Roadmap to Improve Iran’s Trading Across Borders

EghtesadOnline: As part of its Doing Business project, the World Bank also monitors indices concerning trading across borders and the numbers indicate Iran is not doing well.

News ID: ۷۸۲۲۳۱

08 April 2018

Tehran Chamber of Commerce, Industries, Mines and Agriculture, a leading private sector bastion, has sought to improve that by providing a roadmap in its latest analytical report.

In its report published on its official website, TCCIM begins by noting that the World Bank measures distance to frontier (DTF) or distance of each economy to the best performance observed (100 points) to evaluate countries.

Iran's trading across borders DTF was 46.11 in 2018, ranking it at 166th. Iran's DTF was far behind the Middle East and North Africa average of 58.07 and behind peers such as the UAE, Oman and Jordan with the latter boasting an 85.93 DTF to give it the rank of 53rd, Financial Tribune reported.

The WB measures time and cost to export and import in relation with border compliance (hours/USD) and documentary compliance (hours/ USD), resulting in eight different indicators. At present, Iran is faring worse than the MENA average across six of those indicators with triple-digit scores, while dozens of economies have managed to nab top scores (zero) in those indicators.

In order to improve its trading across borders index, WB notes that Iran has only made two positive reform measures since 2010:

The first was in 2010 when it reduced the time for exporting and importing through the installation of scanners at the port of Shahid Rajaee and the reorganization of customs clearance offices to separate inspections of special goods (chemicals, petroleum) from those of general goods.

The second was in 2017 when it made exporting and importing easier by improving and expanding the services offered by the national single window.

In contrast, a host of countries that had ranked lower than Iran in 2010 in terms of trading across borders and now stand higher, namely Russia, Ukraine, Azerbaijan, Niger and Rwanda, engaged in a number of reforms including, but not limited to linking their customs and information transformation systems to the Net, eliminating faulty regulations and facilitating the process of customs inspections.

TCCIM has envisioned two sets of nine scenarios based on which Iran's trading across borders points and ranking can be improved in the eyes of WB. The best-case scenario would entail decreasing the time of documentary and border compliance by 80% coupled with a 10% decrease in costs, which would in turn cut Iran's ranking by half and improve it to 81st while significantly boosting its DTF to 74.8.

For the most part, TCCIM has proposed changes to several directives by the Trade Promotion Organization of Iran, Central Bank of Iran and the Islamic Republic of Iran Customs Administration.

It also puts forward proposals for making changes to several laws, including the law of improving the quality of auto manufacturing, law of revising regulations for the Institute of Standards and Industrial Research of Iran, and an article on the fundamentals of the country's five-year development plans.

The entity further calls on the government to make Iran a member of regional and international customs unions, reduce time and costs of receiving port services, and upload all documents in the national single window.

In conclusion, TCCIM asks the government to engage in widespread educational and informative efforts, calls on several ministries to work closer and establish focused workgroups, and demands executive branches to commit themselves to improving their climate of doing business and drafting transparent reports.