Businesses Booming Under Pandemic

EghtesadOnline: While many businesses are hurting during the coronavirus pandemic, some are seeing an increase in demand and sales.

News ID: ۷۵۰۹۵۰

10 September 2020

According to the Information and Technology Organization of Iran, some 2 terabits of data and information were transmitted daily before the outbreak of coronavirus, which have now increased to 5.4 terabits, indicating a more than twofold growth in the use of online services among Iranians, coronomy.ir reported.

Vice President for Science and Technology Sorena Sattari says that with more than 15 million students, the number of startups operating in the education sector has increased by 1,000%.

The crisis has opened up an opportunity for education startups to develop their services more than before.

Media service providers like movie streaming sites have witnessed a major surge in subscriber growth. For instance, the streaming volume of Iranian VOD service Filimo has increased by nearly 60%, following the viral outbreak.

With many consumers afraid to leave their homes or advised to shelter in place during the coronavirus crisis, retail delivery services have stepped up their competition.

Over the first five months of the current Iranian year (March 20-Aug. 21), 18 million packages were delivered to local citizens compared with 10 million in last year’s similar period.

Snapp Market, one of the fastest-growing retail delivery startups in the country, has registered a 50% rise in demand for its services.

Producers of disposable tableware saw 30-50% growth in output, canned and jarred goods companies talk of a 25-40% increase in production, while sanitizer and disinfectant manufacturers have experienced a 40-65% growth in production.

2.8m Businesses Hit Hard

The coronavirus has hit hard an estimated 2.8 million businesses and close to six million jobs in Iran, according to Alaeddin Azvaji, the director general of Policymaking and Job Department of the Ministry of Cooperatives, Labor and Social Welfare.

“By being hit hard, I mean, these businesses were either forced to close or reduce their capacity substantially,” he added.

Early projections by the ministry put the number of jobs at stake at approximately one million; these jobs were mostly in businesses whose main activities revolved around the Iranian New Year holiday and purchases of spring merchandise. But later in May, the impact of the disease on businesses went deeper and wider.

“At first, getting past the coronavirus crash seemed like a V-shaped recovery but then it transformed into a W-shaped recovery, following the second wave of coronavirus in late June. The second wave was not as severe as the first in March and April,” Azvaji told the Persian-language daily Shargh.

“The ministry had devised a few scenarios to manage the potential levels of the pandemic’s impact on jobs and businesses. Between 50,000-80,000 billion rials [$200-320 million] were needed to carry out these plans. Paying a fraction of small enterprises’ remunerations in the form of ‘income subsidy’ or insurance incentives for the workers of large companies were among our plans to prevent job losses and even help create more employment opportunities.”

Noting that a total of 850,000 insured workers have applied for the three-month coronavirus unemployment benefits, the official said, “Estimates show that the outbreak of coronavirus has hit more than 1.2-1.3 million economic enterprises with more than 2.6 million uninsured workers. These figures might have changed over the past six months; some of this unemployed population might have been reemployed.”

In April, the government announced it would allocate 50,000 billion rials ($200 million) to Unemployment Insurance Fund to support those who have lost their jobs amid the outbreak of coronavirus.

Applicants were urged to fill out online forms for unemployment benefits at the newly-designed website Bimebikari.mcls.gov.ir within 30 days, rather than going personally to the ministry’s bureaus.

“The government tried to stimulate minimum demand by handing out loans worth 10 million rials ($40) to households. The second measure was to grant loans to private sector employers, the self-employed and the uninsured. The program included 14 groups, including 880 businesses. This was the first time a mechanism was provided to identify uninsured workers through executive organizations,” Azvaji added.

Studies show unofficial workers and those without health and retirement benefits are more vulnerable to the crisis. Under the program, workers at sports clubs and in education and services sectors received the government’s virus loans.

“The Economic Taskforce of the National Coronavirus Headquarters provided a total of 200 trillion rials [$805 million] as bank loans with a lending rate of 12% and a repayment period of two years. Estimates show economic enterprises have applied for nearly 120 trillion rials [$511 million] and close to 30 trillion rials [$120 million] have been paid up until now. We tried to make the registration process for taking out loans quick and easy. As we speak, banks are in different stages of approving the application, signing the contract or paying the loans. Some eligible businesses are yet to register for loans,” he concluded.

Guilds’ Monthly Losses at $1b

In June, Hoshyar Faqihi, an official with Iran Chamber of Guilds, told ISNA that coronavirus lockdowns inflicted monthly losses worth 260,000 billion rials ($1 billion) on local businesses under the supervision of ICG.

“The chamber has introduced 57 groups of businesses to the government to receive coronavirus bailout, of which 25, including coffee shops, reception halls, beauty salons, clothing units and bag and shoe shops, have been found eligible to receive loans at an interest rate of 12%,” he added.

Faqihi noted that the monthly losses incurred by these 25 groups are estimated to stand at 143,000 billion rials ($576 million) and the remaining 32 groups, the losses of which amounted to 122,000 billion rials ($491 million), did not qualify for government loans.

“About 2.3 million people are working in sectors that were not found eligible for the bailout and 2.8 million people are working in guilds that will receive the government aid,” he said.

CBI Lists Distressed Businesses

In July, the Central Bank of Iran expanded the list of businesses hurt by the outbreak of coronavirus and therefore deemed eligible to receive government-backed loans.

It added private kindergartens that work under the supervision of the State Welfare Organization of Iran and companies offering exhibition services, including exhibition organizers, to the list.

CBI has also agreed to offer financial support and banking facilities to coronavirus-impacted businesses operating at free trade zones and special economic zones, the central regulator’s website reported.

Last month, the central bank added broiler chicken farms, businesses involved in growing greenhouse supplies, vegetables and cucurbits, floriculture businesses and businesses in ornamental fish rearing, Mehr News Agency reported.

The initial list included the following businesses and jobs:

* Businesses, institutions and companies responsible for any meal prepared outside the home, including restaurants, buffets, reception halls and coffee houses. The Ministry of Industries, Mining and Trade is responsible to determine whether these businesses would be eligible to receive government aid.

* Businesses active in tourism and hospitality sector, namely hotels, apartment hotels, tourists centers, centers receiving pilgrims, guesthouses, eco-lodges, leisure centers and museums. The onus is on the Ministry of Cultural Heritage, Tourism and Handicrafts to determine whether these businesses qualify for government aid.

* Transportation companies, namely air, road, rail and marine transportation firms. The Ministry of Roads and Urban Development is responsible to determine whether these businesses would be eligible to receive government aid.

* Intra-city public transport companies. The Interior Ministry will be responsible to find out whether they qualify to receive government loans.

* Travel agencies. The onus is on the Ministry of Cultural Heritage, Handicrafts and Tourism to determine whether these businesses qualify for government aid.

* Apparel manufacturers and distributors. The Ministry of Industries, Mining and Trade will determine the eligibility of these businesses.

* Manufacturers and distributors of footwear and bags. The Ministry of Industries, Mining and Trade will determine the eligibility of these businesses.

* Confectionaries and shops selling nuts, dried fruits, ice-cream and fresh juice. The Ministry of Industries, Mining and Trade will determine the eligibility of these businesses.

* Gyms, sports and leisure centers. The onus is on the Ministry of Sports and Youth to determine whether these businesses qualify for government aid.

* Cultural, educational and art centers as well as media groups. The onus is on the Ministry of Culture and Islamic Guidance, Education Ministry and the Ministry of Science, Research and Technology to determine whether these businesses qualify for the government’s financial support.

* Handicrafts manufacturers and distributors. The onus is on the Ministry of Cultural Heritage, Tourism and Handicrafts to determine whether these businesses are eligible to receive government aid.

* Health Ministry’s licensed private-run health and treatment centers, including laboratories and those providing para-clinical services.

* Driving schools, barber shops and beauty salons. The Ministry of Industries, Mining and Trade will determine the eligibility of these businesses.

*  The Ministry of Culture and Islamic Guidance will also determine whether any bookstore or publisher would be qualified to receive government loans.

Following the government’s approval of a 490-trillion-rial ($1.97 billion) bailout loans worth a total of 750 trillion-rial ($3 billion) package for low-income households and small- and medium-sized enterprises impacted by the coronavirus, a total of 1.2 million enterprises with insurance codes were identified and received text messages from the ministry to register at Kara.mcls.gov.ir for loans.

“The Ministry of Cooperatives, Labor and Social Welfare will grant 120 million rials [$483] in loans to employers, provided they retain at least one worker on their payroll. Businesses forced to shut down will receive 160 million rials for each employee. The 24-month repayment period will start as of October,” Deputy Cooperatives Minister Isa Mansouri said.