Iran Chamber of Commerce Evaluates Q2 Business Environment

Iran’s National Business Environment Index stood at 6.05 in Q2 of the current fiscal year to register an increase of 0.04 percentage points compared with the preceding quarter but a decline of 0.02 percentage points over the same quarter of last year, the chamber said in a report published on its website.

The index calculated by ICCIMA measures business friendliness of Iran’s economy, with 10 indicating the worst grade. In other words, the decline in the index is indicative of an improving business environment.

Iran’s National Business Environment Index stood at 6.01 in Q1 of the current fiscal year (March 20-June 20) and 6.07 in Q2 of the last fiscal year (June 22-Sept. 22, 2019) 

“Unpredictability and fluctuations in the prices of raw materials and products”, “uncertainties over policies, rules, regulations and business formalities” and “difficulties associated with getting bank credit” were the most undesirable factors affecting Iran’s business environment during the period under review, according to the findings of the 16th round of this report. 

The chamber also measures the index for each of the 31 Iranian provinces. The report names Kurdestan, Kerman and Sistan-Baluchestan as the provinces with the least favorable environments to do business in and Semnan, West Azarbaijan and Markazi as the best. 

The average real production capacity of economic enterprises participating in this survey stood at 37.31% in Q2, indicating an increase of two percentage points compared with the preceding quarter. 

The impact of coronavirus disease on business environment in Q2 was measured to be 6.62 points, indicating a slight improvement compared with Q1 when it was calculated to stand at 7.1 points. 

The spread of coronavirus hurt businesses headquartered in Ardabil (8.75), Ilam (7.72), Lorestan (7.58) and Khuzestan (7.47) the most and those in Semnan (5.31), Qom (5.98), Fars (6.12) and Qazvin (6.13) the least during the period under review.  

Services sector had the worst business environment in Q2 with 6.11 points followed by industry (5.94) and agriculture (5.93).

As for 21 fields of business, the worst three business environments were posted for “information and communications”, “transportation and warehousing” and “healthcare and social work” and the top tier included “education”, “services categorized as others” and “industrial production (manufacturing)”. 

Enterprises with 101-200 employees had the best business environment with a score of 5.67 while those with six to 10 employees had the worst business environment with a score of 6.1. 

Businesses operating for fewer than two years indicated the worst business environment (6.13) while those operating for more than 16 years had the best business environment (5.92). 

The ICCIMA index is fashioned after World Bank’s “Ease of Doing Business” index, the latest edition of which was published in November 2019. 

According to the World Bank, Iran’s ease of doing business ranking improved by one place to stand at 127th among 190 world economies.

The World Bank’s Ease of Doing Business Report 2020 shows the country's distance to frontier score saw a decline of 0.1 percentage point, from last year’s 58.6 to 58.5 in the new report.

New Zealand topped the list of 190 countries in the ease of doing business with a score of 86.8, followed by Singapore with 86.2 and Hong Kong with 85.3, while Somalia was in last place with a score of 20.