The production sector has suffered the biggest loss from government-imposed pricing policy and increased liquidity over the years, the chamber of commerce says.
Now is the time for the Raisi administration to take effective restitution measures, head of the Easing of Doing Business and Eliminating Production Barriers Commission at the Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIM) said.
“Most businesses in production and sales are in the red largely because the government decides prices and dictates to the market. For instance, auto industry losses resulting from price decrees is in the region of 12,000 trillion rials (about $3.36 billion),” Mohammad Reza Najafimanesh said.
One permanent query of businesspeople is why doesn’t the government stop dictating prices once and for all, and allow the market to decide demand/supply mechanisms? This is a question that must be answered, Najafimanesh said.
“The government may believe that if they cap prices it is in the interest of consumers. I must make clear that in the long run these policies have hurt both the consumer and the producer.”
He added that the liquidity tsunami too is a major impediment to production and called on the government to take urgent action to control it.
“I urge banks to be more cooperative with businesses and use their resources to boost lending to manufactures. Private companies want the lending bureaucracy be eased.”
Gov't Says Aware of Failed Policy
The Ministry of Economic Affairs and Finance said recently it was preparing a bill to disengage from the harm inflicted on the economy due to years of government-dictated prices.
“The law, on many occasions, holds the government responsible for compensating loss [suffered by producers] due to the mandatory pricing policy, which were unhelpful and imprecise.
We see it as a duty to support businesses, producers and exporters whose profits were harmed or made losses,” Economy Minister Ehsan Khandouzi said.
Khandouzi said the ministry and the government’s economic team are determined to put an end to the malfunctioning practices. The focus is on eliminating government-imposed pricing systems, he added.
“In the past months some manufactures were removed from the government pricing policy and entered the stock exchange. We are in the initial phase and remain committed to the task” of curbing government interventions.
The ministry is using all the economic tools it can mobilize to eliminate the apparently failed government pricing policy and managing the market, he noted.
The plan to intervene in the market and control prices, for instance steel prices, has emerged as a hot button issue among government officials, manufactures and the capital market stakeholders alike.
