ISLAMIC REPUBLIC OF IRAN

-Mohammad- Tavafi
With its rich cultural heritage and ancient civilization, the Islamic Republic of Iran has a variety of outstanding
tourist attractions and potential from several points of view. For centuries, the hospitable people have understood the
necessity of cultural interaction and exchange and have been hosting many tourists from all over the world. Today,
considering the positive cultural and economic effects of the tourism industry, Iranians welcome the worldwide
development of this dynamic industry and they are also involved in seeking measures for the development of this
industry at the national and international levels.

The Islamic Republic of Iran has prepared and launched Five-year Economic and Social Development Plans
since 1989 in order to attain new economic sources. In these plans, the privatization and liberalization of economic
activities have been considered as major tools for restructuring the economic, social and cultural system. In recentyears,
the Government has had the view that implementation of development plans depend mainly on public-private
sector cooperation and partnership in tourism, as well as the appropriate use of the financial and service potential of
both sectors.

Privatization is a process in which the private sector's share in the ownership and management of economic
activities increases. This process can either take place through direct investment by the private sector or by ceding
former nationalized firms to the private sector. As an economic policy, privatization is based on the idea that private
ownership and control is much more efficient as far as allocation of resources is concerned.

The transfer of economic activities to the private sector has been carried out according to principles set in the
constitution, the first Five-year Economic and Social Development Plan (1989-1993) and the second plan
(1995-1999) with the following objectives: (a) reduce the government's share of responsibility in economic and
service activities; (b) promote the level of efficiency; (c) establish economic equilibrium; and (d) optimize the use of
national resources.

In order to achieve the above-mentioned objectives in the tourism sector, the 'Tourism Industry Development
Law" was approved by the Iranian Parliament in 1991. Based on the provisions of this law, the Supreme Council of
Tourism has been established and is chaired by the first vice president and with membership of the Ministers of
Culture and Islamic Guidance, Foreign Affairs, Economic Affairs and Finance, Culture and Higher Education and
Roads and Transportation. Its purpose is to determine tourism policies and to create necessary coordination among
related agencies.

According to the Council's Articles of Association, which has been also approved by the Cabinet, the Supreme
Council of Tourism has three major responsibilities and duties. First, to determine national tourism policies and
describe their main objectives. Second, to exercise control over the execution of ratified laws and policies
communicated to the operational agencies. Third, to make suitable decisions for removing bottlenecks in the field oftourism,
provide appropriate facilities for the development of the tourism industry and establish necessary coordination
among related agencies.

Under the provisions of the law approved in 1991, Iranian banks are required to finance and pay loans at
preferential rates, in order to encourage the private and public sectors to invest in the construction and development
of tourism establishments. The law also provides that all tourism establishments and travel agencies shall benefit
from the same rates and rules applied to the industrial sector for the cost of fuel, water, electricity, surcharges, taxes,
loans, etc. As a result, in comparison to the rates applied in the service sector, the tourism sector shall enjoy higher
concessions. In order to encourage investment in the tourism sector, the law also requires that relevant organizations
should supply necessary land for building tourism establishments on the basis of regional fixed rates which are lower
that the current effective rates.

During the first development plan, the construction of 139 accommodation units was started. Moreover,
during the same period, the government issued 526 agreements to establish tourism and travel agencies almost all
of which were operated by the private sector.

According to the policies set forth in the first and second development plans, foreign investment will be
supported and special facilities will also be provided for foreign investors. Several foreign investment projects have
already begun their operational stages.

Almost 100 per cent of road transportation in the Islamic Republic of Iran is handled by the private sector. The
government's share in rail and air transportation has considerably increased during the recent years. In light of the

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D.
facilities provided during recent years, the private and public sectors have started action for investment and partnership
in this area and a number of airlines have begun to operate with the financial support from the public sector.

Greater participation of the private sector in the tourism industry has been anticipated as part of the second
development plan (1995-1999). This participation is in the following areas: (1) continue to encourage the domestic
and foreign private sectors to participate in the construction of hotel, tourist villages, beach resorts and hydrotherapy
centres; (2) transfer operation of accommodation units and transfer uncompleted projects to the private sector;
(3) attract foreign investment for the establishment of hotels and other tourist accommodation establishments; and
(4) provide loans, credit and banking facilities with low interest rates for the private sector to invest in the tourism
industry.

The nature of activities in the tourism sector requires cooperation and coordination between the government
and the private sector, the legislative authorities and people's representatives; without which, success and continuity
cannot be achieved.

The Government of the Islamic Republic of Iran intends to achieve the sustainable development of tourism
through cooperation and coordination with full respect for the aims of our revolution and considering cultural and
environmental aspects.

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