Iran Private Sector Businesses Dispirited Over Economic Conditions - Report

EghtesadOnline: A recent survey conducted by the Tehran Chamber of Commerce, Industries, Mines and Agriculture has found that an overwhelming majority of private businesses had a negative perception of Iran's economy in the past few years and predict worsening conditions in the near future.

News ID: ۷۸۴۲۱۷

20 October 2018

The private sector entity surveyed 600 of its members residing and working in Tehran, Iran's capital and business hub, and published the results on its official website.

The report categorizes participants by age, sex, level of education and the economic sector they are active in. From total participants, 86.5% were male and 13.5% were female. Their average age was 44.3 years.

At 83.2%, the overwhelming majority held a bachelor's degree or higher, with 41.5% holding master's degrees or higher. A majority of participants or 72.2% were active in the commercial sector, with the rest working in the mining sector, according to Financial Tribune.

Results indicate that 76% of the participants believed that conditions of the private sector have only worsened in the past three to four years while only 9% believe circumstances have fared better.

Similar results were found regarding private sector conditions in the foreseeable future. About 75% of the participants said conditions will get worse while again only 9% of businesspeople remained hopeful about the immediate future under the threat of returning US sanctions and lingering domestic deficiencies.

Participants were also asked about the future of Iran's economy and devaluation of rial since the national currency has significantly depreciated in recent months.

Iran's rial hit an all-time low of 190,000 against the US dollar in late September, though it has since recouped some losses to stand in the neighborhood of 140,000.

About 62% of private sector respondents said they did not foresee the rate of the greenback reaching such high levels. Less than one-fourth of participants said they expected the rial to continue to depreciate.

Female participants predicted the situation to improve slightly while about 27% of them said they could see the rial stooping to record lows compared to 22% of men. Results were not widely different in terms of level of education, age and field of work.

> Views on Prospects of Overall Economy

Not only did Iran's private sector players held a grim view about its own prospects, but it also saw a further economic downturn.

About 79% of participants said economic prospects will worsen in the foreseeable future, in stark contrast to only 10% who chose to remain hopeful.

About 9% said they cannot make a prediction as they are confused about the future of Iran's economy.

"Bewilderment is the cause of lack of comments from participants who said they don't know and this won't help future business endeavors," the chamber wrote in its report.

"On the other hand, the fact that only 10% have a positive view of the future will entail many negative consequences".

There was a correlation between evaluations of the private sector and the economy at large since about 65% of the participants who said the private sector has fared worse in recent years also believed that bleak prospects await Iran's economy in the next few years.

"Notably, the participants' evaluation of Iran's economic prospects is more negative whereas their negative evaluation of private sector conditions is not as intense," the chamber wrote.

> Doing Business Climate

The survey also evaluated Iran's doing business climate and considered three major categories, namely entities creating barriers, new foreign currency policies of the government and the prospects of independent businesses.

According to private sector businesspeople, the Iran National Tax Administration hampers the domestic business climate the most. About 24% of participants singled out the entity.

Banks, in addition to customs and ports, followed with each grabbing 22% of the votes. About 15% of participants said all four are responsible as the worst entities in terms of doing business climate.

"Therefore, it can be surmised that private sector businesses have a very negative view of entities whose responsibility is to facilitate conditions and create suitable circumstances for doing business," the report reads.

Participants of all sectors had a very close view in this regard. The only minor difference was that businesspeople in the industrial and mining sector viewed the Social Security Organization in a more negative light whereas people active in the agriculture and commercial sectors were mostly dissatisfied with INTA.

According to 79% of the participants, the government's new foreign currency policies supposedly aimed at boosting the climate of doing business are not helpful or acceptable. Add to it the fact that a majority of respondents said they did not foresee the US dollar rising to new highs and results show that private sector businesses are working in a highly unstable environment.

"It seems that private sector businesses find themselves in conditions that are not only remotely within their control, but also do not find their representatives [chamber of commerce] or the government reassuring," the report said, adding that this leads to a climate defined by "frustration and helplessness".

This view was dominant among all groups of private sector businesspeople. They were unanimous in this regard even though many, including parliament members and government representatives, held diverse opinions.

> Personal Prospects

Lastly, participants said their personal prospects are falling as well. About 72% of participants said their businesses will do worse in the foreseeable future while 6% had no evaluation of future conditions.

Only 10% said their conditions will remain roughly the same while the remaining 12% said they will do better.

Again, various categorizations among participants did not give rise to opposing views, as a majority of Iran's private sector businesspeople foresee worsening prospects.