Domestic Economy

Private Sector Still Under Gov’t Shadow

Private Sector Still Under Gov’t ShadowPrivate Sector Still Under Gov’t Shadow

The head of the Privatization Organization has criticized the process of implementing privatization in Iran, saying: "In some cases, while ownership has been transferred to the private sector, the companies are still effectively run by the government," IRNA reported.

Speaking at meeting focused on transferring government shares to public institutions, Mir Ali Ashraf Abdollah Pouri Hosseini defined privatization as "the transfer of ownership as well as management from the government to a privately owned entity, with the aim of increasing efficiency and productivity."

He underlined the importance of encouraging private businesses' participation in various industries, saying: "It has been proven time and again that the government is not a good business manager."

Recalling that the previous administrations pursued a policy wherein the government paid some of its debt to the private sector through transfer of public-owned shares and assets to private and semi-governmental sectors, Pouri Hosseini deemed the policy as inefficient, noting that it does not help competition.

Regarding the incentives offered by the government to encourage greater private sector participation in the transfer of shares, he said the Rouhani administration has so far approved only three decisions in this regard, including: offering the government shares in installments at 15% interest, with 3% discount given to the 'genuine private sector'; extending installment payment period by one third; and offering declining installments on companies purchased by the private sector.

> Gov't Hampers Private Sector Growth

Meanwhile, former managing director of MAPNA Group, Moosa Rafan says government policies at times prevent private sector growth and participation.

"government-affiliated companies have entered many economic sectors as contractors and investors," said Rafan, noting that the private sector has not been given the opportunity to participate in major projects so that it can earn the government's trust for executing major projects.

To maximize private sector role in the economy, he said private companies should increase their capacities in terms of engineering knowledge, project control and management systems and modern equipment, in addition to increasing their financial power to finance their own projects.