In its latest report on easing doing business index, the World Bank has put Iran at the position of 120 among 190 countries. Dr. Hossein Mirshojaeian, the deputy finance and economic affairs minister, is of the opinion that submitting precise data and information by the country to the World Bank and also changing specific methodologies […]
In its latest report on easing doing business index, the World Bank has put Iran at the position of 120 among 190 countries.
Dr. Hossein Mirshojaeian, the deputy finance and economic affairs minister, is of the opinion that submitting precise data and information by the country to the World Bank and also changing specific methodologies have contributed to the improvement.
In an exclusive interview with the Tehran Times on October 4, he said the country’s rank has been 152 some four years ago but has climbed by 32 places to stand at 120 now.
“It’s 3-4 years that we have been following promotion of the country’s doing business rank and it is an agenda for the ministry in this year as Iran’s doing business rank is planned to rise 10 places each year according to the country’s Six Five-Year National Development Plan (2016-2021)”, the official announced.
“Over the past four years, we have submitted four reports to different teams of the World Bank in each year and filled out their questionnaires as well. After nine years we could hold a video conference with them this year and they discussed on every single factor related to doing business index”, he further explained.
“We are working continuously with the World Bank’s teams and submitting them their required data and filling in their questionnaires. And we should follow and conduct this process every year, submitting new data, reports on the latest performances of our organizations and other information”, he added.
“Promotion of rank is a hard job and some serious determination is required for such achievement. “We should make our most effort in this due”, the deputy minister commented.
Competitiveness rank improvement a target
According to ‘The Global Competitiveness Report 2017–18’, recently published by the World Economic Forum (WEF), Iran is ranked 69th among 137 countries included in the report. The country has improved its level seven places from its previous rank.
Mirshojaeian mentioned stability in macro economy as one of the major factors led to this promotion and said: “We had noticeable improvement in most factors related to the competitiveness index.”
“Resistance Economy Committee has outlined 33 targets for us in this year that one of them is promotion of competitiveness rank”, he announced.
This index is of very significance for the countries. They try to improve it as it can depict very better picture of a country, the official mentioned.
He also announced that by the end of the Sixth Five-Year National Development Plan Iran should rank third in the region in two indexes: property rights and competitiveness.
4-4.5% economic growth feasible
Further in his remarks, the deputy minister said that the anticipated 4-4.5 percent economic growth is achievable for Iran in the current Iranian calendar year (ends on March 20, 2018).
He explained that this anticipation is for a steady state growth, i.e. when there is no shock from the outside like what the country experienced during the sanctions. Another shock could be from the oil sector. As Iran is reliant on oil and oil products income, if global demand for such products is reduced it will definitely affect the country’s economic growth.
So, it is natural that ‘Resistance Economy’ requires diversification of export-bound products to reduce dependence on a single commodity, he opined.
The official went on to say: “But to reach an eight-percent growth, many factors are required. One is securing finance from other countries. We are moving properly in this due given the recently signed agreements, but these finances should become capital inside the country.”
“Efficiency promotion can highly affect our economic growth. It requires strong determination from both the government and private sector”, he added.
Inflation rate hoped to remain single digit
Underlining that the trend of inflation is better than anticipation, Mirshojaeian said, “Inflation growth now is less than what we have expected and we hope that a single-digit rate will be preserved.”
The statistics indicate that all sectors are thriving now. Since the beginning of the last calendar year 1395 (March 2017) all sectors are growing, there was not growth just in construction sector that it also began growing at the end of the last year, he added.
The official said that the government is capable of controlling any external shock, and predicted an under control environment and condition to maintain the single-digit inflation.
Macro economy stability main factor for attracting foreign investment
In attraction of foreign investment the important thing is that the macro economy environment is stable in a way that the foreign investors are sure that during their work here they can benefit from the money they bring and then can exit it from the country in due time, according to Mirshojaeian.
He said such stable condition should be provided although there are some barriers that foreign currency fluctuations is one important one.
Mentioning another problem in attraction of foreign investors; he said: “Some sectors in Iran are not attractive for them. They are traditionally attracted to some sectors like oil and we should try to make other sectors attractive for them.”
Elsewhere in his remarks, the official put the approved foreign investment at about $9 billion in the last calendar year and said the figure is about $15 billion in this year.
He also referred to the finance deals Iran has signed recently with some foreign countries and said although some good deals have been made the Iranian side should come and use them although there are some hurdles in this due for example those related to the banking guarantees and foreign currency fluctuations.
To reinforce his opinion he referred to what Finance and Economic Minister Masoud Karbasian said addressing the private sector in the Government-Private Sector Negotiation Council’s meeting on October 3. The minister said: “We have signed the deals, come and use them.”
The more the private sector uses these finances, the more benefits will come to the country, the deputy minister concluded.
Relying more on tax instead of oil
Mirshojaeian believes that reducing reliance on oil revenue has been one of the main achievements of the government in recent years.
“Studying the previous years’ statistics you see that each year our reliance on oil income is decreasing and shifting to tax income in a way that of the 2.83 quadrillion rials [about $71.482 billion] government income in the past Iranian calendar year, 1.01 quadrillion rials [about $25.582 billion] has been from collecting taxes”, he explained.
“It’s a good message that the share of oil revenue in the national budget is becoming less and less and it would be ideal if the government could completely cut its dependence on the oil income as a source for paying its expenditures. But we have a long distance to this end”, the official asserted.
The other good point is that from this year some 30 percent of the oil revenue will be allocated to the National Development Fund (NDF), while the figure has been 20 percent until the last year. And also the figure is planned to increase by two percent each year, he underlined.
“Reducing reliance on oil income is the meaning of ‘Resistance Economy’, i.e. we are resistant against the shocks, tensions and risks from the outside”, he noted.