Iran's Fragile Private Sector

Privitization has been an important economic policy for Iran in the Third and Fourth Development Plans. The establishment of new Government owned corporations was banned and those existing were obliged to set their shares for sale to the private sector. According to the Constitution of the Islamic Republic, the economy consists of three sectors, the government, the cooperatives and the private sector. However,due to the difficult years after the Revolution and the Iraqi imposed war, oil revenues had been the major source of income and major development and infrastructural projects were undertaken by government companies or those in which the government had major shares for a long time. Large intergovernmental trusts and corporations also surfaced during those years and made it very difficult for small private corporations to compete and survive. Inspite of official policy to promote private sector interests and activity, rising inflation rates, the recent political crisis and a strong intergovernmental sector have prevented the practical implementation of these strategic policies.
Two major national projects in which these intergovermental corporations won the tenders were recently taken up not only by local media but also by legal authorities as possible illegal transactions. The powerful winner of the bid however has confidently sealed the deal. These are signs of more difficult times for Iran's fragile private sector.