MPO in Charge of Rural Employment Scheme

EghtesadOnline: The Iranian Parliament, apparently heeding the warnings of its research arm, on Sunday approved a measure requiring the Management and Planning Organization to establish a comprehensive online system to supervise a recent loan scheme by the country's sovereign wealth fund.

News ID: ۷۷۷۵۴۷

10 July 2017

The scheme, devised at the behest of MPO and approved by the Cabinet before it was passed in mid-June by the parliament, allows the administration of President Hassan Rouhani to take $1.5 billion from the resources of the National Development Fund of Iran to create jobs in rural areas "with first priority given to less developed, nomadic and border regions".

This means that the government has focused a majority of the total of $2.3 billion it is allowed to withdraw from the rainy-day fund this year to generating jobs among lower income people, IBENA reported.

Furthermore, the Sunday motion mandates executive bodies to "register the relevant information in the system within a framework set by MPO" while the organization must present a performance report to the parliament every six months, according to Financial Tribune.

Shortcomings

This is while days earlier the Majlis Research Center had taken several issues with the bill, saying it would fall short of its intentions.

"The bill allowing the government to tap the National Development Fund of Iran for creating jobs in rural areas is considerably faulty and in need of various tweaks, which seems to have prompted the parliament to make a move in line with improving the bill," the center's report said.

First and foremost, the think-tank noted that in stark contrast to its moniker and goal, the bill practically "leaves villages and nomads empty-handed" as it has included towns with a population of below 10,000 people among the loan beneficiaries.

Secondly, it stressed that no official executive body has been appointed as the custodian of the plan to play a direct role in distributing the loans in line with the capabilities of rural regions, "and most importantly, answer to the parliament about the effects and performance of the credits".

In its report, MRC points to another significant flaw in designating the groups eligible for the credits. It points out that in one article, the bill refers to rural population, unemployment rate and per capita income while in another, it invokes standards of rural unemployment, population of nomadic, border and underprivileged areas and other criteria devised by the Resistance Economy Headquarters.

"And it is not clear with what kind of logic Article 5 refers to rural population as a mainstay of each province but in effect fails to  serve them justice when it comes to the allotment of credits " the think-tank said.

According to MRC, the bill "ignores the major policies of the country" in that it does not support commercialization of ideas and startups, the use of technical and modern knowledge, development of knowledge-based economy and venture capital.

The parliamentary body emphasizes that a standard bill is expected to detail how the long-term goals mentioned in the scheme will be actualized owing to its high legal standing while "this bill remains completely bereft on all the aforementioned fronts".

Citing another shortcoming, the research center points to the fact that the bill pays no attention to the role of the Ministry of Agricultural Jihad as the legal entity in charge of rural development.

What's more, the body draws attention to the fact that the bill sets no particular timelines or deadlines for the banking system in allocating credits while "job-generating and high efficiency projects are expected to receive the required resources in the shortest period possible".

The parliamentary research center denounces unnecessary red tape, which it says will not only fail to improve the climate of doing business, but will themselves create new barriers to existing ones.

MRC also lists other shortcomings in the bill, such as imposition of high travel costs on villagers and nomads, lack of defined conditions for guarantees, failure to allocate a clear share of loans for job-creating export-oriented projects and anemic attention paid to the technical and expert capabilities of rural and nomadic regions in entering global markets.

The think-tank concludes by proposing that "the bill be re-sent to the related commission to correct the aforementioned faults" and for more comprehensive regulations to be devised on rural job creation.