In its latest move to boost the level of non-oil exports, the government, with the consent of the Central Bank of Iran (CBI), has approved provision of low interest rate loans (below 5%) from the National Development Fund of Iran (NDFI) to exporters, Mehr news agency reported on Tuesday.
The decision is in line with the policies outlined by President Hassan Rouhani's administration to increase the volume of non-oil exports by 20% during the current Iranian year (started March 21), as part of a broader plan to reduce the government's heavy dependence on oil revenues.
"Increasing non-oil exports is among the government’s top priorities in the current year," First Vice-President Es’haq Jahangiri said last week, calling on all government bodies to make every effort to achieve this goal.
To this end, the government has outlined a charter for various ministries, committing them to support development of non-oil exports. Based on the charter, the value of non-oil export is expected to exceed $65 billion during the current Iranian year.
Last year, Iran exported nearly $50 billion worth of non-oil goods including gas condensates as well as $11 billion worth of services. The country imported $52.5 billion worth of goods and $15 billion worth of services during the same period. Experts are hopeful that the government's new policies will help further narrow the gap between exports and imports.
"The government has focused efforts on removing the obstacles and facilitating exports," deputy minister of industry, mine and trade, Mojtaba Khosrowtaj said on Monday.
> Support for Private Sector
"All governments must support private sector participation in the economy by putting in place the right set of regulations and removing the obstacles, rather than interfering with their activities," Khosrowtaj added.
He underlined the need for encouraging export of engineering and technical services, adding that it was decided during the last session of the Supreme Non-Oil Export Council to allocate a certain fund for this purpose.
Meanwhile, in a meeting at the Iran Economy House on Sunday, representatives from both government and private sectors agreed that Iran has the necessary means to become a major exporter to the region and beyond by increasing incentives and easing regulations.
The experts unanimously agreed that government's role in the economy must be curbed in favor of the private sector.
> Excessive Regulations
"Exports have become paralyzed by excessive regulations and lack of incentives,” said a member of Iran’s chamber of commerce, mine, industry and agriculture, Mehrdad Bagheri.
The policies and incentives meant to boost production of export commodities often do not materialize as they are not practical, he said. "To make matters worse, excessive regulations often hurt exporters rather than helping them."
He also noted that "semi-government entities, which enjoy support from the government," dominate the export sector, making it difficult if not impossible for private companies to compete.
Hossein Soltaninia, the spokesperson for Entrepreneurship Development Association pointed that while the Supreme Non-Oil Export Council had drafted clear guidelines regarding the export incentives, imprudent decisions by the previous administration to cut incentives and alter the regulations “drove the final nail in the coffin for the manufacturing sector.”
> Raw Exports
Abbas Vatanparvar, member of Iran’s Industrial Managers and Experts Association, believes expecting 20% growth in non-oil exports is "an ambitious goal, considering Iran's history of exporting oil and minerals in raw form and lack of development in non-oil industries."
Meanwhile, a member of Iran chamber of commerce, industries and mines, Mohammad-Mehdi Tabatabaie believes the Iranian exporters' competitiveness has been reduced as they have to battle excessive costs arising from high interest rates and high risks of doing business.
Intro: The government has outlined a charter for various ministries, committing them to support development of non-oil exports, which is expected to exceed $65 billion during the current Iranian year
