Page 17 - IRANRptOct20

4.0​ Real Economy 4.1​ Industrial production
Iranian government pledges 40 trillion rial to drive indigenisation of foreign product parts
Strong performance of Iran’s manufacturing sector prompts White House to target blue-collar industries with executive order
Iran has set aside Iranian rial (IRR) 40tn ($980mn at the official exchange rate, $172mn at the free market rate) for industrial indigenisation projects, Mehr News Agency has reported.
The country has a long history of taking foreign technology and making it its own. Examples of this in the auto industry include the localisation of the Peugeot 206 and 405 cars. The parts for these vehicles are now made by Iranian companies.
Mehdi Sadeghi Niaraki, Iran’s deputy industry, mining and trade minister for industrial affairs, reportedly said that the project was aimed at helping local businesses invest in new technology so that Iran can reverse engineer products and rely less on international supply chains, thus bringing the cost of production down markedly.
“In line with the ‘surge in production’ movement, the Ministry of Industry, Mining and Trade is trying to use all existing capacities in the country,” the official said while launching the new programme.
In July, Niaraki said €277mn was signed over to auto part companies and automakers to indigenise the production of parts seen in foreign brands. It is believed the parts he was referring to included Peugeot 301 components.
Iran’s strengthening manufacturing sector has become pivotal in the country’s resilience to US sanctions, so much so that the White House has issued a new executive order targeting the “construction, mining, manufacturing, or textiles sectors of the Iranian economy”.
“The [Trump] administration is in effect targeting the private sector and the millions of blue-collar workers in the country’s factories, contrary to its stated intention of using sanctions to restrict the financial resources of government authorities,” Esfandyar Batmanghelidj, founder of Bourse & Bazaar—a media company that supports business diplomacy between Europe and Iran through publishing, events and research—​wrote​ ​in a June 14 piece for Bloomberg Opinion.
Iran officially earned just $8.9bn from the sale of oil and related products in 2019-20, down from a peak of $119bn less than a decade ago.
Noted Batmanghelidj: “Like their counterparts in other hydrocarbon-dependent states, Iranian officials have long talked about the importance of reducing reliance on oil revenues. But the need for transition to a non-oil economy has become critical, following the Trump administration’s reimposition of secondary sanctions in November 2018, which has left China as the only major purchaser of Iranian crude.
“The transition is well under way in the private sector, with a boom in manufacturing. For the past decade, companies have been looking beyond Iran’s large domestic market to export an increasingly diverse range of goods
17​ IRAN Country Report October 2020 www.intellinews.com