Iran: Contraband Worth $2.8m Seized in One Month

EghtesadOnline: A total of 327 billion rials ($2.8 million) worth of contraband were confiscated by the Consumers and Producers Protection Organization and inspectors of the industries, mining and trade organizations of Iranian provinces during the fourth month of the current fiscal year (June 22-July 22).

News ID: ۷۴۸۱۷۸

14 August 2019

According to a report by the Ministry of Industries, Mining and Trade, computer parts and equipment worth $2.22 million, textiles worth $115,384, apparel and accessories worth $104,273, shoes and bags worth $70,085 and home appliances worth $69,230 top the list of contraband confiscated during the month, ILNA reported.

Other seized items includes auto spare parts, food products, pharmaceuticals, cellphones, rice, cigarettes and tobacco.

Figures released by the Headquarters to Combat Smuggling of Goods and Foreign Exchanges, the Organization for Collection and Sales of State-Owned Properties of Iran, and Tazirat Organization (a judiciary-affiliated oversight body dealing with trading offences) show 74.3 trillion rials ($635 million) worth of smuggled goods were confiscated in Iran during the last Iranian year (March 2018-19), which shows a 73.1% surge in the value of seizures compared with the year before, according to Financial Tribune.

Figures released on the volume of confiscated contraband are a far cry from the total value of goods smuggled into Iran, as many of the items find their way into the domestic market.

Data on the value of smuggling, as part of Iran's underground economy, are scant. Latest data show the total value of smuggled goods during the three fiscal years, namely 2013-14, 2014-15 and 2015-16, stood at $25 billion, $19.8 billion and $15 billion respectively.

In the fiscal 2016-17, the number reportedly shrank to $12-13 billion, according to the Headquarters to Combat Smuggling of Goods and Foreign Exchange. There is no available data past the 2015-16 fiscal year.

No newer official data on smuggling in Iran are available.

One major contributing factor giving rise to smuggling of goods out of Iran lately has been allocation of foreign currency by the government to imports of what it calls "essential goods".

Iranian sugar cubes, tomato paste, rice, fish, eggs and many other products have been popping up in shops in neighboring countries.

A report by the Persian daily Iran in January said countries that were sources of smuggled goods to Iran are now the destinations of large volumes of products.

"Iraqis are buying in large quantity rice, fish and chicken to the point that the increasing scarcity of some of these products has led to inflationary pressures in Iran," the report read.

"The 4,200-rial [subsidized] dollar rate is the deadly poison for the economy," secretary of Iran Foodstuff Wholesalers Union, Qasem Ali-Hassani, said. “We have time after time asked the government to stop the allocation of cheap foreign currency, but the government prefers this policy to control prices.”

The government needs to discontinue the allotment of cheap foreign currency instead of patrolling the borders, an informed source at Iran Chamber of Guilds, who wished to remain anonymous, told the Persian daily.

“The resources thus saved could be spent on low-income households’ subsidies. The current policy would only promote outbound smuggling, which would not go away unless prices become real,” he said.

Hefty fuel subsidies in Iran are the chief reason for its smuggling across borders into neighboring countries where prices are considerably cheaper.