Iran's Ministry of Economic Affairs and Finance has published a report on the national climate of doing business based on standards of the World Bank for the first time ever.
The official news website of the ministry has published detailed reports on a number of indices.
According to the ministry, the report, which spans all 31 provinces of Iran, has taken into account the frameworks adopted by the World Bank in its business reports while also considering the local conditions of the country's economy.
It reviews seven national indices of 'ease of ownership registration', 'contract enforcement', 'funding', 'social capital', 'obtaining construction permits', 'access to electricity' and 'access to gas'.
The ministry has outsourced the review of four of the indices, namely ease of ownership registration, contract enforcement, financing and social capital to the University of Tehran's Development Studies Research Center.
Ownership Registration
The 'ease of ownership registration' index includes four components, namely 'legal process of transferring ownership of immovable property' (in terms of number of processes), 'time required to complete processes' (calendar days), 'expenses required to complete processes' (percentage of value of assets) and 'quality of land management' (infrastructural integrity, 'transparency of information' and 'geographical coverage').
However, in conducting research on Iran's provinces, only components of processes, time and land management have been considered.
The reason provided by the research center for this was that a majority of respondents did not answer questions about the expenses of ownership registration in their provinces.
According to the findings of the research center, the processes of ownership registration are roughly the same across all 31 provinces. But rankings show that Hamedan, Chaharmahal-Bakhtiari and Markazi were the three best-performing provinces in terms of this index whereas Semnan, Razavi Khorasan and Kermanshah were at the other end of the spectrum.
The total average of the ease of ownership registration index across the country was calculated at 53.5, and 12 provinces scored higher than the average.
Contract Enforcement
The index of binding contract enforcement includes three components, namely time required to enforce contracts through courts, expenses required to enforce contracts through courts and the quality of judicial processes (including structure and processes of courts, case management, court automation and alternative methods of dispute resolution). The Iranian report considers only components of time and quality of judicial processes.
Findings of the report indicate that Semnan, Isfahan and Khorasan Razavi were the top three provinces in this regard. On the other hand, Bushehr, Tehran and Alborz had the worst performance.
The average score of this index across the country stood at 57.9 while 14 provinces managed to score higher than the average.
Financing
A developed financial market is one that provides services, equips deposits and facilitates funding to purchase fixed assets such as buildings, lands, machinery and equipment while accounting for the working capital required by companies.
By offering suitable services, financial markets significantly reduce dependency on unofficial sources of money, including money provided by friends and family.
Results of the report in terms of financing indicate that only half of the companies questioned in the country had access to loans or credit lines. This is while "internal financial funds and resources" accounted for a considerable share of finances and working capital at 47.1% and 44.5% respectively.
With regard to access to loans and credit lines, the provinces of Mazandaran, Hormozgan and Qazvin topped the list. Ardabil, Sistan-Baluchestan and Tehran respondents said they had the least access to these facilities.
Social Capital
The index of social capital comprises three components, namely personal and social relationships, social norms and civil participation. Each has variants that were subject to questions.
Of these, the variant of not being worried about the future of children was dissatisfactory in most provinces, which the report says "shows lack of confidence regarding the future and results from families' concerns about the future of their children".
The variant of participation in charitable and non-governmental organizations was another variant that had a lackluster performance in most provinces.
A majority of respondents in 31 provinces gave a low score to the variant of "making comments to state officials," which the reports said clearly indicates "the weak possibility of low-level economic players connecting with the government and establishment."
Respondents in most provinces further pointed out that the variant of "equal implementation of law for economic players" is highly flawed in Iran. This indicates a lack of hope toward implementation of justice among people, the report said.
The ability to claim legally owned rights in trade and trust the word of a partner in a trade setting were two other variants related to this that showcased a weak performance.
Satisfaction in having access to good quality health services, meeting new people and finding new friends were other variants missing across Iranian provinces as part of the social capital index.
On the other hand, variants of "giving charity" and "financial aid to family" scored high. This shows that in spite of the fact that millions of households in Iran are facing severe economic problems that have only been exacerbated in recent months, groups having trust and giving social aid are still active.
A comparison of perceptions in various provinces provides interesting insights. In Tehran, for instance, respondents said seeking help from friends and family, meeting new people and making new friends, as well as participation in elections proved most troublesome for them.
In Isfahan, on the other hand, concerns were completely different as respondents identified lackluster help to strangers, participation in charity and NGOs, low feelings of happiness, high anxiety, future worries and low security as the main barriers to social capital.
The World Bank's latest edition of Doing Business Report released on Wednesday shows Iran’s ease of doing business score has seen an improvement of 2.34 percentage point, though its ranking among 190 economies fell by four places to 128th.
The country’s overall distance to frontier score is 56.98, compared to last year’s 54.64. An economy’s distance to frontier is indicated on a scale of 0 to 100, where 0 represents the lowest performance and 100 the frontier, the WB reported on Wednesday.
