Domestic Economy

Private Sector Offers Solution to Recession

Private Sector  Offers Solution  to RecessionPrivate Sector  Offers Solution  to Recession

Solutions for stepping out of the ongoing recession in the economy formed the central theme of a Sunday meeting of members of Iran Chamber of Commerce, Industries, Mines and Agriculture, also known as “Private Sector's Parliament”.

ICCIMA Chairman Mohsen Jalalpour called on the government to shift focus from curbing further inflation to pulling the economy out of recession, noting that the latter would have a stronger and more direct effect on reducing unemployment.

The official proposed 10 solutions prepared by ICCIMA in collaboration with Iran Chamber of Cooperatives, Iran Chamber of Guilds and provincial chambers of commerce and economic experts to end the current recession in economic sectors.

Engaging the private sector in completing unfinished government projects was the first of these solutions.

"On average, about 40% of the fund allocated for the implementation of development projects during 2003-13 were lost due to project delays," said Jalalpour, adding that only 126 projects were completed each year during the period instead of the 526 envisioned.

Improving the business environment was the second proposal made by the ICCIMA chairman. He noted that based on studies by World Economic Forum, access to funding remains the primary challenge in the business environment.

He offered a number of solutions as his third proposal for addressing this challenge, among them: increasing banks' capital, repaying the government's debt to banks, depositing money from the National Development Fund in development-oriented banks such as the Export Development Bank of Iran, providing conditions for external financing through the Central Bank of Iran's finance guarantee facilities.

Creating a better environment for export of manufactured products was the fourth solution proposed by the private sector representatives.

Another proposal was directing foreign investments to joint venture projects involving manufacturing and technology transfer which, according to Jalalpour, "requires close cooperation between the government and the private sector in preparing an action plan.”

Jalalpour referred to deregulation as the sixth important measure for moving out of recession.

"Iran currently ranks 125th out of 144 countries surveyed by the World Economic Forum in terms of the burden of government regulations [144 being worst]," said Jalalpour. "This is while Turkey is ranked 71st, Saudi Arabia 45th and the United Arab Emirates as the 17th economy."

Establishment of banks for financing small- and medium-sized enterprises was another solution by the ICCIMA chairman. He urged the government to support small companies, observing that Malaysia, Pakistan, Thailand, Russia and Japan have all launched special banks to provide diverse funding solutions to SMEs.

Introducing infrastructure development projects using facilities from the National Development Fund, identifying economically feasible projects in accordance with the country's current needs and granting more power to provincial governors to identify special local projects were the other three solutions of ICCIMA for ending the current recession.

In another part of the meeting, the chamber issued a statement to the executive and legislative bodies, calling for certain considerations with regard to implementation of the amendments to Direct Taxation Act.

Direct Taxation Act was ratified by the parliament in 1988 and was last amended in 2002. Based on this act and its bylaws and other regulations, all individuals, corporate bodies and legal entities are taxed on the income they earn. A corporation’s taxable income is normally assessed on the basis of its statutory books or in case of rejection of the books, on deemed basis.