom United Kingdom United Kingdom West Germany, Belgium West Germany Switzerland, West Germar West Germany West Germany Japan, Italy United Kingdom West Germany West Germany West Germany t of Trade Statist * Trade Statistics of Ira Imports, total n the United States ciiial suppliers, 1965 Bricks, fireproof Sanitary fittings, ceramic Chinaware, household, toilet . Glass, sheets Safety glass, motorcar Bottles, glass Glasses, drinking Glassware, pressed and blown Vacuum flasks Glass, spun United Kingdom, West Germany United Kingdom Japan Japan, Belgium West Germany Italy France Japan United States Table 9. — Imports of Principal Iron and Steel Items, 1963-65 a [Thousands of dollars] Imports from the United States Bars, rod, strip Rounds, half rounds Channels Wire, 5-10 millimeters diameter . Sheets and plates, semifinished ... Sheets and plates, finished Sheets, galvanized, lead coated ... Tinplate Pipe, uncoated (Formosa), West Gern 2,776 3,464 6,707 West Germany West Germany West Germany United Kingdom United Kingdom, West West Germany West Germany, Japan France, Italy, United Kingdom United Kingdom Table 10. — Imports of Principal Copper and Alui [Thousands of dollars] i Items, 1963-65 * n the United States Principal suppliers, 1965 Plates and sheets . Tubing Wire cable Shavings, filings, v Sheets, with paper lining Sheets, without paper linin Shavings, filings, waste Rhodesia West Germany Yugoslavia United States, West Gern West Germany United States United States Yugoslavia West Germany f Trade Statis Table 11. — Imports of Principal Items of Agriculti [Thousands of dollars] Trade Statistics of Ira Equipment, i, ISit-lSiS, Tehran, Iran. 1963-65 1 i the United States Principal suppliers, 1965 Cultivators Machines, ground preparation and cultivating, n.e.s. 2 Parts, n.e.s Mowers Combine harvesters Threshers Machines, grain sorting Fruit and seed dryers, cleaners, graders M:n hitii-i y, ,'i:iiii gi hiding and flour mill.. Machinery, grain husking Parts, flour milling, grain grinding, huskim Tractors, agricultural Sprayers, agricultural 833 153 219 193 United Kingdom 1,044 112 28 106 United Kingdom, West Germ 1,251 434 < 3 ) 921 United States 393 454 ( 3 ) 198 United States, Japan 301 78 ( 3 ) 7 Japan 314 544 ( 3 ) 309 United States 553 86 5 136 West Germany 737 X 'I 4 ( 3 ) Denmark, West Germany 1,461 (*) ( 3 ) (3) West Germany 13,455 2,013 1 254 4,576 United States, United Kingdo West Germany 257 5 12 22 West Germany Negligible or one 4 Data not ava ilable. •ade Statistics. h'urciiin Trade Statist ■cs of Ira n, lSbl-l$U8, Tehran, Iran. Table 12. — Imports of Principal Items of Pumping Equipment, 1963-65 ' [Thousands of dollars] Imports, total i the United States Item 1963 Pumps, petrol 469 Parts 513 Pumps, deep well 3,105 Well casings 1,646 Pumps, with suction pump diameter more than 3 inches (excluding deep well) 4,435 Pump parts 1,139 Pumps, hand 91 Pumps, n.e.s 896 Pumps, parts, n.e.s 366 Compressors, air and pas 634 Compressors, freezer ( 3 ) 1 Years ending- March 20. 2 Negligible or none Source: Ministry of Economy, General Departm cipal suppliers, 1965 United States, United Kingdom United Kingdom, United States United States United Kingdom United Kingdom West Germany United Kingdom, West Gei United States, United Kingdom United States Sweden ;, Foreign Trad, Stntisi Table 13. — Imports of Principal Items of Electrical Equipment, 1963-65 1 [Thousands of dollars] i the United States Principal supplie Dynamos, altern; Motors, electric Transformers, ni capacity Transformers, 2 kilow iceeding 2 kil< Parts, dynamos, alternators, electric motors, transformers, converters, rectifiers.. Batteries, wet Batteries, dry Batteries, storage, ordinary Accumulators, electric, stationary •ing and registering equipment Elect deters Wire, electric, and outer cover of lead or other metal Wire, electric, with outer cover of paper, cotton or other textile, steel wire Wire, electric, with outer cover of varnish, rubber, silk, or material, n.e.s. 4 Switches, plugs, tee-boxes, sockets, bell buttons, etc., excluding high amper- age equipment Parts, electric appliance and machinery, Fans, electric, exceeding 15 kilograms by weight Equipment, safety, control and distribution, switchgear West Germany United Kingdom United Kingdom, Japan West Germany , Switzerland , Yugoslavia United Kingdom West Germany, United Kingdom United Kingdom West Germany, United Kingdom Hong Kong West Germany ment of Trade Statist CRYSTAL: Glassware is distributed through stalls such as this on 1341-l.US, Tehra the Tehrc 1 Table 14. — Imports of Principal Items of Radic [Thousand , Television i of dollars] ! Equipment, 1963-65 ' Imports from the United States Principal suppliers, 1965 Radio receiving sets Television receiving sets Record players Radio receiver parts Loudspeakers, microphones ... Tubes, radio Transmitters, radio Radio and television transmi Tape recorders Telephone apparatus Telephone apparatus, parts . Kuwait France Netherlands, France, West Germany, United States Japan, West Germany Netherlands United States United States West Germany West Germany West Germany 1 Years ending March 20. n Trade Statistics of Iran, 131,1-131,3, Tehra Table 15. — Imports of Principal Items of Refrigeration Equipment, 1963-65 1 [Thousands of dollars] Imports, total Imports from the United States Item Principal suppliers, 1965 1963 1964 1965 1963 1964 1965 Refrigerators, electric 744 58 218 286 32 17 France, United Kingdom Refrigerators, nonelectric 33 46 135 5 ( 2 ) ( 2 ) Sweden Deep freezers 147 176 309 15 106 227 United States Air conditioners 387 510 1,315 48 284 944 United States Refrigerator, deep freezer, parts 578 1,093 1,217 282 187 275 United States Industrial refrigerating equipment 190 112 154 78 103 136 Denmark, United Kingdom Icemaking plants 157 225 87 42 18 8 United States Refrigerating equipment, n.e.s. 3 273 144 490 164 103 317 United States Parts, n.e.s 426 79 185 66 11 58 United Kingdom, United States 1 Years ending March 20. 2 Negligible or none. ' Not elsewhere specified. Source: Ministry of Economy, General Department of Trade Statistics, Foreign Trade Statistics of Iran, 131,1-131,3, Tehran, Iran. Table 16. — Imports of Principal Items of Office Machinery, 1963-65 1 [Thousands of dollars] - Imports, total Imports fro m the United States 1963 1964 1965 1963 1964 1965 Typewriters Accounting machines Calculating machines Cash registers Accounting, calculating machine, cash r Duplicating machines Office equipment, n.e.s. 3 West Germany United States Sweden West Germany United Kingdom West Germany STATION STOP: In northern Ira s of Iran, 131,1-131,3, Tehran, Iran. vith Meshed and the U.S.S.R. via Tabriz. Table 17. — Imports of Principal Items of Handtools, 1963-65 ] [Thousands of dollars] Imports, total Imports from the United States Principal supplie Spades, shovels, hoes Scythes Vices, clamps Pliers, wrenches, chisels Wrenches Files, rasps Saws, circular and straight . Drills, chisels Cutting tools, other Japan West Germany West Germany West Germany Netherlands United States, United Kingdom United Kingdom, Sweden United Kingdom ion Trade Statist Table 18. — Imports of Motor Vehicles and Parts, [Thousands of dollars] s from the United States Principal supplie Cars, passenger (not over $1,320 landed value).. Cars, passenger (not over $2,640 landed value).. Cars, passenger (not over $3,960 landed value).. Cars, passenger (over $3,960 landed value) Motor coaches Motor buses Road tankers Trucks Vanettes Trucks, with automatic unloading apparatus .... Trucks, three-wheel Chassis, truck, with driver's cab fitted Chassis, truck, without driver's cab fitted Parts, Parts, Parts, Motorcycles Parts, motorcycles bus, truck . West Germany United States, West Germany United States United States United States, West Germany United Kingdom United States United States, United Kingdom United States West Germany, United Kingdom Japan West Germany, United Kingdom West Germany West Germany West Germany, United States United States West Germany n Trade Statistics of Iran, 1341-1343, Tehrp -Imports of Principal Rubber Items, 1963-65 1 [Thousands of dollars] Imports from the United States Principal supplie Rubber, raw .... Tubing, rubber Belting, rubber Valves, discs, joints Tires, cycle Tires, passenger car Tires, truck Tires, tractor Tubes, truck tire .... Malaysia, United States United Kingdom West Germany United Kingdom, Japan Japan, United Kingdom Japan, United States United States, West Germany Japan, United Kingdom, United States ;, Foreign Trade Statistics of Iran. 1341-1343, Tehra Table 20.— Plai Organization Program Budgets, 1963-66 ] [Thousands of dollars] Total Agriculture Land reform Agricultural < Other . Industry and nr Investment ii Investment i: 132,000 43,270 12,606 Other t of products and distribution . •rivate industry and banks .. Power and fuel Electricity for large cities Electricity for medium-sized cities . Electricity for small towns Administration and research Petroleum Transportation and communications . Railroads Ports Telecommunications Other Education Primary Other Health Equipment and facilities Communicable diseases Other Manpower Agricultural training Other high level technical training . Other Urban development Housing Water and urban health Other Statistics - September 20, 1962 - March 2 Table 21. — Imports of Items Valued over $500,000 of Which the United States Had Less than 10 Percent of Market, 1965 1 [Thousands of dollars] Item Import , total Principal suppliers Chickens 574 9,959 1,168 517 Netherlands India Pakistan Thailand Italy 268 4,753 884 300 Ceylon India 261 3,861 1,168 Rice Olive oil . Fatty acid 767 West Germany 639 Granulated white sugar .. 7,202 45,628 U.S.S.R. Turkey 3,412 10,164 Belgium U.S.S.R. 2,596 9,637 Taiwan (Formosa) 8,257 Granulated yellow sugar .. Colored cement Asbestos Sodium hydroxide Plastics, irregular plates, s waste rap staple fiber, 6,221 1,007 533 1,142 1,196 Hungary Kuwait United Kingdom Italy 2,727 368 738 454 United Kingdom West Germany 331 441 Table 21.— Imports of Items Valued ver $500,000 of Which the United States Had Less thai of Market, 1965 * — Continued [Thousands of dollars] Direct dyes, chromium Finishing dyes, sulfur Nonenamel varnishes Dyes, manufactured, n.e.s Fertilizers, mineral or chemically manufactured from 2 or more of lowing-: nitrogen, phosphorus, pota: Hides, cow or buffalo Rubber tubing Tires, cycle Tires, passenger car Tree trunks (unsawed) Timber, sawn lengthwise Paper felt (ovei Paper, made of over 25 gram Newsprint Paper, n.e.s. (weighing 35 square meters) ... everal layers I wouvhi; per square meter) . Hardboard fiber sheets Paper bags, pouches, sacks Artificial textile fibers Artificial silk fabrics Yarn, wool, fine, hair, mixed Yarn, wool, hair, manufactured for retail sale Wool fabrics, not exceeding 250 grams per eight . Wool fabrics weighing between 250 grams and 350 grams per square meter Wool fabrics weighing between 350 grams and 500 grams per square meter Fabrics, cotton, not exceeding 60 grams per Jute, raw Fabric, jute, rough woven Cloth covering, oil coated Bags, jute Fittings, sanitary Sheets, glass Flasks, vacuum Bars, rod, s Beams, iron and steel Bars, angle, iron and steel Bars, round, semiround ; iron, steel Bars, channel, iron and steel Wire, iron and steel, 5 millimeters to 10 millimeters diameter Sheets, iron and steel, semifinished Sheets, iron and steel, finished Sheets, iron and steel, galvanized, lead coated Tinplate Hoops, iron and steel Pipe, cast iron Pipe, iron and steel, straight Pipe, without jointing Pipe, varnished, enameled, with a zinc, lead, Springs, leaf, vehicle 566 Belgium 10,902 United Kingdom 781 United Kingdom 766 Union of South Afi 3,824 West Germany 1,980 Switzerland 1,245 West Germany 616 Netherlands 649 United Kingdom 1,707 West Germany 2,295 Rhodesia 713 United Kingdom 653 United Kingdom 1,267 Japan 795 Austria 3,204 U.S.S.R. 593 Finland 581 Finland 1,254 U.S.S.R. 5,108 Japan 767 United Kingdom 1,711 Sweden 1,566 Austria 19,339 Japan 1,675 Japan 3,388 Australia 500 Israel 1,349 Taiwan (Formosa) 3,218 Taiwan (Formosa) 1,989 Taiwan (Formosa) 2,653 United Kingdom 7,016 Japan 1,913 United Kingdom 506 Dubai 499 Pakistan 1,176 India 630 Israel 1,107 India 801 United Kingdom 1,713 Japan 589 Japan 3,714 Taiwan (Formosa) 16,410 West Germany 2,536 Taiwan (Formosa) 1,114 Taiwan (Formosa) 920 West Germany 2,776 West Germany 3,464 United Kingdom 6,707 United Kingdom 4,851 Japan 2,850 West Germany 632 West Germany 1,455 France 21,152 West Germany 952 Italy 3,866 France 669 West Germany West Germany n of South Africa 513 Finland West Germany Finland West Germany Japan 587 Israel 370 Japan 1,003 United Ki agdom 2,797 Japan 528 Pakistan 314 Belgium West Germany West Germany United Kingdor Table 21. — Imports of Items Valued [Thousands of dollars] Principal supplie Padlocks, cast iron, iron and steel 504 Copper plates, blanks, sheets 1,633 Aluminum sheets, with paper lining 597 Tin lumps, pigs, ingots, blanks, pellets, balls 775 Blades, razor 1,324 Spoons, forks, of metal 597 Lamps, table, non electric 610 Aircraft engines 1,251 Aircraft engine parts 528 Rollers, road 867 Casings, well 1,828 Pumps (excluding deep well pumps) with suction pipe diameter of more than 3 inches 5,371 Grain grinding, floor milling machinery 737 Parts, floor milling, grain grinding, clean- ing, sewing, husking machinery 1,461 Looms, cloth weaving 1,123 Mills, hosiery making 1,166 Machinery, starching and finishing 878 Parts, starching and finishing machinery 569 Machines, sewing, hand or foot operated 2,608 Lathes 1,370 Equipment, parts for spinning and weaving machinery 1,773 Batteries, storage, ordinary 1,719 Bulbs, electric lighting 1,230 Parts, fittings, for appliances, electric, for use in medicine and radiology 715 Parts, components, for telephone apparatus.... 3,483 Electric meters 702 Wire, electric, with outer cover of lead or other metal 2,867 Wire, electric, with outer cover of rubber, varnish, artificial silk 3,594 Equipment, safety, control and distributing, electric, switchgear 549 Trucks, with automatic unloading apparatus.. 776 Truck, chassis, without driver's cab fitted 5,972 Motorcycles 1,143 Bicycles 1,616 Parts, fittings, pedalcycles 496 Manufactures, other, finished, semifinished in phenol, urea, phtalic acid plastics, synthetic resins 579 West Germany West Germany Malaysia United Kingdom Japan Hong Kong United Kingdom United Kingdom West Germany West Germany West Germany West Germany West Germany West Germany Japan West Germany West Germany West Germany West Germany West Germany West Germany West Germany West Germany West Germany West Germany West Germany Japan United Kingdom India West Germany United Kingdom United Kingdom t of Trade Statistics, Foreign Trade Statistics oj Iran, 13iS, Tehran, Ira KARUN RIVER BRIDGE: This bridge at Khorramshahr crosses the Karun River and leads to Abadan. 90ff ? m '" Table 22. — Plan Organization Expenditures Compared with Total Third Plan Budget, 1963-68— Continued [Thousands of dollars] Sector Total budget for 5% years Expenditure during first 2% years Expenditure as percent of total budget Agriculture and irrigation .. ... 594,000 249,836 42.1 Land reform 35,706 55,691 Agricultural credits ... 116,160 47.9 Increase of production and improvement of crops .. ... 51,612 13,543 26.2 Rural development ... 66,000 13,913 21.1 Other Investment in existing Government industries ... 26,400 4,752 18.0 Long-term credits to priva 2,165 42,491 Electric power and fuel .. 356,400 11.9 713 1,531 Small towns 13,200 11.6 Administration and resear h 11,484 1,478 12.9 Fuel Communications and 9,596 24 2 Telecommunications Other 48,655 Primary education Universities 12 4 44,682 11,563 24 4 Installations and equipment 97,680 11.8 Campaign against Other Higher and secondary agri ... 31,680 Vocational training of Ministry of Education ... 26,400 1,940 7.4 Urban development ... 105,600 26,334 24.9 Drinking water and public sanitary services ... 99,000 25,806 26.1 Other protective projects 6,600 528 8.0 Statistics and miscellaneous 10,560 1,769 16.8 Housing and construction .. ... 99,660 40,828 41.0 Source: Plan Organization. Tehran, DEVELOPMENT: A U.S.-made combine harvests milo, a grain sorghum, on a field trial farm in Khuzistan Province. This crop was irrigated with water from a lake behind the Pahlavi Dam, which is part of the Province's regional deevlopment project. Table 23. — Selected Data on the Expansion of Major Industries Capacity in thousands of u Estimated, 1962 Estimated, 1968 Cotton textiles Woolen textiles Cement Vegetable oil Dried fruits and n< Date packing Carpets Food preservation . Cigarettes Tea 50,000 9,400,000 12,000 . Oiiilni,- „f the Third Plan, Tehra LIBERIA on export and world trade are available at the U.S. Government Printing Office For use of Supt. Docs. ORDER FORM To: Superintendent of Documents, Government Printing Office, Washington, D.C. 20402 or Any U.S. Department of Commerce Field Office Please send me the market studies checked. Enclosed find $ (check or money order). Name Address City, State, & Zip Code D AFRICA: Sales Frontier for U.S. Business. 1963. 121 pp. $1. □ BELGIUM, A Market for U.S. Products. 1963. 60 pp. ' □ TRADE and INVEST in CENTRAL AMERICA. 1965. ( □ HONG KONG, A Market for U.S. Products. 1964. 122 pp. $1. □ KUWAIT, A Market fo'r U.S. Products. 1963. 22 pp. □ LIBERIA, A Market for U.S. Products. 1965. 40 pp. □ LIBYA, A Market for U.S. Products. 1962. 65 pp. 50