50% Rise in Business Permits

EghtesadOnline: Atotal of 440,156 permits were issued for starting businesses over the first nine months of the current Iranian year (March 20-Dec. 20, 2020), registering a 50% rise compared with the similar period of last year, latest data released by the Ministry of Industries, Mining and Trade show.

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23 January 2021

The ministry attributes the increase to the outbreak of Covid-19 pandemic, which resulted in the shutting down of some businesses. This made businesspeople change their field of activity to ones that were allowed to operate under new health protocols over the period under review, IRNA reported.

The data also show electronic signature permits issued over the nine months under review registered a 49.9% increase due to the rise in online business activities, again owing to the spread of the novel coronavirus.

Gov’t Relief Payments

A total of 80,960 billion rials ($368 million) worth of loans have been paid to applicants of the government’s coronavirus relief package for businesses hurt by the outbreak of coronavirus, Hossein Mahmoudi, an official with the Ministry of Cooperatives, Labor and Social Welfare, said earlier in January.

“The taskforce to combat the economic consequences of coronavirus had estimated loan applicants to receive 200,000 billion rials [$909 million]. However, banks have registered 522,533 loan applications amounting to 133,130 billion rials [$605 million] for 977,181 people so far,” he was quoted as saying by IRNA.

Mahmoudi noted that registration for coronavirus loan started at Kara.mcls.gov.ir on May 9, 2020, and ended on Oct. 21, 2020.

The lending program is continuing but registration is no longer possible, except for businesses engaged in three fields, namely tourism, culture and arts, and sports and youth. Businesses of these three fields have until Jan. 19 to apply for loans.

“Businesses that were hurt directly and forced to close down by Covid-19 will receive 160 million rials [$727] for each worker and those that were not shut down are eligible to receive 120 million rials [$545] for each of their workers. The lending rate of these loans is 12%,” he explained.

Sectoral Stimulus

Those engaged in transportation, tourism and handicraft industries, sports, and culture and arts will receive a new round of coronavirus loans worth upwards of 80,000 billion rials ($363 million), Mansouri had said earlier.

“The transportation sector will receive 35,000 billion rials [$159 million], tourism and handicraft industries 20,000 billion rials [$90 million], sports 8,000 billion rials [$36 million] and culture and arts will receive 18,000 billion rials [$81 million] in financial support dedicated to people and businesses affected by Covid-19 crisis,” he was quoted as saying by Mehr News Agency.

Noting that women account for 70% of people who lost their jobs to coronavirus outbreak, the official said, “According to statistics, 62% of jobholders in recent years are not covered by insurance.”

Following the government’s approval of a 750 trillion-rial ($3.4 billion) package for low-income households and struggling businesses impacted by the coronavirus outbreak and its economic consequences, a total of three million workshops from 14 main groups of businesses and 850 subgroups were identified.

Of these three million workshops, 1.3 million have insurance codes and 1.7 million don’t. These workshops have 2.8 million insured employees and three million uninsured employees.

Public transportation operators, educational centers and beauty salons, women’s clothing shops, gyms, rehabilitation centers for persons with disabilities and not-for-profit schools accounted for the lion’s share of applications submitted to the Ministry of Cooperatives, Labor and Social Welfare for coronavirus loans, the ministry said in October.

Early Estimates

The coronavirus has hit hard an estimated 2.8 million businesses and close to six million jobs in Iran, Alaeddin Azvaji, the director general of Policymaking and Job Department of the Ministry of Cooperatives, Labor and Social Welfare, said in August.

“By being hit hard, I mean, these businesses were either forced to close or reduce their capacity substantially,” he added.

Early projections by the ministry put the number of jobs at stake at approximately one million; these jobs were mostly in businesses whose main activities revolved around Iranian New Year holiday and purchases of spring merchandise. But later in May, the impact of the disease on businesses went deeper and wider.

At first, getting past the coronavirus crash seemed like a V-shaped recovery but then it transformed into a W-shaped recovery, following the second wave of coronavirus in late June. Nevertheless, the second wave was not as severe as the first in March and April.

“The ministry had devised a few scenarios to manage the potential levels of pandemic’s impact on jobs and businesses. Between 50,000-80,000 billion rials [$227-363 million] were needed to carry out these plans. Paying a fraction of small enterprises’ remunerations in the form of ‘income subsidy’ or insurance incentives for the workers of large companies were among our plans to prevent job losses and even help create more employment opportunities,” the official told the Persian-language daily Shargh.

In April, the government announced it would allocate 50,000 billion rials ($227 million) to Unemployment Insurance Fund to support those who have lost their jobs amid the outbreak of coronavirus. Applicants were urged to fill out online forms for unemployment benefits at the newly-designed website Bimebikari.mcls.gov.ir, rather than going personally to the ministry’s bureaus.

“The government tried to stimulate minimum demand by handing out loans worth 10 million rials [$45] to households. The second measure was to grant loans to the private sector employers, the self-employed and the uninsured. The program included 14 groups, including 880 businesses. This was the first time a mechanism was provided to identify uninsured workers through executive organizations,” Azvaji said.

Studies show unofficial workers, those without health and retirement benefits, are more vulnerable to the crisis. Under the program, the individuals working in sport clubs, education and services have received the government’s coronavirus loans.

Services Hardest Hit

Fifty-nine percent of all workers who lost their jobs due to the outbreak of coronavirus were service providers, Masoud Babaie, an official with the Ministry of Cooperatives, Labor and Social Welfare, said.

“Sixty-two percent of businesses affected by the virus were also involved in the services sector. Workers in the industrial and agriculture sectors accounted for 31% and 1% of the jobless due to coronavirus respectively. Nearly 31% and 3% of the virus-affected businesses were in the industrial and agriculture sectors, respectively,” Babaie said.

“Close to 12,500-13,500 people typically file for unemployment benefits annually. However, over 871,400 applied for unemployment insurance following the outbreak of coronavirus by July 31, of whom 730,882 were subject to the three-month relief program. Since then, 107,000 new continued unemployment claims have been registered.”