EghtesadOnline: Iranian government’s fight with hoarding is heating up. Back-to-back reports being published on police confiscating goods in warehouses across the country are meant to assure people that, despite economic upheavals, the government seeks to protect them from hardship and exploitation.
However, this policing strategy of confiscating goods has impinged on the commercial liberties of pharmaceutical firms and honest traders.
“The government committed several mistakes in its policies on foreign currency market and now, economic players are being treated with suspicion,” Nasser Riahi, chairman of Iranian Pharmaceutical Importers Association, told Tehran Chamber of Commerce, Industries, Mines and Agriculture’s news outlet, according to Financial Tribune.
“Such an approach is against the presumption of innocence, the principle that one is considered innocent unless proven guilty.”
It was around mid-July that Minister of Industries, Mining and Trade Mohammad Shariatmadari appointed his commercial affairs deputy, Hassan Younes Sinaki, the head of Consumers and Producers Protection Organization, Mahmoud Navvabi, and the head of ‘Tazirat’ (a judiciary-affiliated oversight body dealing with trading offenses), Jamal Ansari, as members of the newly-formed taskforce named “Intensified Fight Against Hoarding and Stashing”.
According to the minister, the taskforce would help maintain market balance by overseeing imported commodities or those produced using imported raw materials purchased at subsidized forex rates and prevent disruptive activities such as hoarding and stashing.
A few days later, he unveiled a list of goods to be targeted by the new taskforce. It included a wide range of products from essential goods to home appliances, spare parts, rubber, publication paper, washing powder and construction material. The items also included a category titled “production raw materials”, without further elaboration.
Officials called on the public to inform authorities of hoarding and stashing cases.
Since then, news of hoarded goods being confiscated in warehouses across the country, the capital city in particular, have been splashing all over the media to attest to the taskforce’s “unflagging” efforts in carrying out its responsibility.
At times, representatives of oversight bodies such as ‘Tazirat’ pay visits to warehouses that do not really intend to hoard things. They have just stored their commodities to sell them later on.
Riahi said hoarding is not practical in the case of pharmaceuticals.
“The import and clearance processes of pharmaceuticals from customs require permits from the Ministry of Health. The ministry only grants clearance permits to businesspeople who have gone through several stages of import formalities and received the permits. The Health Ministry is in the know of the amount of pharmaceuticals at customs,” he said.
The official explained that since medicines should be stored and transported within a GMP framework, they can only be kept for a short period at customs and their customs clearance should be accelerated.
Good Manufacturing Practice is a system for ensuring that products are consistently produced and controlled, according to quality standards. It is designed to minimize the risks involved in any pharmaceutical production that cannot be eliminated by testing the final product.
“Distribution companies are in charge of receiving medicines from customs at the time of clearance. As a result, importers don’t have access to pharmaceuticals, except for a limited amount they keep as sample,” he said.
Referring to an electronic tracking system distributors are obliged to use to locate the imported drug, Riahi said, “The Ministry of Health also has access to this tracking system, so the likelihood of hoarding and smuggling is close to zero. But, sadly, people with little knowledge make baseless allegations against pharmaceutical industrialists.”
Asked about the news of a confiscation of a warehouse full of expired pharmaceuticals last month, Riahi said, “Those who possess expired medicines are required to destroy them in the presence of the representatives of Iranian National Tax Administration, the Ministry of Health and the Interior Ministry at specific venues. So it is wrong to say that this warehouse was full of hoarded pharmaceuticals.”
Fearing the smuggling or people’s storage of drugs more than what they need, the Food and Drug Organization of Iran has warned distributor companies against providing pharmacies with medicines more than their monthly need.
“Pharmacies should match their supply with demand. On the other hand, the pharmaceutical industry is obliged to have strategic pharmaceutical storage sufficient for three months. Therefore, it is natural for them to have medicines in warehouses,” he added.
Riahi noted that warehousing is a normal stage in the cycle of production, supply of goods and providing services.
“Repeated monitoring by the inspectors of oversight bodies creates constant concerns for economic operators whereas all these medicines are traceable before they enter pharmacies,” he added.
So Who’s to Blame?
Riahi, who is also a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, believes that any shortage of medicines is mostly due to a lack of capital, untimely allocation of foreign currency and the government’s failure to pay its debts to companies.
Noting that pharmaceutical importers don’t approve of receiving subsidized foreign currency, Riahi said, “They would rather obtain their needed foreign currency from the open market. The government can pay the difference between the subsidized and open market rates to consumers.
“In doing so, producers and importers of pharmaceuticals won’t get entangled in battles of getting forex from the government. For about 20 days in the Iranian month Tir (June 22-July 22), the government was unable to provide importers with forex,” he said.
Iran’s market descended into panic after the value of rial fell drastically over a very short period following, among other reasons, the US decision to quit the nuclear agreement between Iran and world powers, and reimpose sanctions on Iran’s economy.