Export-led growth: solution to support Iranian producers

By  Trend

In a move aimed at extending support for domestic producers, Iranian government over the past decades has imposed serious restrictions on importing goods and commodities.

The country’s automotive industry is an example of the efforts to boost the domestic production. Although the automotive industry is the second biggest sub-sector of the Iranian economy after oil, the figures and stats on car imports suggest that the local carmakers have failed to earn the nation’s trust.

On the other hand Iran’s leading carmakers have put a great deal of effort in exporting a part of their output to the global markets, having reached only limited success.

While Iran’s auto industry exports registered a fall by 32 percent in terms of value and 20 percent in terms of volume during the first five months of the current fiscal year, the Islamic Republic imported $1.4 billion worth of vehicles and chassis from China in Jan-Aug. 2017.

This is while Iranian carmakers manufactured over 496,800 units over the first five months of the current fiscal year (starting March 20), an increase of 20 percent year on year.

"Given the stated goal of reaching a production level of 3 million cars with a million exported by 2025, the fall in export figures suggests serious underlying issues in the industry that almost certainly will fall substantially short of its export targets and the quality upgrading that is needed to achieve export expansion in the next eight years," Mehrdad Emadi, an economic expert and consultant at the UK-based Betamatrix International Consultancy, earlier told Trend.

?Some observers blame the government policies on supporting the domestic producers, suggesting that such policies have led the domestic manufacturers to produce expensive but sub-standard cars.

Over the past years, a group of Iranian consumers have joined a campaign to support domestic production through purchasing Iran-made goods but in the absence of a proper balance between quality and price the customers are very likely to walk away from the campaign.

In this situation, the country’s industrial policymakers apparently need to draw up new strategies to help the domestic producers to make high-standard goods at proper prices in order to reach the global markets.