Iran Business Environment Improves

Iran’s National Business Environment Index has improved in the first quarter of the current fiscal year (March 21-June 21) compared to the previous quarter, according to the results of a country-wide study undertaken by Iran Chamber of Commerce, Industries, Mines and Agriculture.

The index reached 5.69 points this spring, which signifies a slight improvement compared to last winter’s 5.83 on the back of better economic factors, ICCIMA reported on its website.

The index calculated by ICCIMA measures business friendliness of Iran’s economy, with 10 indicating the worst grade. The lower the figure, the better the business environment.

The data were collected from 1,700 subsidiary businesses of ICCIMA, Iran Chamber of Cooperatives and Iran Chamber of Guilds using computer-assisted telephone and web interviewing.

The respondents pointed to financing difficulties, unfair taxing practices and unpredictable fluctuations in raw materials and products’ prices as the most undesirable economic factors affecting Iran’s business environment.

On the other hand, access to electricity, gas and internet were identified as the three most prominent factors in improving the environment.

The chamber also measures the index for each of the 31 Iranian provinces. The report names Sistan-Baluchistan with 6.10, Kermanshah with 6.07 and Khuzestan with 6.06 as the provinces with the worst environment to do business in, and Fars with 5.09, Gilan with 5.18 and Khorasan Razavi with 5.22 as the best.

As for different fields of business, the top three are “health and social work” with 4.38, “information and telecommunications” with 4.91 and “professional, scientific and technical activities” with 4.98. The bottom tier includes “education” with 5.82, “wholesale and retail (import and export)” with 5.78 and “construction” with 5.64.

Interestingly, agriculture beats industrial production with a business environment index of 5.50 compared to 5.52 in the previous quarter, while dropping below mineral extraction with 5.46.

The real-estate sector had the most improvement in Q1 compared to last year’s Q4, as it dropped 24.78 points to 4.98. This stands in stark contrast to education, the worst performer in a quarter-on-quarter basis, which rose 15.01 points to 5.82.

The ICCIMA index is fashioned after World Bank’s “Ease of Doing Business” index.

According to WB’s 2017 report, which analyzed business environments worldwide by breaking them down into 10 broad categories in accordance with the business life cycle from the start to the end, Iran was ranked 120th out of 190 economies in the Ease of Doing Business ranking, down three notches from its 117th place last year.

Broken down by sector, Iran moved up the rating ladder in two sectors, lost ground in seven and remained unchanged in one.

In terms of “protecting minority investors” and “trading across borders”, Iran improved one notch to rank 165th and 170th respectively.

On the downside, however, the country’s ranking in “starting a business” stood at 102nd of all countries surveyed, down five steps compared to 2016.

The country also slid from 90th to 94th place in “getting electricity”, from 85th to 86th place in registering property, from 97th to 101st in “getting credit” and from 99th to 100th in “paying taxes”.

Iran’s ranking dropped in “enforcing contracts” from 69th in 2016 to 70th this year and in “resolving insolvency” from 155th to 156th.

Iran’s status remained unchanged in “dealing with construction permits” category from last year’s 27th.