Domestic business climate improved in winter of the last calendar year (Dec. 22, 2018-March 19, 2019), the Majlis Research Center said in a report Tuesday.
MRC reported on the business climate based on an index premised on a combination of results from field surveys across assorted businesses and official statistics.
The index in the new report was 6.18 out of 10 (10 being the riskiest) last winter, down 0.25 from 6.43 in autumn. The index had declined in the previous report.
The improvement, though subtle, signifies improvement in key variables impacting security of the business climate in Iran.
Elaborating the “safe business climate”, the influential parliamentary think tank said in a secure business and investment environment macroeconomic variables like inflation and currency rates are stable, or at the least predictable.
It goes on to add that in a safe business environment “regulations, decisions and procedures must be consistent, transparent and easy to implement”. If and when there are changes “all those affected must be notified” within a reasonable timeframe and before implementation.
A secure investment climate, as per the MRC lens, demands that life and property of all citizens are fully protected and ownership rights defined and guaranteed.
Likewise, the judiciary and supervisory bodies need to function in a manner that renders encroachment on people’s intellectual and physical property costly and economically unviable.
Businesspeople say of the 21 factors perceived to affect commerce, “irresponsibility of national officials vis-à-vis promises they make”, “collusion and unwanted influence in government projects” and “irresponsibility of local and provincial officials regarding their duties” have the most detrimental impact.
Poor performance of government officials regarding pledges they make was rated among the worst factors undermining the business environment for the fourth time in a row.
On the flip side, “rampant smuggling”, “violation of intellectual property rights” plus “the disruption in business due to foreign economic sanctions” reportedly had the least impact on investment and business security in Iran.
Provincial Ranking
Regarding the extent of business safety across provinces, the report indicated that South Khorasan (5.70), Sistan-Baluchestan (5.88) and Hamedan (5.9) had the most desirable environment for existing and potential business.
Conversely, Kohgiluyeh-Boyer-Ahmad (6.57), Tehran (6.48) and Ghazvin (6.41), were found to be the least appropriate in terms of investment security in the last quarter of the previous fiscal year.
Regarding security across businesses, the researchers sought the opinion of people active in nine business categories.
Communication and goods distribution (transportation, warehouse management, wholesale and retail) sector, had the worst rating at 6.89, followed by agriculture, horticulture and forestry sector at 6.77 and hospitality 6.69.
At the opposite end, people involved in mining (minus oil and gas) rated business safety the highest at 5.86.
This was followed by services, including financial intermediation, banking, insurance at 6.36 and livestock, aviculture and fishery 6.50.
This is while in autumn of the previous year, the industrial sector, including construction and affiliated work, had the worst rating, and energy-related industries, including oil, water, gas and power distribution along with the hospitality sector were jointly rated as the most secure.
