Disparate Impact of Sanctions on SMEs

EghtesadOnline: Mohsen Salehinia, head of Iran Small Industries and Industrial Parks Organization, says out of the 43,000 small and medium sized enterprises in industrial towns, 20% are facing recession, which means their production has come almost to a halt.

News ID: ۷۸۴۵۴۹

06 March 2019

"However, ISIIPO was able to revive 1,400 of such units [stuck in recession]," Salehinia told a press conference on Tuesday.

He said the effort was not only about allocating credits to the units but also helping them find markets for their products, settling debts and paying overdue taxes.

Close to 13,000 of the units (30%) are working at 50% or less capacity, 7,000 (24%) above 70% capacity and between 15-20% above 70% capacity, according to Financial Tribune.

Asked by the Financial Tribune if sanctions are to blame for the dire situation of SMEs, Salehinian said "sanctions are certainly a factor because the restrictions have had their impact, for example when it comes to importing machinery and equipment.”

He went on to say that the sanctions have not been all about doing harm. They also helped in a way, in that some companies reported higher production. The improvement was among the 55 goods monitored by ISIIPO, including food, mineral products, apparel and consumer health products.

The said sectors reported higher exports and growing domestic demand. However, sanctions hurt other industries like auto spare parts conspicuous in the exorbitant auto prices during the past months.

According to Salehinia, in the current fiscal (ends March 20), 6,700 SMEs received loans plus 470 trillion rials in subsidies.

Since the beginning of the year, the SMEs exported goods worth $3 billion, including 2,000 units covered by ISIIPO services.

According to ISIIPO data, there are 11,362 metal companies in industrial parks in Iran. The figure for chemical firms is 9,442, food and beverages 7,143, non-metals 4,790 and services 2,607 companies.

In the first ten months of the current fiscal to January 20, banks lent 5,380 trillion rials ($ 42 billion) in loans, up 757 trillion rials ($6 billion) compared to the same period in the previous fiscal – a 16.4% growth.

Money for working capital in various sectors had the lion’s share of 3,161 trillion rials on Jan. 20, accounting for 58.8% of the total loans. According to the Central Bank of Iran, the figure rose by 287 trillion rials (10%) compared to the same period last year.

The mine and industry sector had the lion’s share in the working capital loans category, accounting for 1,213 trillion rials ($9.5 billion), which accounted for 78.9% of the total loans allocated to the sector.