Insider news & Analysis in Iran

Iran's economy was collapsing and the JCPOA saved it. President Rouhani claims this as an achievement of his tenure.  Still, evaluations and analyses seem to show that industry and industrial corporations are in crisis within Iran.

Nasim, a news website in Iran, writes, "The closure of more than 30 famous brands and old established factories, such as Arj, Darougar, Azmayesh, Pars Electric, Isfahan polyacryle, IRANA tile, Tabriz Machine manufacturing, Iztech, Isaac bicycles, Varamin Sugar Factory, Swan Oil Factory, Ray Textiles and Iran wood, are only portion of the important country’s production companies that have pulled down their shutters during Rouhani’s presidency.”

Nasim continues, “Rouhani is the one who had promised flourishing of the Iranian economy in 100 days. Not only has he not improved people’s living standards these past 4 years, but according to most economy activists and experts, the economy has reached an unprecedented recession in its years after the revolution. One of the results of his economic activities was an economic downturn and the closure of famous brands whose names are associated with the lives of all Iranians. Unofficial statistics indicate that closure of these brands have led about one million people being unemployed in past four years.”

Marketing and / or management weaknesses or quality issues  cause businesses to lose their market share, close or become bankrupt, to be replaced by new brands. However, the situation in Iran is concerning because of the number of closures and the history of the brands, all of them  famous for quality and profitability. The closures were not due to better products being created in Iran, but rather that mass legal and illegal imports have replaced domestic production and caused the closure of factories. 

Manufacturing centers competing in other countries are typically replaced when a cheaper, more modern or more appealing product takes over the market and puts their competition out of business. If the business corrects its course, then it once again returns to market. 

“Under the Iranian regime, when factories are shut down, it is forever and their workers are, without any support, placed out of work and their lives become endangered,” according to an article published by the National Council of Resistance of Iran (NCRI), who also notes that “bankruptcy of this large number of industries and factories logically cannot be entirely the product of a period of 4 years. The destruction of so many industries is the result of a total economic policy of the country. It has nothing to do with the governing of this faction or that faction. Statistics, for example, indicate during Ahmadinejad’s presidency, 50-70% of the factories were shut down. The difference between Rouhani and others lay in the fact that he claims to have a key for solving these economic problems and claimed to have achieved economic growth and lowered inflation. Meanwhile, closures, bankruptcies, unemployment and people’s empty tables are there. Deceitfully, Rouhani claims that the economy has improved.” 

Several causes may be cited for the closure of factories, in particular the oldest ones, but the NCRI cites  the following important factors:

• Transfer of factories to “so called” private sectors, but they are fundamentally not private sector. Instead, they are entities, such as Iranian Revolutionary Guards, which do nothing other than the plundering of properties and factories;

• Existence of State jobber gangs which import foreign goods with lower custom tariffs and putting domestic manufactured goods out of the market, the existence of vast and established smuggling, a lack of cash for the industries not affiliated with the government and lack of government support for domestic production, sabotage and purposely withholding needed raw materials at customs;

• Lack of factories’ raw materials, poverty and the weak public’s purchasing power resulted in the accumulation of goods in storage;

• Obtaining heavy taxes from factories and manufacturing shops and continued municipalities’ extortions and governmental organs of producers.

The economic problems in this regime aren’t ‘purely economic’. They are political, with roots that go back to the governing structures, like Rouhani’s, known for its prodigious salaries and a president who doubled the budget of IRGC.  

The problem will intensify as long as this structure and governance exist, say the NCRI, adding that the future will see more factory closures, and perhaps, complete economic collapse in Iran.

 

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