Iran's Q1 Business Index Improves

EghtesadOnline: Iran’s business environment saw a modest improvement in the first quarter of the current fiscal year (March 21-June 21) compared with the previous quarter, a quarterly survey undertaken by Iran Chamber of Commerce, Industries, Mines and Agriculture shows.

News ID: ۷۴۸۰۴۰

31 July 2019

Iran’s National Business Environment Index stood at 6.17 points in Q1, registering a decrease of 1.59% compared with the preceding quarter and an increase of 0.31% over the same quarter of last year.

The index calculated by ICCIMA measures business friendliness of Iran’s economy, with 10 indicating the worst grade, meaning that the growth of the index is indicative of a deteriorating business environment, Financial Tribune reported.

“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 first quarter, according to the findings of the study.

Iran’s National Business Environment Index stood at 6.27 in Q4 and 6.15 in Q1 of fiscal 2018-19.

“Difficulties with getting credit” was the most unfavorable factor in Iran’s business environment during the first four rounds of the survey whereas “unpredictability and fluctuations of raw material prices”, according to the respondents of the survey, has been the most limiting factor in improving Iran’s business environment for the past seven quarters (from Q3 of fiscal 2017-18 to Q1 of fiscal 2019-20).

Since the emergence of the signs of currency chaos in Q3 fiscal 2017-18, Iranian businesses are grappling with instability in raw material prices, which has in turn increased the overall unpredictability of economic activities.

“Access to energy carriers (electricity, gas and diesel)”, “access to water” and “access to the Internet and mobile phone network” have been identified as the three most prominent factors in improving the environment.

The chamber also measures the index for each of the 31 Iranian provinces. The report named Kurdestan, Chaharmahal-Bakhtiari and Sistan-Baluchestan as the provinces with the least favorable environment to do business in, while West Azarbaijan, Mazandaran and Gilan provinces had the most favorable conditions.

The industrial sector had the worst business environment in Q1 with 6.14 points followed by services (6.13) and agriculture (6.05).

As for different fields of business, the worst three were “water and wastewater management, sewage treatment”, “professional, scientific and technical activities” and “other services activities”.

The top tier included “accommodation and food services”, “real estate” and “mining” compared with other fields.

Enterprises with 101 to 200 employees had the best business environment with a score of 5.68, while those with six to 10 employees had the worst business environment with a score of 6.21.

Established businesses of 11 to 15 years indicated the worst business environment (6.35) while those of fewer than two years were the best (6.06).

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

The World Bank’s Ease of Doing Business Report 2019 showed Iran’s related score saw an improvement of 2.34 percentage points, though its ranking among 190 economies fell by four places to 128th.

The country’s overall distance to frontier score was 56.98, compared with the previous 2018 report’s 54.64. An economy’s distance to frontier is indicated on a scale from 0 to 100, where 0 represents the lowest performance and 100 the frontier, WB reported on Wednesday.