The Forum for Partners in Iran's Marketplace

October 2018, No. 89

Trade & Business

Businessmen under
the Heavy Shadow of Restrictions

The government should set up the negotiation tables of the business environment as soon as possible, hear the voice of the stakeholders, and think about their pain.

Exporters and importers are facing a difficult situation nowadays. The heavy shadow of politics is all over the economic decisions and, consequently, the heavier shadow of some economic decisions is gradually bending the back of foreign trade. The government has considered export and import restrictions and prohibitions that challenge exporters and importers. Mehdi Ghazanfari, the inventor of the ‘commodity classification’ during the sanctions and the founder of the ‘foreign exchange center’, speaks about the current situation of the foreign exchange market and the new restrictions on foreign trade. The former minister of industry, mine and trade says that trade bans have not been appropriate neither when he was minister nor under current conditions. 

The government is adding more restrictions on foreign trade every day. Imports of 1,400 items have also been banned. Basically, what is the logic behind these wide limits?

Imposing restrictions in the long run is by no means a good thing. I also did not believe that we could manage production and trade with the continuation of such restrictions; rather, we designed them in order to exit the crisis, which worked well in its place. But as for the incumbent government, it seems that, firstly, the government has not taken the issue of the currency crisis seriously and is very slow and incoherent; secondly, the work of government agencies in the current situation is not precise and thoughtful. Apparently, they have only decided to do some part of the work related to the previous boycott. Most importantly, no organization in the current situation is the owner of the whole process, something we did in the ministry.

Of course, at that time too, criticisms were made against the Ministry of Industry, Mine and Trade about the import ban. Isn’t the 12th government’s applying the same policies?

I agree with economic activists that this is not a good idea either in exports or in imports. The best way is management which is beyond restrictions and is more of rule-making; that is to design slopes so that when the private sector activist steps on it he could start moving. We must, in all conditions, support rational economic freedom. The economic activist is absolutely right to believe that there should be no restrictions and prohibitions. We too, despite our will, had to impose import and export prohibitions. Imposing restrictions cannot be defended under normal circumstances whether by us or by others. In the meantime, we should not forget that the government is responsible for all the society, and must take decisions that would not jeopardize the future of the country and the people. A safe passage by the people through these challenges is the primary responsibility of governments. 

Can foreign exchange restrictions help the Iranian economy improve or could undermine it?

I believe that incomplete implementation of a plan can undermine it. At that time, we launched a “complete package of economic decisions,” which I just mentioned the part dealing with Industry, Mine and Trade Ministry. But today things have changed and no one maintains that perspective. It seems that some in the government want to stand aside and wait for the problems to be solved automatically; but this is not possible; all the tools in this toolbox should be used.

We at the ministry dealt with issues such as importer, manufacturer, import registration, currency allocation, customs tariffs, clearance, pricing, distribution and sales, exporter, currency transfer and exporter’s currency pricing, creation of a center for currency exchange between exporter and importer, prioritization, capital in circulation, inspection and supervision over the market, supply of goods, all-out cooperation with the Ministry of Oil and the Central Bank, interaction with the media, and information dissemination to the other powers, and we did this with all power. That is, for all the players on the scene, we had a special program to use everyone’s potential and minimize uncertainties. However, if the government wants to solve the problems, it must know that it is still at the beginning of a difficult road. It should not lose hope or become passive. It should not let people think what the opponents claim come true, that is “old and exhausted generals would surrender before the people do.” 

The government may think that the ​​ban on imports is aimed at supporting domestic production; can import restrictions boost domestic production?

Perhaps we all favor lack of import of foreign goods, but we know well that if this happens constantly, it would create monopoly; for example, a domestic producer may create monopoly in the market, that is to raise the prices but pay no attention to quality. In the conditions of monopoly, whether we want or not, our first and last option is the goods that we offered.

The time is up for attributing all the problems to the previous governments and voicing ridiculous optimism which the speaker himself does not believe in.

In fact, monopoly would reduce competition, create disregard for the seller, etc. which would create industrial backwardness; so any decision may have some mal effects per se. In the economy too, the decisions of the authorities would cause displacement of the wealth, opportunities and future of the country and affect the next generation.

Economic decisions, of course, have short and long term positive and negative impacts. This is a precise question and its bad effects can be quite horrible. However, we are at the beginning of a huge challenge. Apparently Foreign Minister Mohammad Javad Zarif and his colleagues are trying to keep Europe in the Joint Comprehensive Plan of Action or may hold some negotiations with the United States, I do not know. But there are different scenarios before Iran’s economy. The first scenario is to keep Europe committed to JCPOA and not let the deal collapse. Here we need a strategy and planning in the field of economy and foreign currency, but we observe no plans in this respect.

The second scenario is that Iran and Europe come out of JCPOA and there will be new sanctions from the US alongside quarterly, biannually and secondary sanctions. In that case, special conditions will prevail over the country, which are manageable, but with the government procrastinations in making decisions and taking actions, people would be harmed. Again, we do not see any plan by the government for this scenario.

The government should pay more attention to the elites, change its procedures and hear the words of the elites. The conditions we are embracing are very difficult. Now it is not the time to settle accounts by political factions; instead these groups must all get united and be coherent. Now a big enemy has been shaped that wants to interfere in all affairs of the Iranian nation, and the government is clearly unable to manage this situation. 

Some exporters say they have stopped exports because of government restrictions on foreign trade. What could be the consequences of this policy for the future of Iranian economy?

The government should set up the negotiation tables of the business environment as soon as possible, hear the voice of the stakeholders, and think about their pain. Naturally, if the government turns a deaf ear to these voices, it would gradually diverge and double the problems complications of the country. As far as I know, the people, economic activists, and the media are tired of the government indifference, and they may be resort to national incitement. The time is up for attributing all the problems to the previous governments and voicing ridiculous optimism which the speaker himself does not believe in. The people are losing patience and they need to be heard. The social atmosphere has undergone a major transformation. The Cyberspace, right or wrong, provides a huge amount of information to its clients. Let’s not forget that people do not want anything other than dignified life; so if some officials are unable to make people reach this humanitarian cause, the way is open for them to quit.


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  October 2018
No. 89