IRAN EDIFACT COMMITTEE –IrEC – 2001

General Conditions Update:

The Iran EDIFACT Committee is pleased to provide an update of its latest developments. As brought to your attention in September 2000 at the Taiwan gathering, in March 2000, Iran implemented its Third Five-Year Plan. A key objective of this Plan has been the provision of the means for the development and expansion of trade facilitation and information dissemination on a macro-economic level. With the rise of the global marketplace, no nation can afford to focus solely on a healthy domestic economy; its leaders must also develop policies – based on a mission and a vision- to guide their day-to-day efforts to develop their economy. As can be seen from the attached Appendix, Iran has drawn up a comprehensive EC strategy encompassing all economic sectors so as to allow Iran to increase its competitive advantages in the global market place. This comprehensive policy serves to connect macro-economic public policy with the micro-economic behavior of industries, firms and consumers so as to achieve sustainable growth. Already under implementation, we are pleased to note that Iran has been recently been ranked among the top fifty countries in the field of EC, while its economy in general is now ranked as the 22^nd largest economy in the world. As this report will show, the key cornerstones of such developments lay within the development of a broad based infrastructural and institutional framework, which are currently being instituted in Iran. These steps can be evidenced as follows:

Commercial Sector: In addition to activities such as the National Trade Dissemination Network and other steps that were highlighted in last years report, Iran’s Ministry of Commerce has increased its focus of activities this year towards the promotion of services for SME’s. Two key highlights include the launch of an EPC (Electronic Products Catalog) and the second is an e-fair, or in other words a virtual trade fair. Both these services are rendered via Iran’s National Trade Point, which was launched in 1995. The e-Catalog is unique in the fact that for a nominal fee, the Trade Point will custom design an e-Catalog which will incorporate the clients marketing message, slogan, philosophy while fully highlighting the clients product line. The search engine of the e-catalog allows users to quickly browse through the catalogs and to search for specific items based upon product or company name. The e-Fair concept (iranefair.irtp.com) allows users to search for their desired item by company or product name and to place an order. The rendering of such services it is hoped will serve, as a further means of facilitation for SME’s to enter global markets without the high costs inherent to such steps.

Infrastructural Framework:

(i) Electronic Island: The Kish Island Free Trade Zone Authority has successfully launched the first phase of its ‘electronic island’ project. The launch, which took place concurrent with an international symposium on EC in April 2001 was unique as it signified the entry of a new player in the EC field, which, given the unique geo-economic positioning of Kish island, combined with a comprehensive incentive framework (as evidenced by measures such as a 15 year tax holiday), will provide a unique launch pad for local and international companies to a regional market with a combined population in excess of 250,000,000 inhabitants.

(ii) Telecommunications Infrastructure: One of the mandates of Iran’s Telecommunications Ministry has been to rapidly increase and improve the nations telecommunications infrastructure. As shown in the attached Appendix, the Ministry is aiming to undertake steps such as increasing bandwidth capacity from 1000 M bit to 5Gbit. Concurrently, Iran has been ranked fifth in the world in terms of growth of fixed lines. Of specific note has been the results of the privatization policies of the Ministry. By way of example, since ceding activities of ISP’s to the private sector, the number of ISP’s has grown by %500 whereas the resultant price wars have reduced prices to one-tenth of their original prices. As Iran is exploring the prospect of allowing the private sector to purchase 3G licenses, the valuation of a 3G license in Iran has been estimated to be in the vicinity of $28 billion, the highest valuation of any country in the Middle East.

(iii) Increase in Numbering Technology: The number of companies utilizing bar codes has increased by %17 to 3191. Of particular note has been the recent signature of a Memorandum of Understanding between EAN Iran and the Iran Khodro Group, the 18^th largest vehicle manufacturer in the world. As this company is implementing a comprehensive JIT program, it is foreseen that some 400 Iran Khodro suppliers and subsidiary companies will register with EAN Iran for bar coding and other support services.

(a) Capital Markets Sector:

(One) The establishment of Electronic Stock Exchanges: At the present time, the Tehran Stock Exchange which is ranked as the second largest in the Middle East and 26^th in the world in terms of growth, has linked authorized stock brokerages directly to the exchange online. The second phase is the implementation of an actual electronic exchange, which is currently being implemented on a ‘pilot’ basis. Now under going its trial phases, the pilot project is expected to shortly be launched on a national scale. Concurrently, and in conjunction with the launch of Iran’s electronic island (see above) a second exchange, which is to be linked to international capital markets is currently being implemented in Iran’s Kish Island Free Trade Zone.

(b) The Customs Sector:

(i) The rapid implementation of the ASYCUDA System in Iran is continuing. Following the trial launch of this system in selected Customs Offices in the year 2000, the project is now being incorporated across Iran as evidenced by the implementation of this system in twenty - two major customs offices, covering %91 of the value of imported goods and %80 of the value of exported goods. With the planned installation of this system in a further ten major customs offices across Iran, it is expected that this figure will reach %99 of the value of all exports from and imports to Iran.

One of the reasons attributed to the rapid success of this project has been the ability to successfully train over 600 Custom’s personnel and a further 500 Custom’s brokers towards the use of this system.

The Iranian Customs Organization has continued to broaden its scope of activities with other countries as well. We are pleased to note that in furtherance to the Memorandum of Understanding signed at least year’s AFACT meeting in Taiwan with the Malaysian Customs Organization, preliminary steps of cooperation have been taken as evidenced by, inter alia, agreements on message type and related standards for message exchange such as ‘Cusdec’ and D01 directory. Furthermore, so as to encourage and promote the ASYCUDA system among Iran’s regional trading partners, three training courses have been held by the Iranian Customs Organization for the Customs Organizations of countries such as Pakistan, Turkey, Turkmenistan, Uzbekistan and Georgia among others.

(c) General:

(a) Despite the global downturn in the EC and IT sector, Iran on the other hand is continuing to witness major growth in these sectors. The number of ISP’s and E-commerce sites are continuing to grow, as well as other activities such as electronic magazines have also been registering significant growth. One reason attributed to such growth is Iran’s unique demographics. With close to %70 of Iran’s population under the age of 30, the bulk of Iran’s population is in the key 17-24 age ranges, the demographic grouping which is most widely attributed to having the highest receptivity to EC activity. It is within this context that Iran’s Telecommunications Ministry is preparing to expand its services to enable its infrastructure to handle over four million new Internet users within the next three years. Concurrently, most Iranian banks are in various stages of progress for the implementation of Internet banking activities, while other sectors, such as chain stores have implemented on-line retailing activities. Of particular note is the launch of ‘Shahrvand On-Line’, an e-shopping site launched by one of Iran’s largest chain of grocery stores. Providing such features as payment flexibility (as highlighted by the ability to pay on-line or C.O.D. basis) the company’s successful business model is now being followed and implemented by other companies. Elsewhere, the establishment of Internet cafes in major cities across Iran have now become a growing trend among Iran’s youth, while the free availability of Internet services at public parks and libraries have all served to contribute to these trends and promote awareness. Of special mention is the fact that even Iran’s smallest and most remote villages have joined the internet bandwagon, as exemplified by the village of Charbagh, which became the first Iranian village to link itself to the web via its own web site (www.Shahkooh.com). Visitors to the site can learn about the indigenous products of the village, the culture of its people and the like.

Institutional Framework

(i) EC applications must take place concomitantly within the framework of a clear and transparent institutional and legal framework. As a result, following our announcement last year that Iran’s first national e-commerce law has been drafted and submitted for review, it has now been officially presented to Parliament for ratification. Concurrent with these steps, following extensive negotiations with several first tier IT companies, Iran’ first Certification Authority is now under implementation. The objective of the Certification Authority is to provide the basis for the availability of an organization that will be recognized by the Iranian community of users as a trusted party. Iran’s Certification System will serve as a means by which the identity of users of the network (Internet) can undertake electronic business transactions in a secure and trusted manner. It bears specific mention that concurrent with this step, a complete regulatory framework has been drafted by the Iran LWG so as to ensure a clear and transparent institutional framework for the CA.

(ii) In conjunction with the development of a legal framework, the development of a viable framework for ‘Awareness Promotion’ has also played a key part of the IrEC program. As a result IrEC has sponsored a number of speeches, seminars, training programs for a broad cross section of society including, inter alia, the private and public sectors, academia and the general public.

In furtherance to such activity, IrEC, in conjunction with the World Intellectual Property Organization (WIPO) is also preparing to hold an international e-commerce forum on November 14-15 2001. Details are available at www.iranafact.org.