The future of industries in the next 3 months
Mohammad Hossein Adeeb
With the new currency package, Iran’s industry must buy at the daily rate and sell at the daily rate
Iran’s industry grew strongly from 1380 to 1391, but the growth of the industry was due to energy subsidies. In 1380, the price of oil was 17 dollars, and in 1390, the price of oil reached 100 dollars, but the price of energy for industrial production in Iran is much lower than the price increase. Oil increased, almost free energy was provided to the industry
Three industries in Iran grew strongly during this period based on energy subsidies:
Steel
petrochemical
cement
In these three industries, energy had the main weight and when free energy was supplied, these three industries developed strongly
The value of petrochemical production increased from one billion dollars to 20 billion dollars
But the petrochemical and steel industries, which received energy for free, distributed their products semi-free inside, so a fourth category of industries grew in Iran, industries that took petrochemicals and steel for free and combined them with some imported parts. They turned it into the final product
Household industries such as the refrigerator manufacturing industry and the automobile industry were in this category. The refrigerator was nothing more than petrochemicals and steel, to which 60% of imported parts were added.
Refrigerator, TV, car, etc. There were industries that were produced in the shade of petrochemicals and free steel with 40-60% of imported parts, almost 80% of Iran’s industries, apart from the three metals of petrochemicals, steel and cement, were included in this group.
Over time, from 1990 onwards, petrochemical and steel companies, which continued to produce with subsidies, but increased the selling price of their products domestically to international prices.
Conclusion:
Now the domestic industry receives petrochemicals and steel at the price of the world market, so this industry should have been shut down, but foreign exchange subsidies or exchange currency replaced petrochemicals and steel for free. Until November 2016, the industry was receiving foreign exchange subsidies of around 800 tomans. In other words, every dollar would buy 800 Tomans cheaper
Now the subsidized dollar has stopped
Now there is no news of free steel and 800 tomans currency exchange
Last word:
80% of Iran’s industries, except for petrochemicals, steel and cement, will be closed at the end of October if they want to buy petrochemicals and steel at world prices and buy dollars at free prices.
The result of the government’s new currency package, which requires cutting off foreign currency subsidies to industry, is the closure of such industries within three months.
Cutting the foreign exchange subsidy to the industry will lead to the unemployment of several hundred thousand people within three months
I am not an ignorant person in the field of industry, I have consulted or lectured in 70 percent of the country’s industries at least once. Those who have not seen the sun in the factories in their lifetime close down the industries they have established in 20 years in three months.
The sudden stop of foreign exchange subsidy to the industry should be gradual, its sudden stop will only lead to the shutdown of the industry
@adibmh
This post is written by FaraDanesh1