Economy, Business And Markets

FDI, Private Sector Crucial for Functioning Economy

FDI, Private Sector Crucial for Functioning EconomyFDI, Private Sector Crucial for Functioning Economy

Supporting banks and revising tax policies are the two main components of the government’s new economic incentive package, presidential chief of staff Mohammad Nahavandian said Tuesday.

“The proposals should help increase banks’ revenues, enabling them to provide loans especially to businesses stuck with bad debts. It will also serve the government’s plan of action to pull the economy out of recession and stimulate growth,” IRNA quoted him as saying. The package is expected to be made available next week.

A new chapter in the economy has opened after the approval of the nuclear deal with the six world powers (known as Joint Comprehensive Plan of Action) by the Majlis on Tuesday, paving the way for an effective private sector role in the economy, he said.

Nahavandian urged businesses to mobilize their resources and do their fair share in contributing to growth rates after the sanctions unravel by early next year. However, he warned that the lifting the sanctions in and of itself would not fix the hibernating economy.

 Foreign Investment

Iran’s diminished role and influence in international markets and finding a way to reengage with the outside world was another concern referred to by Nahavandian. “We should do all we can to reclaim what we lost in global trade, and one crucial factor here is foreign investment.”

President Hassan Rouhani’s close confidante and a free-market pioneer who formerly served as chairman of Iran Chamber of Commerce, Industries, Mines and Agriculture, said foreign direct investment is the only way for improving Iran’s non-oil exports.

“If we can attract foreign investment and come up with a win-win situation for all the parties involved, the way to foreign markets will open for our products.”

 Instilling Competition

Referring to monopolies as one of the woes besetting the country’s economy, Nahavandian echoed Rouhani’s stance and appealed to the relevant camps and businesses leaders to strengthen their belief in and promote the values of competition and transparency as is the case in countries with decent growth rates despite their assorted problems.

“It is indeed regrettable that in the course of our history we created a plethora of organizations and groups with power to exercise monopoly or regulate prices. Every single one of us should be committed to a competitive field that will lift both production and consumption and keep corruption at bay.”

 Dangerous Dependency

Nahavandian also called on the private sector to cooperate with the government in crafting and drafting workable policies, including those related to tax reforms that will help cut government’s dangerous overreliance on oil revenues.  

Decades of dependency on a single product (oil) have stunted Iran’s economy and it is high time that the country choose another viable and less risky path, he said without mentioning the steep decline in international oil prices since mid-2014 that have now cut Iran’s revenues by more than half.

“To survive and move forward economies need to base the major portion of their growth on efficiency and innovation which is possible only through competition.”