Economy, Business And Markets

Nematzadeh Outlines Industrial, Trade Policies

Nematzadeh Outlines  Industrial, Trade Policies Nematzadeh Outlines  Industrial, Trade Policies

Minister of Industry, Mining and Trade, Mohammad Reza Nematzadeh, announced his ministry’s general policies for the current Iranian year (started March 21).

Addressing a press conference on the occasion of the Industry and Mining Day in Iran, which will coincide with July 1 this year, the minister praised the government of President Hassan Rouhani for its efforts to reverse the downward trend in the industrial, mineral and manufacturing sectors since it came to power 20 months ago.

“A 3% economic growth was achieved last [Iranian] year, out of which the industrial, mineral and trade sectors accounted for 1.1%, 0.1%, and 0.5% respectively,” Nematzadeh said.

According to the minister, non-oil exports increased by 19% last year while imports increased by more than 5% compared to a year before. He added that the increase in imports owed mostly to intermediate or capital goods and that import of consumer goods declined last year.

The legislation on “removing barriers to competitive production and improving the financial system” will be finalized next month with the aim of enhancing the business environment in the country, he said.

Based on the law, a sizable portion of the revenues generated from removing energy subsidies is supposed to be injected into the manufacturing sector. However, since the Subsidy Reform Plan was enacted during former president Mahmoud Ahmadinejad’s tenure, the manufacturers have received nothing.

“As much as 30% of revenues from the Subsidy Reform Plan were supposed to be given to the manufacturing sector but the former administration’s estimates were not accurate and it failed to provide the fund. The current administration has also spent the majority of these revenues–48 trillion rials [more than $1.63 billion based on official currency exchange rate] on the health sector,” said the minister.

Nematzadeh, who has served as Cabinet minister in four administrations, stressed that the core policy pursued by the Ministry of Industry, Mining and Trade in the current Iranian year is to protect major industries, which would in turn help revive and support smaller industries.

According to the minister, a great cause for concern for domestic manufacturers is lack of liquidity to run their business.

“Over the past 10 years, small industries were hard hit by economic crises and sanctions [imposed by the West on Iran over the country’s nuclear energy program]. Now much as the Industry Ministry is willing to protect them, banks are refusing to grant any more loans to indebted manufacturers,” he said.

Nematzadeh said his ministry has formulated a plan to be presented to the Money and Credit Council, based on which banks will resume offering facilities to manufacturers provided they pay off a small portion of their debts.

The minister also said the Supreme Audit Court has banned all government bodies from buying foreign goods while counterparts are domestically produced to support domestic manufacturers

He added that the biggest challenge facing the industrial sector is restrictions on banking transactions with the world as a result of western sanctions, which have inflicted extra costs on both exporters and importers.

Nematzadeh challenged those who believe the country risks becoming import-oriented after the removal of sanctions. He argued that since many manufacturers have halted production over the past few years because there has been no export market for their products, exports are expected to boom in the post-sanctions era.

He expressed hope that the domestic industrial, mineral and trade sectors will benefit most from the possible removal of sanctions.