EghtesadOnline: Iran’s Trade Promotion Organization suspended 2,500 commercial ID cards after their owners failed to heed government warnings regarding the return of overseas export currency earnings, head of the TPO said.
Addressing reporters Monday, Hamid Zadboum said the suspended commercial cards were owned by “non-manufacturing” export companies who repatriated zero earnings, the TPO website reported.
Referring to the regulations, Zadboum warned that the TPO will nullify commercial cards of manufactures unless they too meet all their financial obligations by the end of current calendar month (July 21).
The TPO is affiliated to the Ministry of Industries, Mining and Trade and promotes non-oil exports.
Observers blame users of the so-called “rented commercial cards” and unruly exporters for failure to repatriate their overseas earnings, arguing that credible traders are less likely to breach government rules.
Zadboum warned that those who give their cards on rent are responsible for any abuse or breach by the user of the card.
The government is taking strong measures to minimize the abuse of rented cards. One such measure is to restrict the value of exports they can handle.
“Exporters who have recently got their commercial cards will be allowed to export goods worth not more than $500,000 during the current fiscal year [March 2020-21]”, Zadboum told the press conference.
The proposal was floated earlier in the month during a meeting of the government and private sector leaders known as the Dialogue Council.
In the meeting it was agreed to limit the value of goods newcomers can export. These businesses can export a limited amount of goods with their special commercial cards for the first time and demonstrate that they are capable of fulfilling their financial commitments.
The protracted problem of export income repatriation came into the spotlight after exporters’ repeated failure to return their earnings caused a supply crunch in the currency market pulling the rial down to historic lows.
Central Bank of Iran officials say that out of the $72 billion revenue generated from non-oil export in the past two years, $27 billion has been held overseas.
In light of US economic sanctions that have hit Iran’s oil industry, the government is struggling to improve non-oil exports and has regularly urges exporters to play by the rules and bring back their earnings.
In line with these efforts and in a bid to boost transparency in allocating foreign currency for import and keeping abreast of overseas non-oil export earnings, the government created a secondary market, dubbed as Nima, in April 2018.
Nima is a CBI-affiliated platform where exporters sell their overseas currency earnings and importers purchase the currencies for importing non-essential goods, machinery, equipment and raw materials.
The system logs data on repatriated and currency traded for import and export.
Export earnings are supposed to be returned via one of the following ways: selling currency on Nima, cash transfers through hawalah, selling currency to exchange bureaus, and finally using the money to import goods and machinery or allow a third party to do so.
Rules stipulate that companies exporting non-petrochemical goods sell at least half of their earnings via Nima and 20% in cash to moneychangers. The balance can be used for importing raw materials, machinery and other goods.