Iran’s economic council recently rejected a proposal put forward by the ministry of agriculture for a 17 percent hike in the regulated price of cotton, from 2,820 rials to 3,300 rials per kilogram. Opposition was raised by the ministry of industries and mines, who was concerned that an increase in the price of this key raw material would deal a final blow to the local textile industry.
The Iranian textile sector, which employs a third of the Islamic Republic's labor force, has been grappling with the problem of high production costs. Private entrepreneurs, who got a good bargain on textile factories purchased from the state-owned Mostazafan and Janbazan Foundation (MJF) have been unsuccessful in raising the sector’s competitiveness and faced numerous strikes by unpaid workers over the past few months.
On September 25, a bill on the renovation and restoration of the textile industry was approved by the parliament, within the framework of the third five-year development plan (2000-2005). Excluding the sector from the General Labor Law, the government set up a tripartite committee—comprised of ministry of labor and social affairs, ministry of industries and mines and state management and planning organization officials— which was delegated the necessary powers to raise the sector’s efficiency by cutting down on textile workers.
Seeking ways to cope with mounting troubles, the Iranian ministry of industries and mines is also allocating generous funds in a bid to raise the quality of local products and ensure competitiveness on international markets. A ministry official announced on December 1, that a bill granting up to IR 876 billion ($500 million) in forex loans to the textile industry would be presented to the cabinet shortly. A proposal to establish a IR 50 billion textile technology development fund also awaits cabinet approval.
Since the beginning of the Iranian year, on 21 March 2001, subsidies allocated for the local textile industry totaled IR 200 billion, the general director of the ministry of industries and mines, Golnar Nasrollahi, told Iranmania, adding that over the next two years, IR 800 billion will be directed to the ailing sector.
Nonetheless, questions have been raised regarding the logic behind supporting the low-profit industry at the expense of other vital economic sectors. The Farsi daily Iran maintained in a recent article that the poor export prospects for Iran’s textile products, on the heels of a global downturn in demand, necessitate a revision of the economic council's strategy. — (menareport.com)
© 2001 Mena Report (www.menareport.com)
