Domestic Economy

Tayebnia Calls for Smaller Gov’t Role in Economy

Tayebnia Calls for Smaller  Gov’t Role in EconomyTayebnia Calls for Smaller  Gov’t Role in Economy

Minister of finance and economic affairs, Ali Tayebnia, on Saturday called for taking necessary measures towards empowering the private sector saying the government's domineering role is the economy's biggest problem.

He made the remarks during a meeting with the board of representatives of Iran’s Chamber of Commerce, Mines, Industries and Agriculture, in Tehran on Saturday.

“The most crucial step towards economic growth and productivity is to empower the private sector and help it achieve its true potential,” he was quoted by IRNA as saying.

His remark echoes the same line of argument by a number of other Iranian officials and economic experts.

Since it assumed office In June 2013, the Rouhani administration has on several occasions called on the private sector to play a more effective role in the economy, which has been hit by several rounds of sanctions as well as a drastic plunge in international oil prices.

The policy is highly contested by economists, arguing that where entrepreneurs are stifled by inappropriate regulations, excessive taxation, lack of fair competition, they are unlikely to be able to play their real role in the economy.   

What is required, experts argue, is reform in the business environment so as to reassure the participants in the private sector that they are treated fairly by the government and can enjoy the same privileges as those of the government-run entities.

“The country’s business environment is in need of immediate reform,” Tayebnia said, noting that the reform is achievable through "unified action by both public and private sectors."

Meanwhile he dismissed the report on lowering oil prices to $40 per barrel in the next year budget.

On Friday this week, media outlets quoted Tayebnia as saying that the administration is going to lower the oil price assumption in the next year’s budget to $40 per barrel.

The minister said the government has envisaged three “optimistic, pessimistic and middle scenarios” with regards to the oil prices in next year's budget, noting that out of the three existing scenarios one will be selected according to oil price fluctuations.

He further dismissed the possibility of tax hike by the government, saying: “The government's attempts are focused on restraining tax-evasion and tax-avoidance in the country.”

> Exports to Help Manufacturing Sector

Speaking at the same meeting, Mohammadreza Nematzadeh, the minister of industry, mine and trade, said that the government’s major duty is to underwrite the manufacturing sector so that it can assume its real function in the economy.

“Exports can save the manufacturing sector. In order to achieve sustainable growth, we have to have a strong presence in international markets,” he underlined.

He called for the revival of export incentives, which has been put on hold since 2011, saying: “The exports of engineering and technical services have been halved since exporting incentives were scrapped in 2011. The same thing is happening to the export of other commodities.”

> Gov't, Private Sector Cooperation

In the meantime, Gholam Hossein Shafei, head of Iran’s Chamber of Commerce, Mine, Industries and Agriculture, who was addressing the same meeting, called for cooperation between the government and the private sector, highlighting the need to make the best of the economy’s exporting potential.

“The government and the private sector cooperation is needed to improving the economy," he said.

Sharing the same opinion, Minister of Agriculture Jihad Mahmoud Hojati, said that the government and the private sector must cooperate to help the manufacturing sector be more profitable.