According to the news agency Khabar Online, the name of Article 44 Constitution It is often associated with the privatization and divestment of state-owned companies; But its scope is not limited to handing over. The general policies of Article 44 and its implementation law also provide frameworks for the expansion of non-governmental sector activities, strengthening cooperatives, competition and preventing monopoly.
What does the text of Article 44 say?
Article 44 considers the economic system of the Islamic Republic of Iran to be based on three sectors: public, cooperative and private. In the text of this principle, the public sector includes activities such as large and mother industries, foreign trade, large mines, banking, insurance, power supply, dams and large water supply networks, radio and television, post and telecommunications, aviation, shipping, roads and railways.
The cooperative sector includes production and distribution cooperative companies and institutions that operate according to legal regulations. The private sector, in the original text, includes activities of agriculture, animal husbandry, industry, trade and services that complement the economic activities of the state and cooperatives.
At the end of the principle, it is emphasized that ownership in all three sectors is supported to the extent that it is compatible with other principles of the constitution, does not go beyond the limits of Islamic laws, helps the economic growth and development of the country and does not harm the society. Determining the details and terms of operation of the departments is also left to the law.
In order to understand the current regulations, it is necessary to distinguish between three issues: the text of Article 44, the general policies announced for its implementation, and the law implementing these policies. The principle of the constitution states the general framework; General policies specify directions, and executive law provides more detailed mechanisms for economic activity, competition, and divestment.
Three economic sectors in principle 44
Government sector
In the text of Article 44, a number of large and infrastructure activities are placed in the public sector. In this framework, in addition to regulation and supervision, the government can have the role of owner or operator in some enterprises. The scope of this role depends on the relevant laws and executive policies.
In examining the status of a company, “ownership”, “management” and “supervision” should not be considered the same. The government may own all or part of a company, but its management has a different form; or non-governmental ownership, but the company’s activity is still under legal supervision.
Cooperative sector
Cooperatives are formed based on the cooperation of members and their participation in economic activity. They can operate in areas such as production, distribution and services and provide the context for pooling resources and collective participation.
The success of a cooperative depends on factors such as financial transparency, management style, management ability, access to resources and the possibility of competition in the market. The general policies of Article 44 have also paid attention to the development of cooperatives and strengthening their share and competitive power. Therefore, the implementation of Article 44 cannot be equated with handing over state enterprises to private companies.
private sector
The private sector includes the economic activity of individuals and non-governmental organizations within the framework of laws. Production, trade, agriculture, animal husbandry, and services are some of the fields mentioned in the text of Article 44 for this section.
The expansion of private sector activity can provide the basis for investment, business creation and increased competition; But a change of ownership alone does not guarantee that productivity will increase or services will improve. The quality of regulations, the security of property rights, access to financial resources, the possibility of new companies entering the market and preventing monopolies are also important.
General policies of Article 44 and its implementation law
The general policies of Article 44 were promulgated in 2004. In these policies, goals such as increasing productivity, expanding ownership at the general level of the people, promoting the competitiveness of the economy, increasing the share of the private and cooperative sectors, and reducing the financial and managerial burden of the government in undertaking economic activities have been proposed.
These policies also emphasize issues such as the development of the non-governmental sector, preventing the unnecessary expansion of government economic activities, and supporting cooperatives. At the same time, maintaining the government’s sovereignty, the country’s independence, social justice and economic growth are also considerations that should be taken into account in the implementation of policies.
Article 44 of the Law on the Implementation of General Policies specifies the executive rules related to the scope of activity of economic sectors, assignments and competition. This law was approved in 2006 and has had amendments and additions in the following years. For this reason, the valid and updated version of the law must be checked for legal reference.
What is privatization and what is not?
Privatization usually refers to the transfer of all or part of the ownership of a state enterprise to the non-state sector. In the framework of the general policies of Article 44, the transfer of enterprises is one of the means of increasing the share of the non-governmental sector and reducing the economic ownership of the government.
However, privatization does not mean the government’s complete withdrawal from the economy or the end of its responsibilities. Even after the transfer of ownership, the government can be responsible for regulating, supervising, enforcing laws and protecting the public interest. Also, the transfer of a company does not necessarily mean the transfer of all governance functions. In public services and sensitive infrastructures, the separation of the roles of owner, operator, regulator and supervisor is particularly important.
Does delegation alone increase productivity?
A divestiture may provide an opportunity to reform management, increase investment, or improve a firm’s performance, but it alone does not guarantee a favorable outcome. Its consequences depend on factors such as the buyer’s selection method, pricing, company’s financial status, management quality and market conditions.
If a firm is divested but still has monopoly power in its market, the change in ownership does not necessarily lead to increased competition. Also, if the transfer process is not transparent or the buyer does not have the necessary power to run the company, the expected goals may not be achieved.
To evaluate the outcome of a divestiture, indicators such as the amount of production, new investment, productivity, quality of goods or services, employment status and fulfillment of obligations can be checked. The selection of indicators should be appropriate to the type of activity of the company. Therefore, the question is not only “Is the company divested?”; Rather, it should be seen how the handover was done and what results it had for the company, employees, consumers and the economy.
The connection of Article 44 with competition and prevention of monopoly
One of the important issues in the implementation of the general policies of Article 44 is to provide competition and prevent behaviors that limit the market to the benefit of one or more companies. The law implementing these policies also deals with issues such as competition, monopoly and disruptive behavior in the market.
Competition can increase the motivation of companies to improve quality, control costs and innovate; But its formation depends on the existence of clear rules and the possibility of independent activities of companies. If the ownership of a company changes, but competitors are still unable to enter the market, the goal of increasing competition may not be achieved.
In some infrastructure activities, technical and economic characteristics may create the context of natural monopoly. In such cases, effective regulation and monitoring of service quality and price becomes more important.
What effect does Article 44 have on the economy and people’s lives?
The implementation of Article 44 can affect the economy through the ownership of companies, investment, competition and quality of management. If divestitures and reforms lead to increased productivity, development of production, and improvement of services, they may have consequences such as improving the quality of goods, reducing costs, or expanding access to services.
However, the number of divested companies alone is not a sufficient measure of success. The performance of the company after the transfer, the amount of investment and production, the quality of services, the status of employees and the changes in the competition in the market should also be examined. The role of the cooperative sector is also important in this evaluation; Because Article 44 and its general policies do not only deal with the private sector and transfers.
Tips for reviewing news related to Article 44
- Do not equate the principle of the constitution with the executive law. Article 44 states the general framework, and the policy implementation law has more details.
- Don’t equate handover with competition. A change of ownership alone does not mean the end of a monopoly.
- Don’t consider the surrender amount as the only measure of success. Company performance, investment, production and service quality are also important.
- Pay attention to the type of company and its activity. The regulations and considerations of all economic activities are not the same.
- Check the valid and current version of the law. The Law on the Implementation of General Policies of Article 44 has been amended over time.
- Separate ownership from governance responsibility. Handing over a company does not necessarily eliminate the government’s regulatory and supervisory duties.
summary
Article 44 of the Constitution defines Iran’s economic system based on three sectors: public, cooperative and private. General policies promulgated to implement this principle include issues such as increasing productivity, developing the non-governmental sector, strengthening cooperatives, and reducing government economic entrepreneurship. The policy implementation law also determines the rules for economic activity, competition and transfer of enterprises.
Article 44 should not be considered as the equivalent of privatization. The quality of concessions, competition conditions, prevention of monopolies, performance of enterprises and preservation of public interest are all important in evaluating its implementation. Changing ownership is only part of the process; The result should be weighed according to the economic and social consequences.
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