Exports Start at the Factory, Not at Customs Borders

For Iran's economy, exports are not merely selling goods beyond borders. They are an important link in the production chain, employment and currency supply, and an effective factor in connecting the country with global markets.

Ambassador Arjan's guest note - Parham Rezaei, head of Alborz Chamber of Commerce, Industries, Mines and Agriculture: The exporter can be recognized from the moment the goods leave the factory door. Not when his name is on the list of sample exporters, because he is the one who has to keep the production going, deliver the foreign order on time, pay for shipping and insurance, fulfill his financial obligations, and finally, wait for the money for the goods he sold to return to the production cycle.

The problem starts right here; Where the export does not end for the exporter, but just enters its most difficult stage. Iranian goods have crossed the border there, but the money may return to the country with more delay, cost and even more complexity. In the meantime, the factory does not wait; Employee salaries, raw material purchases, installments, taxes, energy and running costs are still due.

For this reason, considering the upcoming National Export Day, it should be clarified that when we talk about exports, we should not only talk about the number of shipments that have left the country or the value of the goods that have been registered at the customs. The more important question is to what extent export has been able to allow the producer to continue operating, investing and maintaining the foreign market.

The record of the country's foreign trade in the 9 months of 1404 presents a remarkable picture. During this period, according to the announcement of the Iranian customs, as many as 118 million and 901 thousand tons of goods worth 41 billion and 243 million dollars have been exported; The weight of exports has increased by one percent, but its dollar value has decreased by 5.78 percent. These numbers show that despite the increase in the volume of export of goods, its dollar value has decreased. In our country's economy, which provides an important part of its production needs through export earnings, and this gap is not just a statistical fluctuation; Rather, it is directly related to the company's ability to provide liquidity, purchase raw materials and continue production.

From this point of view, a difference should be made between "crossing goods across the border" and "successful exports". Successful exports are not just exports that cross the border. Exporting creates real value for the country's economy when the company can maintain its market, manage its costs and return resources from foreign sales to the production cycle with the least friction.

The foreign customer does not wait for our internal decision

In the global market, contracts are formed based on time, price and commitment. A foreign customer cannot adjust its production or sales schedule every time by changing a domestic instruction of the exporting country. The Iranian exporter can also stay in a foreign market when he can plan for production, pricing, transportation, financing and return of foreign exchange from his exports. Frequent changes in regulations, sudden export restrictions and the complexity of foreign exchange processes are the costs that are ultimately paid out of the company's pocket.

This issue becomes more important when the cost of transportation, insurance and risk of foreign trade have increased. When the external business environment is risky, the minimum expectation from domestic policy should be stability and predictability; Not that part of the same risk is transferred back inside the company. In order to compete in the global market, the exporter needs the ability to plan more than anything else.

A factory that does not have electricity and energy infrastructure cannot be saved by an export contract

But export planning makes sense when the producer can fulfill his obligations inside. No export policy can succeed without a sustainable production policy. Before negotiating with a foreign customer, the exporter must be sure that his factory has the possibility of continuous production and timely delivery of the order.

Energy imbalances, power shortages, and fuel constraints directly affect production capacity and order delivery times. In Alborz, the director general of industry, mining and trade of the province has named energy imbalance and lack of fuel and electricity as serious challenges for the industries.

The exporter cannot be expected to adhere to his time commitments in the foreign market, but face production line stoppages, energy shortages or disruptions in the supply of raw materials inside. Competition in the global market starts inside the factory, before the border, and the export power of the country depends more than anything on the company's production power.

Dependence on multiple markets, the cost of a forced choice

When domestic production and infrastructure are ready for export, the next issue is the markets in which this capacity should be seen. The export market of our country needs a new look. When a large part of our exports is concentrated in a limited number of markets, any change in the political, economic, transportation or regulatory conditions of those markets can directly affect the Iranian exporter. In this case, we can have a look at the volume of exchanges with two important trade destinations of Iran, in the 9 months of 1404, China was the first export destination of Iran with about 10.2 billion dollars and a 24.76% share, and Iraq with about 7.4 billion dollars and a share 17.93% was ranked next. The share of these two markets together was about 42.7% of the country's non-oil export value.

But we need diversification to the market of other countries not only as a goal but as a part of national economy risk management, naturally, a more active presence in the neighboring markets, Central Asia, Caucasus, Africa and other markets with capacity, results when it is accompanied by economic diplomacy, market knowledge, financial instruments, export insurance and transportation network.

But entering a new market is not achieved by sending and accepting a business delegation or signing a memorandum of understanding. To stay in a new market, one must be able to sign a business contract, deliver the product on time, receive payment, and continue with the same customer in the next transaction. In other words, the development of export markets will not be sustainable without providing the necessary infrastructure for the continuation of the business relationship.

The exporter does not want a hero; Wants a decision-making partner

This fact shows that in order to solve export problems, we should not expect the exporter to adapt to the existing conditions; Rather, his voice should be heard when making decisions. Iran's private sector has borne a large burden of foreign trade costs during the years of sanctions and crisis. But the resilience of the private sector should not be confused with the endless bearing of costs.

If exports are going to increase, the exporter should be seen and his opinions heard during any decision in this area, including exchange rates, energy prices, transportation costs and foreign trade; Not that after the notification of the decision, he is asked to adapt himself to the circulars and instructions.

On the other hand, it is very important to pay attention to this type of view, that chambers of commerce and private sector organizations are not only places where problems are raised; Because the experience of economic enterprises can clarify its consequences before the implementation of a policy and prevent decisions that impose unforeseen costs on production and export during the implementation phase. Certainly, involving the private sector in the decision-making process is actually using the experience of those who directly experience the effects of these decisions in the field of practice. Especially in the current situation when the cost of foreign trade has increased, the presence and participation of economic activists should be taken seriously by the policy makers, and it is natural that any cost, if it is not predictable, will eventually reduce the competitiveness of the exporter.

honoring exporters; From appreciation to decision

From this point of view, a basic question must be answered, what should be removed from the export path so that the exporter can export more and more sustainably? Certainly, the answer to this question cannot be summed up in occasional encouragements on special days and occasions such as National Export Day, because the exporter does not need encouragement and celebration, but the stability of regulations, sustainable energy, working capital, predictable currency process, reliable transportation and insurance, and active economic diplomacy. These are not extra points; Rather, they are prerequisites for the stable presence of our country's economic activists in the global market.

If we want exports to be the engine of production and employment of the country, we should not only see the moment when the goods leave the border; Rather, we should see the whole path that starts from the factory and continues until the return of export income to the production cycle, export starts from the factory, not from the border, and its success becomes meaningful when the return path of export income is equally clear, safe and predictable.