The ministry of industry, mine and trade has developed an export roadmap for 13 industries that covers the period from 2015 to 2025. Based on the estimates, exports should generate $80 billion income for the country by then.
In its short-term policy planning, the government has named “export” as one of the main drivers to help the economy out of recession and to this end, the minister of industry, mine and trade has talked of long-term plans to increase exports to $80 billion by the end of 2025 as the national Vision calls for. While optimistic about the success of the plan, the private sector industrialists believe that the first step is to remove obstacles and improve export development infrastructure in public agencies.
The estimates provided in the roadmap, as shown in the table, encompass 13 industries to reach the final target of $80 billion. The government has announced that detailed plans are underway to make this figure attainable; however, the private sector players have been wondering how it would be possible in light of existing obstacles on the way of exports.
Donya-e-Eghtesad has conducted a number of interviews with some experts in order to examine the prospect of the success of the government undertaking in this regard.
Prerequisites
Export targets embodied in the 2025 Vision will not be realized unless certain prerequisites are met. According to Mohamamd Raeeszadeh, chairman of the national textile industry association, some industries have export advantages while some others grapple with numerous problems despite their export potentials. He adds that “only when production obstacles are removed and incentives are developed, exports can act as a driver and meet the envisaged targets”.
The industries face rise in the amount of tax they should pay despite the stagnation in production. “Producers also face difficulties in repayment of foreign exchange facilities, Raeeszadeh stated. In this respect, the government has recently set up a working group under the supervision of the ministry of economic affairs and finance to examine measures needed to remove existing production impediments through joint meetings with private sector representatives,” he said.
Export Deterrents
On the top of export deterrents, according to Asadollah Asgaroladi, chairman of export development committee of Iran’s Chamber of Commerce, are “financial and banking issues” which are directly linked to existing international sanctions, imposed by the West over Tehran’s nuclear energy program. In addition, the transportation industry across the southern and northern borders of the country does not have the sufficient capacity to facilitate export as the industry grapples with numerous infrastructure problems.
Asgardoladi believes that the potentials of Iran’s rivals should be studied carefully and then the required equipment and facilities should be provided based on the target destinations. “Unfortunately, the government does not trust the private sector and has not taken any serious steps to transform itself into a small yet efficient structure although this is what the Vision Document has called for”, he added.
As to other obstacles, Asgaroladi named visa restrictions and a lack of enough flights to export destinations as two major issues that make business journey painful for exporters and called on the government to do something about this. “Exporters are not supported by any types of incentives or benefits and issues such as guarantees and export duties need to be addressed”, he added.
The absence of a stable foreign exchange rate formula is another deterrent. “The government’s pricing policies should enable exporters to predict the future of the market so that they can plan for their business of the future. If the government’s ambition is to push exports up, more serious actions should be taken. Otherwise, at best, only up to $70 billion of the 2025 target can be met”, Asgaroladi predicted.
From his viewpoint, although industries are not going through favorable conditions, targets still can be achieved if the government resolves the issues faced by production sector.
Infrastructure Development
The 2025 target export income can be generated if required infrastructure is developed, according to Rasool Khalifeh Soltan, secretary of Steel Association of Iran. He believes that when it comes to steel, not only the export potential of final product but also that of intermediate products should be considered.
In this respect, concentrate and direct reduced iron (DRI) are among the intermediate products that can be exported and planned for based on the demand.
“It is possible to be optimistic about generating $6-7 billion from exporting final steel products by 2025. The remaining gap can be filled by intermediate goods”, he added.
DRI, bullion and final steel products are among the possible options for steel export, he added.
In the meantime, customs regulations, ports, transportation system and railroads as well as banking facilities play restrictive roles in steel exports, he added.
Despite the existing obstacles, Khalifeh Soltan believes that 2025 Vision objectives are still achievable if the government redresses the infrastructures.
2025 Target Unlikely
It is unlikely to achieve export targets stipulated for food industry in 2025 Vision, according to Ali Hadizadeh, chairman of agriculture, water and natural resources committee of Iran’s Chamber of Commerce.
“There’s only 11 years left and the existing shortcomings in food industry do not leave room for optimism”, he said.
Moallem believes many chances have been lost in the past and food production in the country is “export-oriented”.
Customs officials and other relevant authorities cannot respond effectively to the demands of exporters when it comes to international standards. 2025 Vision is far-fetched unless all public agencies unite and act in a coordinated manner towards export development, according to Hadizadeh.
For instance, he said, “Iran ranks 6th in poultry production in the world; however, certain polices set by the government have failed to support domestic producers and facilitate exports.”
Moallem believes that only through paying enough attention to the agriculture sector, food industry can be empowered for export. He called on the government to translate words into action and take concrete measures to lay the required infrastructures.
“Market instability”, “energy pricing” and “yearly and short-term planning” are among the major concerns for food industry players, he added, asserting that “the government has to first focus on resolving domestic issues and at the same time, look beyond current expectations while maintaining market stability.”
