Currency Suppression Undermines Competitive Edge of Knowledge-Based Companies

TEHRAN (Iran News) TEHRAN – Minister of Economic Affairs and Finance, Abdolnasser Hemmati, highlighted the detrimental effects of currency suppression on the competitive capabilities of knowledge-based companies in the country. Speaking on December 17, 2023, during a press conference held after the signing ceremony of a memorandum of understanding between the Ministry of Economic Affairs and the Vice Presidency for Science, Technology, and Knowledge-Based Economy, Hemmati emphasized the crucial need to support these innovative enterprises.

According to Hemmati, the primary objective of the memorandum is to bolster and enhance the capabilities of knowledge-based companies so that they can successfully navigate marketing and selling their products in global markets, potentially even engaging in cross-border production.

“This is a significant opportunity amid the current sanctions,” he stated. “By enhancing the export of these products, we can import the necessary goods and components through barter, benefiting our economic landscape.”

Hemmati noted that there has been considerable effort from the Vice Presidency in recent months to facilitate this initiative, expressing optimism about the potential for increasing the exports of domestic knowledge-based products. He stated that this agreement focuses on the micro-scale products of these companies and has the potential to expand to neighboring markets as well.

With neighboring countries boasting imports exceeding $1 trillion, while Iran’s exports to these nations hover around only $27 billion, Hemmati underscored the vast potential for Iranian knowledge-based companies to significantly increase their export levels beyond current figures.

During a visit to the “Iran Made” exhibition, Hemmati observed a high potential for export within the country. He expressed concern regarding one of the significant issues facing companies at the exhibition, namely, the importation of similar foreign products by certain state entities, which undermines the products produced by local firms. He assured that efforts would be made to prevent such occurrences.

A key factor contributing to the challenges faced by local companies stems from currency suppression policies that make imported similar products cheaper, thereby eroding the competitive ability of local firms. Hemmati expressed optimism that recent government decisions regarding a more flexible currency exchange system would mitigate this issue.

“We hope to see a halt in the import of goods that are already being produced by knowledge-based companies in Iran,” he said, emphasizing that the government is committed to supporting local innovation and production.

Hemmati mentioned that the Iranian Foreign Investment Holding Company (IFIC) is actively assisting knowledge-based enterprises, and the ministry is committed to facilitating their operations effectively. He acknowledged queries regarding foreign investments made by IFIC, explaining that these investments are primarily state-to-state collaborations, such as the Iran and Egypt Development Bank, in which Iran holds a 40% stake.

Addressing speculation regarding the suspension of the Privatisation Organisation’s meetings, Hemmati clarified that only the high council sessions had been temporarily paused; regular meetings would be reinstated in the coming week.

Furthermore, he provided updates on the ongoing formulation of the Production Finance Law, stating that related regulations, including its validation guidelines, are nearing completion. Some components of this legislation have already been implemented, such as the financing of production chains backed by available credit documents, which are currently operational.

Hemmati confirmed media reports about a temporary halt in the issuance of business licenses, attributing this situation to concerns raised by certain organizations regarding ambiguities in the process. Nonetheless, he assured that the procedures for reviewing and issuing business licenses would resume shortly as the necessary directives were issued three weeks ago.

In summary, the Minister’s remarks underscore the Iranian government’s recognition of the vital role of knowledge-based companies in driving economic progress, especially under the strain of sanctions and currency stability challenges. As the government aims to mitigate the negative impacts of currency suppression, there is a hopeful outlook for the growth and expansion of local innovations in international markets.