The new minister of economy and finance Sunday was surrounded by a weary business community as he addressed board members of the Iran Chamber of Commerce, Industries Mines and Agriculture.
As hard as he tried to appease, Farhad Dejpasand – an academic appointed by President Hassan Rouhani in late October after his predecessor was ousted in a no-confidence motion in parliament – was bound to be met with deep skepticism from businesses disappointed with broken promises and sloganeering.
Add to this the plight of sanctions from outside and an unfriendly business climate inside the country.
"I am here to promote interaction between the government and private sector. While we believe that the private sector should partner with the government during normal times, we also think that it should have a forward role during the sanctions era," Dejpasnad said.
The technocrat, who has held several government posts since 1995, regretted that Iran's Ease of Doing Business Ranking has worsened in recent years – a common complaint of businesses – but blamed factors other than those under the control of the government.
The Ease of Doing Business Report 2019 published by the World Bank on Oct. 31 shows that even as Iran's overall score improved by 2.34 percentage points to reach 56.98, its rank among 190 economies fell by four places to 128th.
Businesses also bemoan the fact that in the MENA region Iran lags behind its regional rivals and is only faring better than war-ravaged countries such as Syria and Yemen.
Of Tax and Banks
Dejpasand also faced gripes about the inefficient taxation system, dysfunctional banks and the privatization plans gone awry.
"You don’t need to do anything for the private sector, just fix the value-added tax," one representative interrupted the minister, referring to the decade-old controversial VAT policy that manufacturing companies say is unhelpful, unwanted and undermining their margins.
On the thorny issue of privatization, for which Dejpasand preferred to use the term "divestiture", the minister urged ICCIMA to share its experience for a better future that would help downsize the bloated government bureaucracy and also prevent "social and cultural consequences.'
He alluded to the apparent bungled divestitures that vexed unpaid workers at the major Haft Tapeh Sugarcane Factory in Khuzestan Province and resulted in several days of street protests. However, he insisted that wrong divestiture decisions had not led to the sugar factory snafu.
Saying that a revision of VAT law is underway in the Majlis, the minister promised to "do his best" to avoid an increase in tax rates for the next fiscal ( starts in March) and join hands with ICCIMA to clamp down on massive tax evasion by shady companies.
However, he did not say anything of essence about dispatching the taxman to powerful state organizations and affiliated companies who, as a matter of policy, evade taxes due to their connections.
Unproductive Sector
In his address to the chamber before the arrival of Dejpasand, ICCIMA boss Gholamhossein Shafei focused on the perennial dark side of the domestic economy, which he said has been inflicting harm even before the Islamic Revolution of 1979.
As a result of the sheer lack of accountability and transparency "middlemen and speculators" are making huge gains with impunity, the well-known free market advocate rued.
"This unproductive section of the economy epitomized by middlemen and property speculation has long been a rival of the production and industrial sectors since it delivers huge profits to their purveyors," Shafei told the business meeting.
He lamented the fact that consecutive governments had failed to support manufactures against the unproductive sectors and the army of middlemen.
He recalled that since 1988 which Iran (after the Islamic Revolution) has had five-year economic development plans and the government had earned $1.7 trillion only from oil receipts.
“Why despite this huge income is the country still saddled with such problems?”
He said the answer should be seen in "wrong economic decisions" and the gulf between bureaucratic policymaking and the elite and the governments’ refusal to effectively involve private enterprise over the past seven decades in planning and policy.
