Not long ago, order registration for imports used to take 15 minutes; there were no restrictions like ceiling or having prior experience in imports, Mehrad Ebad, a member of Tehran Chamber of Commerce, Industries, Mines and Agriculture, prefaced his write-up for the TCCIM website with this note. A translation of the text follows:
With the onset of sanctions and decline in the inflow of foreign resources, policymakers introduced rules and regulations, such as enforcing a ceiling and stipulating previous experience, to control demand for foreign currency.
Since a decade ago, they have unveiled a new amendment to improve the order registration process once every two months, but they don’t realize that restrictions on import will increase the end prices of goods and smuggling, apart from depriving the government of import revenues.
By considering the average sum of the last two years as the import ceiling, policymakers have failed to consider that the country’s need for imports may have increased over the years; a factory that plans to increase production will need more raw materials. However, the ceiling will prevent the entry of raw materials required by the production sector and prepare the ground for price hikes.
At present, the import quota for each businessperson is determined based on their ratings in the comprehensive trade system. On the whole, the ceiling has increased significantly, but imports of some items require previous import experience.
Over the past few years, this prerequisite has led to a plethora of problems, for example, despite the condition of having experience, businesses will not be able to diversify their product portfolio. Only those who have imported goods in recent years are allowed to engaged in the import of the same goods, which is an example of rent. With this rule, young entrepreneurs will be prevented from entering the field of imports. Or, at some point, the license to import raw materials was only granted to producers; manufacturers who had no background of imports were forced to become importers of raw materials and importers were removed from the supply chain. In other words, such a policy turned producers into importers and some importers into smugglers.
The latest rules and regulations require importers of 68 items to have already imported these goods; some of these items include tractor parts, cellphones, telephones, fabric, aluminum oxide, absorbent powder and ball bearings.
Seriously, why some importers are allowed to import these items and others are not? Also, what effects does the imposition of this restriction have on the management of foreign currency market?
At one point, in order to fix these hasty policies, those in charge granted privileges to first-time importers such as the permission to import any item of choice worth up to $500,000.
It is enough to weigh in the situation of the following three companies for the import of one of the 68 items from the aforementioned list for which the experience prerequisite has been set to realize the unfair nature of these regulations:
• A newly established company that is allowed to import any product worth up to $500,000.
• A company established 10 years ago plans to expand its product portfolio and import new products, but due to its lack of experience, it cannot import the new product.
• A company established 10 years ago, which imported this product once in the early years of its establishment by chance, could now import this product as much as it desires.
According to these regulations, the first and third companies have been granted rent. In fact, the third company is enjoying a monopolistic market, given its bigger clout.
The key point is that economic players are faced with many trials and errors in policymaking regarding import order registration and allocation of foreign currency in recent years; these inappropriate approaches can be referred to as internal sanctions.
It is advisable to create stability required by businesses and the current regulations and procedures should be overhauled based on expert reviews. In doing so, the import of raw materials in sufficient quantities and at the lowest prices would take place and the private sector would remain immune from the adverse consequences of such policies.
