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Why Iran’s private sector hasn't benefited from privatization

Despite ambitious plans to downsize government and help expand the private sector, Iran’s efforts to privatize state-owned enterprises continue to face serious challenges.
People walk past shops in an upmarket suburb in northern Tehran, Iran May 3, 2016.  REUTERS/Marius Bosch - RTX2CS8T

TEHRAN, Iran — Privatization in Iran only effectively started in 2001. Five years later, in 2006, Supreme Leader Ayatollah Ali Khamenei backed a constitutional amendment — the Law on Implementation of General Policies of Article 44 of the Constitution — to ease the sale of state-owned enterprises in an attempt to downsize government and help expand the private sector. But this grand scheme has never hit its intended target, and genuine privatization has thus far remained slow.

Indeed, based on figures published by the Iranian Privatization Organization (IPO), total proceeds from privatization in the last 16 years were just over $108 billion, largely facilitated via local exchange markets (more than 61%).

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