Economy, Business And Markets

CDB Urged to Fulfill Pledges to Cooperatives

CDB Urged to Fulfill Pledges to CooperativesCDB Urged to Fulfill Pledges to Cooperatives

The newly-formed national union of cooperatives for mines and steel - composed of numerous cooperatives in mining and steel manufacturing sector, plans to find a way to overcome the existing disagreements with the Cooperative Development Bank, the National Development Fund of Iran (NDFI), and the Iranian National Tax Administration, reported Fooladnews.

The bureaucratic procedures required by the banks and the tax authority take up a huge amount of the cooperatives’ time, said Hamid Kalantari, the deputy minister of cooperatives, labor, and social welfare, during the inauguration ceremony of the union.

Despite the pledges made by the Cooperative Development Bank, the bank’s performance in granting loans to cooperatives has been evaluated as unsuccessful and the cooperatives complain about a lack of financial sources.

Kalantari stressed that the mentioned problems constitute only 15% of the problems faced by the union and that the rest should be sorted out by the cooperatives themselves.

The national union of cooperatives for mines and steel is comprised of 15 major cooperatives, seven of which are the union’s founders. The union will soon add new members in order to make the best use of the so-far-ignored capacities the cooperatives can provide in the steel sector.

Based on the law concerning the activities of the cooperatives, they can benefit from a generous 25% tax credit, while 10% of the labor insurance fees is covered by the social security organization, said Fazel Homami, the managing director of the new union.

He added that the huge potentials possessed by the cooperatives will help the mining companies and steel plants overcome the shortages, increase employment, and ultimately boost the national production.

 Cooperatives Need Support

The Constitution leaves much room for the development of the cooperatives, experts believe. Based on Article 44 of the Constitution, the cooperatives are eligible to take over 25% of the country’s development projects and the specialized cooperatives have the privilege of using finances offered by the NDFI.

Despite all the facilitation offered by the law, the banks have so far been unable to practically support the cooperatives as they are expected.

The new union’s member units are able to produce 7 million metric tons of steel per annum, while their turnover during the first 9 months of the current Iranian calendar year (started March 21, 2014) has been over 1.5 trillion rials ($44.1 million based on market rate).

The NDFI is required by law to finance the cooperatives through allocating part of the internal resources of the banks, including the Cooperative Development Bank. Meanwhile, the bank refrains from signing agreements with the NDFI and to refer to other banks such as the Bank of Industry and Mine.

A successful experience in forming such cooperatives was Moein Cooperative, which was established to supply the major national housing scheme known as Maskan-e Mehr - launched during the presidency of Mahmoud Ahmadinejad - with steel products at prices lower than the market rate.