Iran moves to sell shares to the poor

TEHRAN - Iran's Government has launched a plan to sell heavily discounted shares in state firms to the poor as part of a pledge to spread wealth more fairly.

Economists say the move may speed up an inert privatisation plan but could leave the public holding non-performing stocks in failing firms if the Government does not ensure independent evaluation of companies being offered.

President Mahmoud Ahmadinejad said distributing the shares - dubbed "the share of justice" - aimed to shrink government, create a fairer society and encourage participation in developing Iran, the world's fourth largest oil producer.

"Bestowing the share of justice is the beginning of a great development in Iran as it is a fair distribution of Government's wealth among various classes of Iranian people," Ahmadinejad was quoted by the official IRNA news agency as saying.

Ahmadinejad compared the "share of justice" to the sluggish privatisation led by previous administrations, saying less than the equivalent of US$3.3 billion ($5 billion) was privatised in 15 years.

He said the new initiative had transferred the equivalent of US$2.75 billion out of government hands in one day.

But shares have yet to be sold to poor Iranians. So far, stakes in the firms have been handed to provincial cooperative organisations, which will sell them on to those eligible, IRNA said. It did not identify the names or number of firms.

In the first phase of the programme, 5 million rials ($833) worth of shares - at a 50 per cent discount for payment over 10 years - will be offered to 4.6 million poor Iranians, IRNA said.

The holders cannot sell their shares for two years.

A similar idea for distributing shares was first proposed by Ahmadinejad's main rival in last year's presidential election, former president Akbar Hashemi Rafsanjani.

It was not immediately clear how the Government had evaluated shares being offered and some observers fear poor Iranians could find themselves holding failing stocks, even if bought cheaply.

Economists say many state firms are uncompetitive and need heavy restructuring to survive in the private sector.

"It would be a great idea to offer the share of all state companies to the people, but it will be a bad idea if it only includes shares in industries that are broke," said Massoud Rad, senior adviser at the private Karafarin Bank.

- REUTERS