Economy, Domestic Economy

Private Sector’s Pivotal Role in New Economic Climate

Private Sector’s Pivotal Role in New Economic ClimatePrivate Sector’s Pivotal Role in New Economic Climate

World businesses rushing to Iran, according to many economists, could act as a double-edged sword. The opportunity could be seized by the government to boost the economy by increasing domestic production and creating jobs, or it could act the opposite way by letting international investors enjoy the incentives offered by Iran without providing any advantages in return.

Experts believe the government should leave part of the job to the private sector to make foreign participation in the economy efficient and joint chambers of commerce as representatives of the private sector could play a leading role to that end, wrote Hossein Pirmoazzen, treasurer of Iran Chamber of Commerce, Industries, Mines and Agriculture, in the Persian daily Donya-e-Eqtesad.

Following the historic July 14 nuclear deal between Iran and the world powers, as part of which economic sanctions against Iran are to be lifted, Tehran has turned into a popular destination for world officials accompanied by investors, traders and business owners of all stripes.

Europeans were quick in reestablishing connections with Iran. German Vice Chancellor Sigmar Gabriel accompanied by a business delegation landed in Tehran one week after the nuclear deal was sealed. Afterwards, Tehran saw delegations from France, Italy, Britain, Switzerland, China, South Korea and Japan. And most recently, missions from Austria and the Czech Republic traveled to Iran.

This is while the Iran race, according to many experts, is far from over.

Iran’s consumer market of 80 million is a huge motive for foreign investors; add to it the role that the country could play in providing a transit pathway to other countries in the region due to its already expanded ties with neighboring countries, including Caspian littoral states and Persian Gulf Arab countries.

Moreover, years of sanctions have made the Iranian economy thirsty for investment. There is an abundance of infrastructure projects in transportation, aviation, oil and petrochemicals craving for investment. The government would fall short of providing such amount of investment due to its limited cash resources. Therefore, a considerable portion of all these projects have to be funded by foreign investments.

On the other hand, Iran’s economy has been sunk in recession for the past two to three years, due mostly to western sanctions. Although some industries have managed to hold on to the status quo, if not prosper, during the recession period, many have been hard hit.

The government, however, is in charge of managing the FDIs and joint ventures to not only protect the partly-successful domestic industries against the onslaught of foreign companies, but also to help strengthen the weaker sectors.

Government officials, mulling over a lengthy spectrum of investment offers, have time and again stated that they will not neglect the macroeconomic objectives such as moving towards an inclusive economy by relying on domestic production.

Experts believe the government should put its trust in private businesses to take the lead in establishing interaction with the world, while playing a supervisory role. A brief look back at Iran’s lost opportunities in the past decade shows that neglecting the role of the private sector and its representatives i.e. the chambers of commerce, in the government’s decision makings, have never yielded a positive result for the economy.