Iran’s Business Index Perks Up in First Fiscal Quarter

(Tuesday, July 28, 2020) 09:38

Iran’s business environment improved in the first quarter of the current year (March 20-June 20), despite the outbreak of coronavirus and its impacts, Iran Chamber of Commerce, Industries, Mines and Agriculture reported.

Iran’s National Business Environment Index stood at 6.01 in Q1 to register a decrease of 0.66% compared with the preceding quarter and a decline of 2.59% over the same quarter of last year, the chamber said in a report published on its website.

The index calculated by ICCIMA measures business friendliness of Iran’s economy, with 10 indicating the worst grade. In other words, the decline in the index is indicative of an improving business environment.

Iran’s National Business Environment Index stood at 6.05 in Q4 of the fiscal 2019-20 and 6.17 in Q1 of the fiscal 2019-20. 

“Unpredictability and fluctuations in the prices of raw materials and products”, “difficulties associated with getting credit from banks” and “uncertainties about policies, rules, regulations and business procedures” were the most undesirable factors affecting Iran’s business environment during the period under review, according to the findings of the 15th round of this report. 

On the other hand, “access to energy carriers (electricity, gas and diesel)”, “access to water” and “access to mobile networks and the internet” were identified as the most prominent factors improving the business environment. 

 

“Access to energy carriers (electricity, gas and diesel)”, “access to water” and “access to mobile networks and the internet” were identified as the most prominent factors improving the business environment

 

 

The chamber also measures the index for each of the 31 Iranian provinces. The report names Sistan-Baluchestan (6.32), Tehran (6.31) and Kerman (6.29) as the provinces with the least favorable environments to do business in and West Azarbaijan (5.15), Zanjan (5.22) and Markazi (5.38) provinces as the best. 

The average real production capacity of economic enterprises participating in this survey stood at 35.57% in Q1, indicating a decline of five percentage point compared with the preceding quarter. 

The spread of coronavirus hurt businesses headquartered in Ardabil, Hormozgan, Khuzestan and North Khorasan the most and those in Semnan, Qom, Zanjan and Markazi the least during the period under review.  

The agriculture sector had the worst business environment in Q1 with 6.09 points followed by services (6.08) and industry (5.87).

As for 21 fields of business, the worst three business environments were “healthcare and social work”, “professional scientific and technical activities” and “transportation and warehousing”. The top tier included “arts, leisure and recreation”, “administrative and support services” and “finance and insurance”.

Enterprises with 50-100 employees had the best business environment with a score of 5.83 while those with six to 10 employees had the worst business environment with a score of 6.18. 

Businesses operating for fewer than two years indicated the best business environment (5.68) while those operating for six to 10 years had the worst business environment (6.08). 

The ICCIMA index is fashioned after the World Bank’s “Ease of Doing Business” index, the latest edition of which was published in November 2019. 

According to the World Bank, Iran’s ease of doing business ranking improved by one place to stand at 127th among 190 world economies.

The World Bank’s Ease of Doing Business Report 2020 shows the country's distance to frontier score saw a decline of 0.1 percentage point, from last year’s 58.6 to 58.5 in the new report.

New Zealand topped the list of 190 countries in the ease of doing business with a score of 86.8, followed by Singapore with 86.2 and Hong Kong with 85.3, while Somalia was at last place with a score of 20.