Economy, Domestic Economy

Call for More Assertive Private Sector

Call for More Assertive Private Sector Call for More Assertive Private Sector

The private sector in Iran needs to adopt a macro-level perspective, shifting its attention from trivial problems to more fundamental issues, renowned economist, Mousa Ghaninejad said in a meeting with private sector professionals last week.   

Held at Tehran Chamber of Commerce, Industries, Mines and Agriculture, the meeting aimed at exploring methods for optimal public-private interaction, Persian daily Ta’aadol reported.

  State Dominance

The main problem lies in the dominance of the state over major parts of the economy, as well as the prevalence of bureaucracy, the daily quoted Ghaninejad as saying.

“Domination of Iran’s economy by the public sector,” the economist noted, “has undermined the private sector’s role and led to chambers of commerce being far less effective than they should be.”

Pointing out that the opinion of the private sector does not count in Iran, “because the government practically represents the private sector in every field,” he said. “The private sector does not seem to have any say in major decision-making in an economy dominated by oil.”

He observed that even the chamber of commerce, regarded as the ‘private sector parliament’ in Iran, has representatives from the government in its organizational chart, and that the government plays a significant role in supplying the financial resources needed by the chamber.   

The expert criticized the fact that all major Iranian companies with high turnovers are either state-owned or run by the government via intermediaries, citing the automotive and telecommunication industries as two examples.  

“Although the authorities claim that the auto industry is privatized, there is hardly any competitiveness in the market,” he said, adding that the sector could become competitive if and when the high tariffs on car imports are lifted and international auto giants allowed to enter the market.

“A similar situation exists in the telecommunication sector, where only three operators provide services to nearly 80 million people. This is while, if the industry allowed competitors to enter the field, the quality of such services as the internet speed would improve.”

  Demand Awareness

The main problem with the private sector, according to the expert, is that the sector’s participants do not know what they should actually demand from the government.

“The main demand of the private sector must be for the government to reduce its role in the economy, instead of asking for more government support, through such measures as increasing the import tariffs or providing them with cheap hard currency,” said Ghaninejad.

He noted that the Organization for Protection of Consumers and Producers Rights (affiliated to the ministry of industry, mine and trade), which was established to prevent inflation rise in line with implementing the targeted subsidy program, now completely controls the private sector as it is allowed to set prices in the industrial and  agricultural sectors according to its charter.

He mentioned the Governmental Discretionary Punishments Organization as another organization that controls the private sector, saying: “The existence of such organizations for regulating prices weakens the private sector, among other consequences.”

The expert concluded by saying that the private sector must push for its rights with confidence, as the restrictive barriers to privatization are against the country’s laws and need to be addressed to help strengthen the private sector.