With the recent decree issued at the highest level of the Islamic authority regarding Article 44 of the Constitution, the move towards meaningful privatization of the economy should become more realistic.
The supreme leader’s directive should help push the economy on the fast track towards much-needed development and growth in line with the ambitious aims of the Vision 2025 and also the objectives of the Fourth Five-Year Economic Development Plan (2005-10), which has envisaged an economic growth rate of 8 percent.
So far schemes to privatize the economy and cut down the bloated bureaucracy have remained largely on paper as state grip on national assets and resources have been further tightened through a maze of official rules and directives.
Article 44 has clearly defined the role of the state, the cooperative and the private sectors and their jurisdiction on various areas of the economy. But over the years the apprehensive private sector never really took off due to the closed-door approach of the executive authority. Therefore, private enterprise has remained dormant for decades, making it lethargic in the process or taking flight from the country through capital investments abroad. The government, meanwhile, has become fatter and spread in all directions in an unruly way. Its domination of all major sectors of the economy as well as the prized resources of the country has dissuaded potential investors in the private sector and also discouraged foreign direct investments.
It is quite natural that an economy monopolized by the state for almost three decades will not be able to easily attract domestic and foreign investments, which are necessary to create new jobs and development works.
The leader’s directive is clear -- government should trim its size considerably by handing over 80 percent of state companies to the private sector. Some of the key areas mentioned are telecommunications and aviation, which have thus far been under the control of the non-private sector.
Most countries of varying sizes are jumping into the fray of globalization through liberalization of their trade policies, deregulation and greater involvement of the private sector in their economies. If emerging economies like India and China are becoming global in a short span of time despite their huge populations and large pockets of poverty, it is thanks to the open economic policies of their governments and more so to the initiative and enterprise of their private sectors.
Often it is the private sector’s innovativeness that leads nations, developing or developed, to become the single dominant force at the international level in areas where they have comparative economic advantage.
In Iran, which has huge reserves of fossil fuel and mineral wealth this is yet to be witnessed since no business leader has emerged in the private sector nor has been allowed to take the lead to capitalize on the same. Of course, those with political connections or in the excusive circles of power have in the past managed to make inroads into lucrative businesses or monopolized certain areas of industry that have not benefited the masses in general.
Red tape, too much government and a bloated bureaucracy have resulted in private sector ennui, and stood in the way of decent national development and advancement. To sustain growth, the government has no choice but to expand the non-government sector in an organized manner and loosen its grip on the country’s rich natural resources, by showing its faith and trust in private entrepreneurship.
After all, private industry is part of the national economy and complements government work in more ways than one. It should not be seen as ’the outsider’ and therefore be given more freedom to function as an equally important partner in the economic progress of the nation.