Private sector development depends on appropriate international relations, but sanctions have prevented Iranian companies from forging ties with their foreign counterparts in recent years, Mehrad Ebad, a member of Tehran Chamber of Commerce, Industries, Mines and Agriculture, says.
A translation of his write-up for the TCCIMA website follows:
Unofficial statistics show there are 1.8 million active companies in Iran. The number of registered companies is an indicator of the ease of doing business; Iran ranked 127th in this index in 2020.
To better understand the situation of active companies and their resilience under different economic and political conditions, we need to probe statistics dating back to 1952-53.
A total of 100 companies were registered per month from 1950-51 to 1971-72; 250 companies per month were registered from 1971-72 to 1991-92 and the number of registered companies reached 2,000 per month between 1991-92 and 1996-97.
Interestingly, as many as 10,000 companies were registered in the years 2006-7 and 2007-8; in the 2010s, this figure fell to an average of 4,000, even dipping as low as 1,000 in 2019-20. Only 1988-89 had seen this decline in the number of new companies.
During these periods, Iran was struggling with political tensions and sanctions. At times of economic instability and the devaluation of local currency, the private sector is less inclined to start a business. During those years, many of our entrepreneurs closed their businesses and left the country.
A large number of small- and medium-sized enterprises have gone bankrupt in recent years, thanks to poor market conditions and lack of liquidity.
SMEs are less resilient compared with large companies. Corporate resilience is defined as the ability to cope with volatility and respond creatively to workplace pressures.
Each year, scores of SMEs close their businesses due to low resilience. Large companies have been more resilient in recent years, thanks to the low-interest loans they receive. However, we have seen the closure of large, old companies as well, indicating that entrepreneurs are meeting roadblocks and facing hardships in Iran. Of course, the current situation is the result of Iran’s isolation in the international arena.
It is obvious that economic development depends on appropriate international relations. In recent decades, it has been proven that international cooperation leads to the development of countries; Iranian companies have been deprived of international cooperation.
In fact, economic development is impossible without the cooperation of private sector companies. The private sector is urging the government to help increase economic resilience by improving the business environment and international relations.
