Iran’s Business Environment Improves for Fourth Consecutive Quarter

EghtesadOnline: Iran’s business environment improved for the fourth consecutive time in the three-month period ending Dec. 21, according to Iran Chamber of Commerce, Industries, Mines and Agriculture.

News ID: ۷۴۹۶۴۲

08 February 2020

Iran’s National Business Environment Index stood at 6.03 points in Q3 of the current fiscal year to register a decrease of 0.68% compared with the preceding quarter and a decline of 7.09% over the same quarter of last year, the chamber said in a report published on its website, Financial Tribune reported.

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 6.07 in Q2 and 6.49 in Q3 of the fiscal 2018-19.

Unpredictability and fluctuations of raw material prices, uncertainty about policies, rules, regulations and business formalities, as well as difficulties with getting credit, were the most undesirable factors affecting Iran’s business environment during the period under review, according to the findings of the 13th round of this report.

In fact, unpredictability and fluctuations of raw material prices has been the most unfavorable factor in Iran’s business environment during the nine quarters leading to Dec. 21, according to 2,674 respondents of the survey.

On the other hand, access to water and energy carriers (electricity, gas and diesel) and customers’ reaction to innovation and how services and products are offered were identified as the most prominent factors in improving the business environment.

The chamber also measures the index for each of the 31 Iranian provinces. The report names Chaharmahal-Bakhtiari Province (6.61), Tehran (6.29) and Alborz (6.20) as the provinces with the least favorable environment to do business in, and West Azarbaijan (5.12), Gilan (5.32) and Zanjan (5.41) as the best.

Services sector had the worst business environment in Q3 with 6.06 points followed by industry (6.02) and agriculture (5.8).

As for 21 fields of business, the worst three were water supply, wastewater management and treatment; information and communications; and education. The top tier included finance and insurance; administrative and support services’ activities; and real estate.

Enterprises with fewer than five employees had the best business environment with the score of 5.89 while those with six to 10 employees had the worst business environment with the score of 6.28.

Businesses operating for three to five years indicated the worst business environment (6.16) while those under two years old were the best (5.81).

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.