323 Public Firms Up for Privatization Next Year

EghtesadOnline: The remaining 323 out of 1,713 enterprises on the privatization list will be ceded in the new Iranian year (starting March 21), the head of Iranian Privatization Organization said.

News ID: ۷۷۴۶۹۱

19 March 2017

“Up until now, the organization has paid its 120 trillion rials ($3.2 billion) budgetary allocation, 50 trillion rials ($1.33 billion) went for clearing debts and the rest went into the government coffers. Also, the Telecommunications Company of Iran has paid its 9.5-trillion-rial ($253.33 million) debts,” Mehr News Agency quoted Mir Ali Ashraf Abdollah Pouri-Hosseini as saying.

“The High Council of Transfer has underlined the importance of pressing ahead with privatization, as the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei is not satisfied with the slow pace of privatization.”

Earlier this month, Minister of Economic Affairs and Finance Ali Tayyebnia blamed the stiff resistance mounted by provincial officials and some parliamentarians to privatization and said, “Not a single day goes by without the ministry receiving letters threatening me and my deputies with impeachment”, according to Financial Tribune

A motion to impeach the minister in the parliament failed after a majority of lawmakers pursuing the impeachment withdrew their bid on December 6.

Tayyebnia said rent-seeking, astronomical executive salaries and cronyism were examples of corruption in state-run companies.

“Article 44 of the Iranian Constitution was supposed to bring about an economic revolution in the country but when it comes to privatization of one company, the beneficiary groups exert pressure from all directions,” Tayyebnia was quoted as saying last year.

“If privatization is supposed to be done like in the past, I prefer not to be the minister and have my name on this disaster.”

Echoing the minister’s remarks, Iranian parliamentarian Hassan Hosseini-Shahroudi told the Persian daily Jahan-e Sanat, “People associated with government network with interests and connections do not allow the implementation of privatization in its real form. Privatization in Iran is synonymous with the transfer of state-run companies from the official government to shadow government, semi-governmental companies or foundations.”

Stressing that privatization will improve business environment, MP Mohammad Feizi said privatization is meaningless in the absence of ownership transfer.

“At times, outsourcing in the country were labeled as privatization,” he said.

Post-Privatization Challenges

Referring to the closure of production units and worker layoffs following some cases of privatization, MP Hamid Reza Fouladgar said, “The Law on the Implementation of Article 44 of the Constitution does not allow dismissal of employees following the privatization of companies.”

Fouladgar noted that supervision over the observance of legislation comes within the purview of oversight bodies like the General Inspection Organization of Iran.

“An arbitration board in the Iranian Privatization Organization also handles complaints from laid-off workers,” he said.

This is while Minister of Cooperatives, Labor and Social Welfare Ali Rabiei said a few months ago that privatization has only put workers out of jobs.

“We privatized companies to reduce the burden of management … but we have only accelerated job losses for workers.”

After the 1979 Islamic Revolution of Iran, almost all strategically situated economic sectors were nationalized or expropriated for the sake of wealth redistribution.

Under Article 44 of the Constitution, the government owns all major industries. In 2008, a new wave of criticism over the disproportionate state ownership and its inefficiencies in promoting economic development in the country brought attention to Article 44.

The Law on Implementation of Article 44 of the Constitution, which redefined private sector participation in the economy, was drafted. The law kept the core management of the government in main industries and allowed privatization of all other activities or the participation of private sector in expanding the previously public sector.

The process marks a move toward market economy and aims to achieve full privatization.