Editorial

One underlying justification for privatisation of state-owned enterprises lies in the fact that due to their unfair size and access to financial resources they easily outmanoeuvre competitors and solidify their own position in a typical economy. This problem has for long been strangling economies as large as China, where state owned companies are unleashed in their activities. Iran is no exception. The fact that some large enterprises enjoy the unlimited support of the government was somehow plausible when the country was engaged in a fierce war and the then government had to take control of most strategic economic activities. That necessity faded away as soon as the war ended and the government had to find partners from the private sector to outsource a part of its obligations. No wonder that some resistance appeared on the part of those privileged companies and they tried to go round the demands. It was at this stage that semi-government companies emerged. Under the coverage of privatisation, big companies assigned their functions to some affiliates of which the major share was preserved. The parent institutions are still in power and extend their helping hands to the semi-government sector whenever needed. That is why the real private sector remains oppressed and the economy is still dominated by the invisible hand of the government.
The recent letter issued by the governor of the central bank addressed this problem and recommended that the banks release their hands off the affiliates and their shares in other companies in three years. In recent years, companies belonging to the banks contributed to a major part of semi-government sector. Thanks to their wealthy parents and their unconditional support via bank liquidity, the offsprings grew strong and exacerbated the destructive impact of semi-government economy. Hopefully, it seems there is a strong determination in the banking system to deal with this long-lasting issue.