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Chapter 2: Realization of the motto: “Consumption of Iranian goods, guarantees employment of the next generation,” and the upcoming challenges

The “Association of Managers and Experts of Iranian Shoe industry”, (ASSOMES), with 25 years of professional teamwork experience, has always been trying to attract the attention of inbound economic, business and industrial authorities to the key role of leather, shoe and related industries in sustainable employment.

In the last September, equal to the Iranian month of Shahrivar, ASSOMES presented the Ministry of Industries and Business, the ‘comprehensive scheme of battling shoe smuggling, attached with 47 solutions, including ‘creation of social and cultural movements in media and advertisement support of campaigns “I wear made in Iran” and “Consumption of Iranian goods, guarantees employment of the next generation”.

Presently, after expert investigations by all beneficiaries and authorities at the Ministry’s deputy office, Anti-Smuggling Organization and commissions relevant to the Central Headquarters of the Resistance Economy, the scheme is pending to convert to an executive directive.

Following the tragic collapse of Tehran’s Plasco Building in January 19, 2017, and over 4000 employees losing their jobs, a new sympathetic wave started in the social media, carrying the message: buy Iranian shoe and clothes. Gradually, the movement turned into a self-driven behavior between people, officials and the relevant administrations.

The huge social movement, paved the way for the reconciliation of post Iranian-revolution generations, especially women and the youngsters, with domestic goods presented in the stores. Some of wise and self-driven actions taken by the shoe retailers throughout the country partially attracted the attention of Iranian people to Iranian shoes and leather products late last year.

The measures taken included installing the sign shoe stores in Tabriz, East Azerbaijan, saying: we are proud to sell only Iranian products; establishing a campaign by shoemakers society of Tehran with the motto: exquisite Iranian shoe, deserving Iranian people”; creation of campaign “I’m an Iranian, I buy Iranian” and installing signs (we proudly present Iranian products to support domestic production” in Isfahan; establishing a campaign by Mashhad society of shoemakers with the motto: Iranian products, sustainable employment, social gaiety and security; and Qom’s association of shoemakers highlighting the motto: we sell Iranian products.

In addition, Tabriz’s association of shoemakers suggested Iran Chamber of Guilds to order the city’s shoe and leather shops to follow the association, installing signs and following the planned policy to support resistance economy.

Given the naming of the new Iranian year (started March 20) by the Iranian supreme leader, Seyed Ali Khamenei as “the year of resistance economy, production and employment” and his emphasize on the necessity of developing domestic production and its effects, during his regular New Year speech in the holy city of Mashhad, the responsibility of the relevant authorities and the men of industry has doubled in order to realize the motto of the year.

However, a number of questions are raised here, including: why the economist, merchants and the men of industry could not efficiently think of solutions to gear up domestic productions and entrepreneurship, although there had been such naming and affirmations by the Supreme Leader? And why is the final price of domestic products still higher that the foreign samples.

How much the domestic industrial, commercial and businesspersons care about the problem solving and efficient strategies, solutions and warnings offered by the experts?

Are they aware of the fact that their unprofessional decision makings could heavily hurt industries and higher the final price of the domestic products?

Do they know that the effect of wrong decisions on the final price of Iranian goods is much more than destructive factors in production process?

Are they aware of the negative impacts of incomplete execution of progressive value added tax law, which is one of the most important factors of failure of domestic production?

What has been their reaction against all these information? and while they are fully aware of shortages and weakness in the required fundamentals at the last circle of value added tax, why are they destructively involved in the registered industrial units, which play a key role in boosting employment and production?

Why the small and medium businesses are not financially supported, although they officials know they are extremely influential in developing domestic production and industries?

Don’t they know the worrying figures released on 70 to 80 fold amount of smuggled goods, compared to the official statistics released by the Iranian custom?

If they do, what have they done to tackle the problem?

Don’t they know that before crediting a domestic producer, they should be in the same position and situation as their foreign counterparts are in foreign markets under the cover of competing with the foreign market?

Aren’t they aware of the fact that when a domestic producer supplies their raw material at high prices (close to the international price), they will not do efficiently at the international market compared to the foreign competitors?

Don’t they know that scarcity, and in cases, absolute rarity of petrochemical raw material destroys domestic production, ruining their business and lagging their export deliveries? Why they are not willing to stand against such inequalities, which directly harm Iran’s employment and industrial development?

FILLIP   The managers and headquarter have not realized their power, and the fact that power brings responsibility.

The authorities perfectly know that lack of liquidity is the major challenge faced by manufacturing units. However, why they apply short selling policies on mercantile exchange? Because the action causes the liquidity of two months of some shoe manufacturing units, which equals to 250b rials ($6.6m) to be blocked by the supplier petrochemical company.

How can a domestic producer, which has goods ready to sell with official invoice, continue its legal performance, while there is a customer outside who doesn’t want an official invoice?

Can’t they understand that the domestic shoe production units, which are mostly small and medium size businesses, are not able to follow the progressive bill of value added tax, as do the similar European countries for instance?

Don’t they know that putting more pressures on the units makes nothing of help?

Perhaps fining the units is in favor of tax organization at the first phase, but next, there would remain only a useless industry, not even capable of paying tax fees.

Is there any staff to detect such cases and to quickly obviate problems facing domestic production?

Certainly, custom release of raw material, which has been lasting more than a month, contributes rise in the final price. Who should help the producer out?

This is a wrong and unfair norm that production units applying for loans, require to open accounts with a certain bank, which in long term causes increase in the interest rate of bank facilities.

In addition, blockage of liquidity has a cost, which will be added to the imposition and release tax, increasing the final price.

Who would answer why Afghanistan and Iraq prefer to supply shoes from Pakistan and Turkey, instead of Iran?

Who is responsible for losing Afghanistan’s boot market? Who is responsible for the weak fundamentals in Iran’s custom, which causes delay in good exports and imports and consequently increase, in final price?

What is the reason behind the 14 fold increase in Turkey’s shoe export to Iraq during last 15 years, while in the same period, Iran’s has increased only 20% ?

There are tens of similar unanswered questions and snags on the issue. If the barriers are not removed from the domestic production, the motto of the year, “Consumption of Iranian goods, guarantees employment of the next generation” will be seriously challenged.

The society of Iran’s shoe industry, as one of the most influential keys in the development of shoe and leather industry in the country, suggested establishing professional working group of shoe industry during a meeting held on April 8.

The proposition is hoped to be approved as soon as possible by the Ministry of Industries and Business, to quickly restore the integration and collaboration. If the goals realized, the major brakes on the path of domestic production, including high final price, will be soon obviated with the help of wise executive actions.

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