Trilateral MoU Aimed at Supporting Carpet Sale, Job Creation

EghtesadOnline: A trilateral memorandum of understanding has been signed by Omid Entrepreneurship Fund, Iran’s National Carpet Center and the private sector for generating sustainable jobs and lending support to the hand-woven carpet sector.

News ID: ۷۸۶۲۸۵

16 March 2021

“As per the MoU, hand-woven carpets will be sold on credit to Iranian households in the next fiscal year [starting March 21],” said Farahnaz Rafe’, the head of the center, was quoted as saying by Mehr News Agency.

With loans worth 500 million rials ($2,000) granted by Omid Entrepreneurship Fund, Iranian households will be able to buy hand-woven carpets, she added.

Rafe’ noted that more than one million jobs will be created, if they buy at least one carpet.

“In collaboration with Qarz Al-Hasaneh Mehr Iran Bank, loans worth up to 300 million rials [$1,200] with an interest rate of 4% will be paid toward the Complementary Health Insurance of carpet weavers,” she was quoted as saying by IRNA earlier.

“At present, 261,000 carpet weavers are covered by the Social Security Organization’s insurance,” she added.

Omid Entrepreneurship Fund is a fund for supporting entrepreneurship and small- and medium-sized enterprises. It was formerly called Imam Reza (PBUH) Mehr Fund. The name change came after President Hassan Rouhani took office in 2013.

The fund’s loans are mostly for less developed and rural areas, as well as small towns deprived of credit from banks.

Asghar Nurollahzade, the fund’s CEO, said recently 81,228 loans worth 18,500 billion rials ($75 million) have been offered since the beginning of the current Iranian year (March 20, 2020).

Of this figure, 14,810 billion rials ($60 million) have been lent to support businesses hurt by the coronavirus outbreak, he added.

“A total of 1,250 gymnasiums, 1,800 eco-lodges, 200 restaurants and 500 greenhouse complexes have received the fund’s financial support,” he was quoted as saying by ILNA.

As per the budget bill for the next year (March 2021-22), the government will allocate 155.5 billion rials ($600,000) to improve the country’s share from the export of hand-woven carpets through local and international marketing.

It has also projected a 50-billion-rial ($200,000) financial support for Iran’s Hand-Woven Rural Central Union.

Decline in Exports

Iran exported hand-woven carpets worth $47.91 million during the eight months to Nov. 20, according to Rouhollah Latifi, the spokesperson of the Islamic Republic of Iran Customs Administration.

“Carpet exports show a $755,000 decrease compared with the similar period of last year, which seems reasonable given the outbreak of coronavirus and closure of borders,” he was quoted as saying by IRNA.

A total of $50 million worth of hand-woven carpets were exported from Iran in the last fiscal year (March 2019-20), registering a 90% decline compared with the previous year.

In fact, last year was the worst in decades for Iranian carpet industry, according to the CEO of the National Association for Handmade Carpet Producers Cooperatives.

“This decline in exports has many reasons, the main ones being US sanctions as well as the Central Bank of Iran’s stipulation that traders repatriate the foreign currency gained from exports, which significantly increases the risk of trade and discourages exporters,” Abdollah Bahrami was also quoted as saying by Fars News Agency.

The official noted that CBI has imposed this regulation on hand-woven carpets, Iran’s strategic non-oil export, and the officials responsible for making this decision must now be held accountable for all the losses suffered by the industry.

The move is aimed at boosting strained currency reserves in the short run, but it has understandably received negative feedback from private sector players.

“Up until two decades ago, the country used to earn more than $1.5 billion from handmade carpet exports, but today we have lost our position as the world’s biggest carpet exporter. It is well known nowadays that when you lose an export market, you can’t easily take it back,” the official said.

According to Bahrami, the UAE, China, Germany and South American nations were the main customers of Iranian hand-woven carpets last year.

Carpet ID

Iran is finalizing a plan based on which identification documents will be issued for hand-woven Persian carpets by the end of the current Iranian year (March 20), the head of Iran’s National Carpet Center said.

“The IDs will not only contain information on the physical features of rugs, but also their weaver[s] and patterns,” Rafe’ was quoted as saying by Mizan Online in May.

The patterns weaved on most Iranian rugs usually narrate a folkloric tale, a historic event or illustrate poems by well-known Persian poets.

Rafe’ noted that the project will begin with the most exquisite and luxurious woven carpets.