There is an urgent need for the elimination of unnecessary trade regulations if the government wants to boost productivity and attract foreign investment, a prominent Iranian businessman said Sunday.
Gholamhossein Shafei, who was addressing the 39th meeting of Iran chamber of commerce representatives and board members, emphasized the need for ease of doing business and increasing production levels through removing cumbersome regulations.
"The large number of non-essential trade regulations has only created additional complexities, stifling business activities and inflicting numerous difficulties and enormous costs upon the manufacturing sector," Shafei stated.
In order to resolve this problem, Shafei said, the government needs to review the regulations and renew them with more efficient replacements. The government's intervention in economy must not be in a way that it stops businesses from functioning properly, he asserted.
Iran is ranked 125th, among 148 world countries, on the burden of government regulation – according to the Global Competitiveness Report 2012-13 -- with a value of 2.8 where 1 means extremely burdensome and 7 means not burdensome at all. Iran's ranking in the Global Competitiveness Report 2012-13 was 116th. The ranking is an indication of excessive complexities in Iran's business regulations.
"If we want to achieve favorable short term results, the government and the private sector cooperatives, and all other beneficiaries need to work together to reform the regulations," said Shafei. According to ICCIMA chairman, the chamber of commerce deputy is tasked with conducting case studies on countries that have successfully improved their business environments (ease of doing business index), in order to provide a suitable model for Iran in deregulation process.
Budget and 6th Development Plan
Elsewhere, Shafei announced that the government has completed drafting the Sixth 5-Year Economic Development Plan (2016-2021).
ICCIMA, the Chamber of Guilds, and the Chamber of Cooperatives have received copies of the draft and are expected to send their views on the details of the plan to the government before it is finalized later this year. "Rouhani's economic team has also finished the drafting of next year's budget and copies have already been sent to the country's leading businessmen for consultation, Shafei added.
"The private sector has been given a pivotal role in the sixth development plan, however, both the government and the parliament should partner with the private sector on policymaking and decision-making procedures," Shafei asserted.
On September 10, the government started submitting the discretionary draft budget for the next fiscal year (starting March 21, 2015) to state organizations. President Rouhani submitted his administration's first state budget last year. The bill, worth 7,930 trillion rials ($319 billion at the official exchange rate) included cuts in spending in an effort to repair state finances. The parliament approved the budget bill in February, after finding in it what Rouhani called only "a few minor differences" between the legislature and the government.
The Rouhani administration has vowed that it will not follow the path of former president Mahmoud Ahmadinejad, who continually feuded with parliament over economic issues including the budget. Ahmadinejad's budget bills were passed with delays of several months during most of his 8 years in office.
Iran's budget announcements involve a string of revenue assumptions that are subject to sudden change, making it very difficult to make firm estimates for the government's budget deficit in the next fiscal year.
After receiving budget proposals from agencies and departments, the government will start drafting the budget bill before sending it to the parliament for approval.
