Iran Chamber of Commerce: Business Environment Worsened in Q3

EghtesadOnline: Iran’s National Business Environment Index came in lower in the third quarter of the current fiscal year (Sept. 23-Dec. 21, 2018) compared with the previous quarter, according to the results of a study undertaken by Iran Chamber of Commerce, Industries, Mines and Agriculture.

News ID: ۷۴۶۵۲۳

20 January 2019

The index stood at 6.49 points this autumn, registering a respective increase of 1.37% and 10.94% compared with the preceding quarter and the same quarter of last year.

The index calculated by ICCIMA measures business friendliness of Iran’s economy, with 10 indicating the worst grade and a deteriorating business environment.

“Unpredictability and fluctuations of raw material prices”, “uncertainty about policies, rules, regulations and business formalities”, and “difficulties with getting credit” were the most undesirable factors affecting Iran’s business environment during the period, according to Financial Tribune.

Iran’s National Business Environment Index stood at 6.40 in summer 2018 and 5.85 in autumn 2017.

"Access to electricity, gas and diesel”, “access to water” and “access to the Internet and mobile phone network” were identified as the three most prominent factors affecting the business environment in Iran.

The chamber of commerce also measures the index for each of the 31 Iranian provinces nationwide.

The report has named North Khorasan, Ilam and Kermanshah as the provinces with the least favorable environment to do business in, while Gilan, West Azarbaijan and Zanjan provinces were ranked the best.

Services sector had the worst business environment in Q3 followed by industry and agriculture sectors.

As for different fields of business, the worst three were “administrative and support services”, “human health and social work” and “wholesale, retail and repair”.

The top tier included “finance and insurance”, “art, leisure and vocation” and “education”.

Enterprises with 50 to 100 employees had the worst business environment while those with 101 to 200 employees had the best business environment.

Businesses established more than 16 years ago indicated the worst business environment while those under two years were the best.

World Bank's Latest East of Doing Business Report

The ICCIMA index is fashioned after World Bank’s “Ease of Doing Business” index.

According to World Bank’s Ease of Doing Business Report 2019, Iran’s ease of doing business score has seen an improvement of 2.34 percentage point, though its ranking among 190 economies under review fell by four places to 128th.

The country’s overall distance to frontier score is 56.98, compared to last year’s 54.64. An economy’s distance to frontier is indicated on a scale of 0 to 100, where 0 represents the lowest performance and 100 the frontier, the World Bank reported on October 31 last year.

An overview of Iran’s rankings and scores in all 10 indexes in the report ranks Iran 173rd among 190 economies, with a score of 67.79 on ease of starting a business, indicating a 0.02 percentage point improvement compared with last year’s report.

It takes 10.5 procedures, 72.5 days and 1.2% of per capita income to start a business in Iran, according to WB’s flagship report.

Iran’s ranking on ease of obtaining construction permits stands at 86th with a score of 69.11, indicating a 0.52 percentage point improvement compared to last year’s report. Construction permits in Iran require 16 procedures, takes 130 days and costs 6.6% of the warehouse value.

Getting electricity in Iran requires six procedures, takes 77 days and costs 923.1% of income per capita, placing the country at 108th position in the global ranking.

The country sores 68.86 in getting electricity, which shows an improvement of 0.43 percentage point compared to last year.

Iran ranks 90th on the ease of registering property with a score of 63.98 compared to last year’s 63.97. The report indicates that registering a property in Iran requires six procedures, takes 31 days and costs 5.7% of the property value.

Iran ranks 99th on the ease of getting credit with a score of 50, indicating no change compared to last year.

The country ranks 173rd on the strength of minority investor protection index with a score of 33.33, which shows no change over last year.

On average, firms in Iran make 20 tax payments a year, spend 216 hours a year filing, preparing and paying taxes up to 44.7% of their profit, placing the country at 149th place among 190 nations. Iran's score in this area was 56.78, registering an improvement of 4.17 percentage point compared to 2018.

The World Bank said Iran made paying taxes easier by introducing an online system for filing social security contributions, allowing the possibility of filing value added tax refund claims online, amending corporate income tax returns online and making payment of additional tax liability at the bank.

As per "trading across borders" indicator, in Iran, documentary compliance for export takes 33 hours and $60. Border compliance for exports takes 101 hours and costs $415. Documentary compliance for import takes 40 hours and costs $90. Border compliance for import takes 141 hours and costs $660.

The country stands at 121st spot in the ranking of economies on the ease of trading across borders, with a score of 66.2, posting an improvement of 18.32 percentage points, the most significant improvement affecting one of 10 areas of doing business in Iran measured between June 2017 and May 2018.

Iran made exporting and importing easier by enhancing the national trade single window, the WB report said.

“The Islamic Republic of Iran has invested in training customs officials, setting up ‘expert pools’ of customs officials for electronic goods clearance, as assigned by the national single window,” it read.

Iran ranks 89th with a score of 58.21, which indicates no change over last year. Contract enforcements in Iran take 505 days, costing 19.3% of the value of the claim.

Iran ranks 131st in the ease of resolving insolvency, with the process taking 1.5 years on average and costing 15% of the debtor’s estate. No change in Iran’s resolving insolvency score has been reported.