Currency Policy Divide in Car Imports: Imports by Iranians Abroad Halted While Corporate Imports Continue

While imports of cars by Iranians living abroad have been halted on the grounds of currency outflow, the corporate import channel continues.

According to the report of Ambassador Arjan, in 1405, politics and automobile industry faced two different paths; On the one hand, the import of cars by Iranians living abroad has been stopped with the argument of the necessity of managing foreign exchange resources and preventing the outflow of foreign currency, and on the other hand, the possibility of continuing the process of registration of car import cases from the place of paragraph "R" of Note (1) of the budget law of 1404, by changing the type of foreign exchange operation to "without currency transfer", has been extended until the end of December this year.

This duality can be considered in a situation where Iran's economy is facing currency pressures and limited foreign exchange resources, and the policy maker also cites the management of foreign exchange demand as one of the reasons for restricting the import of some commodity groups. The main question is that if the prevention of currency outflow is the basis for stopping the importation of cars by Iranians abroad, on what grounds is the continuation of the importation of cars without the possibility of obtaining foreign exchange through official channels justified?

Quarterly extension of the remaining cases from the 1404 budget

According to the Mehr notification of the comprehensive trade system and follow-up letter No. 8807167 dated Mehr 6, 1405 of the Iran Trade Development Organization, it is possible to edit the type of currency operation of the order registration files created for the import of passenger cars from the place of clause "R" of note (1) of the budget law of 1404, which lack currency provision, to the option "without currency transfer" until December 30, 1405.

This deadline was previously set until the end of September and now it has been extended for another three months. The important thing is that the mentioned resolution does not control the registration of new orders, but includes cases that were created earlier and based on last year's budget mechanism.

However, the extension of the deadline in 1405 means that the remaining cases from an expired budget mechanism can still be followed up administratively. This issue, along with the uncertainty of the status of new car import quotas, which could be focused on cheap economic cars with less foreign exchange, raises questions about the policy-maker's prioritization criteria in the allocation of import opportunities.

Cars with high engine volumes and heavy tariffs

The importance of this matter becomes more important when considering the tariff rules for gasoline cars with high engine volume in the executive regulations of paragraph "R" note (1) of the budget law of 1404.

According to the amendment of August 26, 1404 of this regulation, the import duty for gasoline cars with an engine volume of 2500 to 3000 cc is set at 145% and for cars with an engine volume of more than 3000 cc at 165%.

Nevertheless, the continuation of assignment of the cases included in this mechanism raises the question why in the import policy of the country, for some car cases, it is possible to continue the process with the "no currency transfer" method, but the path of car import by Iranians abroad is stopped with the currency argument?

"No currency transfer"; The answer to the uncertainty of currency withdrawal is not

One of the key points in examining these two paths is the difference between "providing currency from official sources" and "without transferring currency". Placing an order without transferring currency does not necessarily mean using government currency or receiving currency from Central Bank sources. In such a situation, if the importer uses foreign exchange sources outside the official currency supply network to buy a car, it is necessary for the policymaker to explain how to evaluate the effects of this method on the foreign exchange market.

Ambiguity in the car import policy in 1405

Now that a significant part of 1405 has passed and the implementation period of the budget law of 1404 has also ended, two issues still need to be clarified: first, the basis for stopping car imports by Iranians abroad and its relationship with foreign exchange management policy; Second, the reason for the extension of the deadline for cases without foreign currency provision from last year's budget law and the conditions for the continuation of this process.

Also, it is not clear on what criteria the new car import quotas will be determined this year, and whether the policymaker intends to establish a single and transparent criterion for evaluating their currency effects among different car import routes.

The main issue is not simply a three-month extension of an administrative deadline; Rather, it is necessary to explain the different criteria that are used to continue or stop car import routes. If foreign exchange is the basis for the restriction of an import route, it is necessary to clarify how this criterion applies to other routes related to the corporate route, especially cases that proceed with the "no currency transfer" method.