Groups of Exporters Want Exemption From Currency Repatriation Rules

EghtesadOnline: The Majlis Joint Commission has approved a proposal calling for exempting exporters of technical and engineering services and agricultural goods from currency repatriation rules.

News ID: ۷۸۵۲۱۲

05 January 2020

This was announced by Jamshid Nafar, head of the Export Development Department of Iran Chamber of Commerce, Industries, Mining and Agriculture.

Speaking to IRNA, he expressed the hope that the exemptions would be incorporated in the 2020-21 draft budget. To become law, the exemptions must be approved in the chamber, according to Financial Tribune.

However, the next budget bill does not include such a provision. It only requires the Central Bank of Iran to set a deadline for exporters of technical services to repatriate their foreign income, two months after the budget bill is passed.

Based on rules announced by the CBI in mid-May, companies are now required to sell at least half of their export earnings in the secondary market, known locally as Nima, at exchange rates below the (higher) rates in the open market. Petrochemical exporters need to bring back at least 60% of their overseas earnings and sell it via Nima.

As per law, at least 20% of the total proceeds sold in the secondary market must be in cash. The balance can be used to import goods, machinery and equipment either by the exporting firm or any other third party.

"Exporters of technical services and farm products are facing difficulties bringing home their forex revenues, Nafar said without providing details.

While officials have commended the performance of non-oil exporters and expressed satisfaction about the repatriated earnings, some exporters say CBI repatriation rules are too stringent and that it (CBI) has done too little too late to pave the way for exporting firms to bring back their income.

Concerns are mostly over lack of legal banking channels for transferring money back to the country, and the lower rates offered at the secondary forex market.

Exporters of non-oil goods repatriated more than €12.4 billion of their overseas earnings since the beginning of the current fiscal year in mid-March.

Agro exports account for a significant part of Iran’s total non-oil exports.  According to Abdolmehdi Bakhshandeh, deputy agriculture minister for planning and economic affairs, more than 2.5 million tons of agrifood worth $1.95 million were exported during the first five months of the current fiscal year (March 21-Aug. 22).

This accounted for 10.9% of Iran’s total non-oil exports during the period.

Iran’s main export destinations were Iraq, Afghanistan, the UAE, Pakistan, Russia, India, Turkey, Turkmenistan, Germany and some East Asian countries.