Iran’s business environment strengthened in the winter of the previous fiscal year after being weakened for the third consecutive quarter in the autumn of the previous year, according to the Iran Chamber of Commerce, Industries, Mines and Agriculture.
Iran’s National Business Environment Index stood at 5.83 in Q4 (Dec. 22-March 20) to register a 0.11 percentage point or 1.85% decrease compared with the preceding quarter and a 0.03 percentage point or 0.48% increase compared with the corresponding quarter of last year, the chamber said in a new report published on its website.
The index calculated by ICCIMA measures business friendliness of Iran’s economy, with 10 indicating the worst grade. In other words, the decline in index is indicative of an improving business environment.
The ICCIMA index is fashioned after World Bank’s “Ease of Doing Business” index, a tool for countries seeking to measure the cost of doing business.
Iran’s National Business Environment Index stood at 5.94 in Q3 (Sept. 23-Dec. 21) and 5.92 in Q2 (June 22-Sept. 22).
“Unpredictability and fluctuations in the prices of raw materials and products”, “instability in policies, regulations and executive procedures related to businesses” and “difficulties associated with funding from banks” remained the most undesirable factors affecting Iran’s business environment during the period under review, according to the findings of the 22nd report.
The chamber also measures the index for each of the 31 Iranian provinces. The report names Sistan-Baluchestan, Qom and Chaharmahal-Bakhtiari as the provinces with the worst environments to do business in and Markazi, West Azarbaijan and Fars as the best.
The average real production capacity of economic enterprises participating in this survey stood at 41% in Q4, indicating a decrease of 0.33 percentage points compared with the preceding quarter.
Worst Business Environment for Services
The services sector had the worst business environment in Q4 with 5.77 points followed by agriculture (5.69) and industry (5.62).
The average Producer Price Inflation for the services sector in the four-quarter period ending March 20, which marks the end of the fourth quarter of the previous Iranian year, decreased by 3.92% compared with the same quarter of last year.
The overall PPI for the services sector stood at 423.4 in Q4 of the last fiscal year (Dec. 22-March 20), indicating a 7.3% increase compared with the preceding quarter.
The index indicates a 45.8% increase compared with the same quarter of the year before.
The services sector employed 51.9% of the Iranian employed population (12.03 million), 1.5% higher than the corresponding period of last year, whereas industrial and agricultural sectors provided 33.6% and 14.5% of jobs respectively.
Over 7.78 million were employed in the industrial sector, indicating an increase of 0.2% year-on-year and 3.37 million worked in the agriculture sector, posting a 1.3% decrease YOY.
The services sector consists of wholesale and retail trade; restaurants and hotels; transport, storage and communications; financing, insurance, real-estate and business services; as well as community, social, education, health and personal services.
The sector employed 9.95 million men and 2.08 million women in the three-month period, such that 6.87 million men and 901,585 women were working in the industrial sector and 2.9 million men and 469,735 women worked in the agriculture sector.
Services accounted for 60% or 10.54 million of all jobs in urban areas and 26.6% or 1.49 million of jobs in rural areas. The industrial sector made up 34.8% or 6.11 million of the jobs in urban areas and comprised 29.8% or 1.66 million of employment in rural areas.
This is while 5.3% or 925,570 of the total jobs in urban areas and 43.6% or 2.44 million of the jobs in rural areas were in the agriculture sector.
As for 21 fields of business, the worst three business environments were posted for “real-estate services”, “human health and social work” and “other services”, and the top tier included “finance and insurance”, “office works and support services” and “art, entertainment and leisure”.
Enterprises with 101-200 employees had the best business environment with a score of 5.54 while those with 11-49 employees had the worst business environment with a score of 5.83.
Businesses operating for less than two years indicated the best business environment (5.49) while those operating for 11-15 years had the worst business environment (5.81).
