The difficulties of starting a business through the ۱۰th administration
Ahmad Fallahpour, The head of Business Environment Commission of Tehran Chamber of Commerce is well - familiar with hurdles for starting a new business in Iran. His Commission alongside the Parliament’s Research Center thoroughly analyzed “World Bank Enterprise Performance Survey ۲۰۱۴” and Iran’s rank in this report. Unlike the experts at Majlis, Fallahpour believes that establishing an enterprise clearly became a tough task during Ahmadinejad’s second term as president, but the procedure has been enhanced over the past few months.
In World Bank Enterprise Performance Survey 2014, Iran stood 107th among 189 nations in 'Starting a Business' indicator. The Parliament's Research Center underlined that 'false information' were the basis of the ranking and that the country could rank as high as 65 should World Bank used first-hand information. Do you agree with this analysis?
To claim that we deserved to stand at 60-70 and that the current ranking is only due to World Bank being fed with misinformation is unfair. Of course the current ranking could be different with a tolerance of plus-minus 10 to 15 percent, but the truth is the country's business environment is troubled. What do they have to say about all the enterprises and production units' shutdown? When the Minister of Industry, Mine and Trade speaks of 14 thousand closed enterprises or when we take a closer look at the long list of debtors with non-performing loans, we understand how serious the turmoil is. In order to provide more realistic info, two measures should be taken; first, we need to ask World Bank to include Farsi language in their website as well as in their questionnaires so that respondents may answer more appropriately. Second, a specific center should be tasked with distributing the questionnaires among qualified respondents.
Thus, we need to rationalize the business environment of the country to give a good impression to the world, which means we need to fend off possible offenders, maintain stability in rules, regulations and procedures, put faith in private-sector, increase the efficiency, fight the bureaucratic corruption, choose our directors based on competence, give more time to unions in making decisions and extend relations with the Parliament as well as Executive and the Judiciary branches -which seems to be the case lately- but we need to see real output, and altogether, we will make the world bow down to us with respect.
Let's focus on 'Starting a Business' indicator. World Bank's 2014 report suggests that registering a work permit and starting a business comprises eight steps and takes about 16 days to proceed in Iran. I want to know about your actual experience in this regard. Have we fared better or worse in the past few years?
That we are back to 20-25 years ago in terms of work permits is wrong, and temporary permission comes on the table only after the acquisition of business permit and operation permit. I assume that financers are free to invest their capital in their field of choice, as long as they comply with rules, but everyone speaks of lack of resources, the need to manage resources carefully and that we should give permissions selectively, etc., but we need to let investors decide for themselves. It's not to say that we need a center to thoroughly instruct investors on every field of work. If one decides to invest on a particular product, they must be aware of the level of demand, imports and the need for that certain product.
The fact is I, as the head of Business Environment Commission of Tehran Chamber of Commerce, have always requested the government to establish a 'single window' to let the members of every ministry sit together and express their points of view to investors, not that Environmental Protection Org. go one way and water and electricity organization the other. Fortunately, the issue is discussed in the long-term plan for overcoming stagflation. I hope that soon enough, we will be able to set a deadline for each and every ministry, so in case a ministry fails to respond to their respective investors, the permission request will be granted automatically. For instance, Environmental Protection Organization must be given a twenty-day deadline to reply to work permit requests and should the organization fail to respond within the allocated time, the requests will become effective without further hindrance.
We need to move towards this direction with practical guarantee. In other words, those who fail to be accountable for requests, lack commitment or disrupt the flow of the initiation of new enterprises must be dealt with legally, and only then will we be able to start a business in 16 days or less similar to Singapore or Turkey.
The 'single window' model you spoke of is ratified in the Fifth Development Plan, but has not been put to practice yet?
You mean that neither the 'single window' rule nor 'constant elevation of business environments' which was passed a couple of years ago has been put to practice.
The previous administration paid little attention to 'constant elevation of business environment' and totally boycotted the rule, only because they disagreed with it. For example, one of the articles of the rule required the government to establish a 'discussion council'; an idea that the government didn't wish to bolster and the ministers of the 10th administration never participated in the council. As a result, the council was embargoed. But I'm confident that everything will go according to plan and the council will be resurrected.
Over the past five years, Iran has continued to rank worse in terms of 'Starting a Business' in World Bank reports. Have you practically witnessed the slump in the business environment of the country?
Yes. The downtrend was absolutely tangible during the past five years. We need to adopt a new viewpoint with the 11th administration in command; many bothersome rules are toned down and automation is on the agenda, starting with the Customs Administration or the process of registering an order. I'm positive that the efforts of the 11th administration and their close affinity with private-sector will come to fruition in 2014, though there is still a long way to go and there's much yet to be done.