country programming framework for inclusive and ...€¦ · country programming framework for...
TRANSCRIPT
COUNTRY PROGRAMMING FRAMEWORK
FOR INCLUSIVE AND SUSTAINABLE INDUSTRIAL DEVELOPMENT
TIME FRAME 2017- 2021
This Country Programming Framework (CP) is designed to enhance UNIDO’s support to the Government of the
Islamic Republic of Iran to implement a road-map towards Inclusive and Sustainable Industrial Development (ISID)
as stated in the Lima Declaration adopted on the 2 December 2013 during the 15th session of General Conference of
UNIDO. In doing this, UNIDO has aligned the priorities for the Islamic Republic of Iran to the 20-year vision
document and the sixth 5-Year National Development Plan for the 2016-2021 period, and to outcomes being proposed
by the UNCT for the new UNDAF, building on the achievements of past projects and programmes. As industrialization
is a long-term endeavor involving many stakeholders, efforts will be made to strengthen synergies and minimize
duplication by collaborating with development cooperation partners, state and non-state actors, including the private
sector in the country. The proposed CP is a framework of UNIDO’s possible contribution to the industrial
development efforts of the Government of the Islamic Republic of Iran. As a framework based on established
national priorities, it will be a useful guide for UNIDO’s interventions in The Islamic Republic of Iran over the next
years.
On behalf of Government of
Islamic Republic of Iran Mohammad-Reza Nematzadeh ______________ _____
Minister, Ministry of Industry, Mine & Trade Signature Date
On behalf of UNIDO LI Yong _____________ _____
Director General Signature Date
2
Acronyms
ADB Asian Development Bank
CAREC Central Asia Regional Economic Cooperation
CP Country Programme
CPAP Country Program Action Plan
CSP Country Strategy Paper
DaO Delivering as One
ECO Economic Cooperation Organization
EU European Union
FAO Food and Agriculture Organization
FDI Foreign Direct Investment
GDP Gross Domestic Product
GEF Global Environment Facility
GOI Government of Iran
GOI Government of the Islamic Republic of Iran
GVCs Global Value Chains
HDI Human Development Index
IDA International Development Association
IFCO Iran Fuel Conservation Organization
IMF International Monetary Fund
IRI Islamic Republic of Iran
ISID Inclusive and Sustainable Industrial Development
ITPO Investment and Technology Promotion Office (UNIDO)
ITSR Institute for Trade Studies and Research
JCPOA Joint Comprehensive Plan of Action
LDCF Least Developed Country Fund
M&E Monitoring and Evaluation
MENA Middle East and North Africa
MSMEs Micro Small and Medium Enterprises
PA Preparatory Assistance
PPP Purchasing Power Parity
PTC Programme Development and Technical Cooperation Division
RE Renewable Energy
RECPs Resource Efficient and Cleaner Production
SAARC South Asian Association for Regional Cooperation
SDGs Sustainable Development Goals
SMEs Small and Medium-sized Enterprises
SSC South- South Centers
TCB Trade-Capacity Building
UN United Nations
UNCT United Nations Country Team
UNCT UN Country Team
UNDAF United Nations Development Assistance Framework
UNDP United Nations Development Programme
UNIDO United Nations Industrial Development Organization
UNRC United Nations Resident Coordinator
WB World Bank
WTO World Trade Organization
3
TABLE OF CONTENTS
EXECUTIVE SUMMARY ........................................................................................................................ 4
1. Country situation analysis .................................................................................................................. 5
1.1. The National Context .................................................................................................................. 5
1.2. UN Coordination Framework .................................................................................................... 6
1.2.1. Environment ............................................................................................................................ 7
1.2.2. Health ....................................................................................................................................... 7
1.2.3. Resilient Economy ................................................................................................................... 8
1.3. Industrial Development Challenges .......................................................................................... 8
2. Past Cooperation and Lessons Learned .......................................................................................... 15
3. Iran Country Programme 2017-2021 .............................................................................................. 17
3.1. Component 1 Policy: elaborate sector specific industrial policies contributing to
international environment targets, financially and environmentally sustainable industrial
development and job creation .............................................................................................................. 20
3.2. Component 2 Market: enhance competitiveness, market access and export ...................... 21
3.3. Component 3 Partnership: establish networks for knowledge sharing and building
partnerships at the regional and international level .......................................................................... 23
3.4. Component 4 Environment: promote environmentally sustainable industrial development
through green industry, waste management, resources management, energy efficiency, systems
optimization, and most importantly a behaviour change .................................................................. 24
3.5. Component 5 Job creation: create job opportunities in MSMEs ......................................... 25
4. Management Framework ................................................................................................................. 26
4.1. Programme Management ......................................................................................................... 26
4.2. Programme Implementation and Coordination ..................................................................... 26
4.3. Monitoring and Evaluation ...................................................................................................... 27
4.4. Risks and Mitigation Measures ............................................................................................... 28
4.5. The Legal Context ..................................................................................................................... 29
5. Indicative budget and fund mobilization strategy ......................................................................... 29
5.1. Indicative budget ....................................................................................................................... 29
5.2. Fund mobilization strategy ...................................................................................................... 29
ANNEX I: Ongoing UNIDO Programmes in Iran (as of November 2016) .......................................... 32
ANNEX II: PROPOSED PROJECT INTERVENTIONS .................................................................... 33
ANNEX III. RESULTS FRAMEWORK FOR THE COUNTRY PROGRAMME ........................... 39
ANNEX IV: Gender Checklist ................................................................................................................. 47
4
EXECUTIVE SUMMARY
Drawing on UNIDO’s experience and its understanding of international developments, and drawing also
on the outcome of the Programming Mission to Iran in May 2016, and in the light of discussions with
national authorities, the following are the proposed five components around which the Country
Programme is structured, with the title “To promote Inclusive and Sustainable Industrial
Development in Iran (2017-2021)” with a total budget of US$ 43,379,077 of which US$ 22,908,777 are
already mobilized.
Component 1: Policy: assist the Government of Iran to elaborate sector-specific industrial policies that
are financially sustainable and cost-effective and that contribute to national/international environmental
targets, sustainable industrial development, and job creation;
Component 2: Market: enhance enterprise competitiveness, market access and export;
Component 3: Partnership: establish networks for knowledge sharing and building partnerships at the
regional and international level;
Component 4: Environment: promote an environmentally sustainable industrial development through
green industry, waste management, resources management, energy efficiency, systems optimization, and
most importantly a behaviour change; and
Component 5: Job creation: create job opportunities.
5
1. Country situation analysis
1.1. The National Context
Islamic Republic of Iran is a
country of plateaus and mountains,
dominated by the Alborz
Mountains in the north, and the
Zagros Mountains along its
western borders. It has the second
largest population of the Middle
East and North Africa (MENA)
region after Egypt, with an
estimated population of nearly 80
million. The central and eastern
portion is covered by the Plateau of
Iran. The most significant river is
the Karun, in the southwestern
corner of the country. Lake Urmia
(in the far-northwest) is the
country's largest body of water.
Iran (Islamic Republic of)’s
Human Development Index (HDI)
value for 2014 is 0.766, which put
the country in the high human
development category, positioning
it at 69 out of 188 countries and
territories. Life expectancy at birth
increased by 19.9 years, mean
years of schooling increased by 5.7
years and expected years of
schooling increased by 6.5 years.
Iran’s Gross National Income (GNI)
per capital increased from US$ 38.416 Trillion in 1996 to US$ 113.293 Trillion in 2015.
Iran is the second largest economy in the region, with an estimated Gross Domestic Product (GDP) in
2015 of US$ 393.7 billion. Iran’s economy is characterized by a large hydrocarbon sector, small-scale
agriculture and services sectors, and a significant state presence in manufacturing and financial services.
Iran ranks second in the world in natural gas reserves and fourth in proven crude oil reserves. Economic
activity and government revenues still depend to a large extent on oil revenues.
The Iranian authorities have adopted a comprehensive strategy encompassing market-based reforms as
reflected in the government’s 20-year vision document and the sixth 5-Year National Development Plan
for the 2016-2021 period.
The sixth 5-Year National Development Plan is comprised of three pillars, namely:
1. Development of a resistance economy,
BASIC KEY INDICATORS
Population
as of 2016
79,816,397
Equivalent to 1.08 per cent of the total world
population
73.7 per cent of the population is urban (59,443,534
people in 2016)
The median age in Iran is 30.1 years
GDP per Capita US$ -
2016
5936.54
Income group MIC, upper
Economic growth in
per cent
4.3 per cent (IMF 2015 est.)
Origin of GDP1
%
Agriculture: 9.3%
Industry: 38.4%
Services: 52.3% (2015 est.)
Main natural resources petroleum, natural gas, coal, chromium, copper, iron
ore, lead, manganese, zinc, Sulfur
Main production Petroleum, petrochemicals, fertilizers, caustic soda, car
manufacture, parts, pharmaceuticals, home appliances,
electronics, telecom, energy, power, textiles,
construction, cement and other construction materials,
food processing (particularly sugar refining and
vegetable oil production), ferrous and non-ferrous metal
fabrication, armaments
Competitiveness index 74 GCI
Trade Exports: petroleum (80 per cent), chemical and
petrochemical products, automobiles, fruits and nuts,
carpets
Imports: industrial raw materials and intermediate
goods (46 per cent), capital goods (35 per cent),
foodstuffs and other consumer goods (19 per cent),
technical services
Main trading partners China, India, Turkey, Japan, Republic of Korea
Employment Rate 89,4
SDG/2030 Agenda
indicator
SDG-4, SDG-5, SDG-8, SDG-9, SDG-17
6
2. Progress in science and technology and
3. Promotion of cultural excellence.
On the economic front, the development plan envisages an annual economic growth rate of 8 per cent and
includes the implementation of reforms of state-owned enterprises, the financial and banking sector, and
the allocation and management of oil revenues among the main priorities of the government during the
five-year period. The Government continues to play a key role in the economy with large public and
quasi-public enterprises dominating the manufacturing and commercial sectors.
Sanctions and a tight embargo in the past have had an impact on technology transfer and on technical
assistance, particularly in the energy and manufacturing sectors. However, oil and financial sanctions on
Iran were lifted on 16 January 2016 and roughly US$ 100 billion of its assets were released, after
international inspectors concluded that the country had followed through on promises to dismantle large
sections of its nuclear programme. In the light of this development, the opportunity for strengthening
UNIDO technical cooperation engagement with Iran is increasing. The Country Programme for Iran will
also strengthen UNIDO’s cooperation and synergy with other parts of the UN system, thus contributing to
an Inclusive and Sustainable Industrial Development.
The Government of the Islamic Republic of Iran can look at UNIDO as a key partner for sustainable
industrial development, in the light of its neutrality in the international arena, its international expertise,
and its good knowledge of Iran and its industrial infrastructure.
As noted, the Iranian state continues to play a key role in the economy; large public and quasi-public
enterprises dominate to some extent the manufacturing, commercial and banking sectors. Although Iran
has improved its position, the business environment remains restrictive, with Iran ranking 130 out of the
189 countries surveyed in the 2015 Doing Business report.
1.2. UN Coordination Framework
UN system in Iran, in cooperation with the Government of Iran (GOI), civil society and the private sector
have developed the United Nations Development Assistance Framework (UNDAF). The document has
been signed between the Government of the Islamic Republic of Iran and the United Nations Country
Team in January 2016.
This is a strategic framework document for cooperation between the Government of the Islamic Republic
of Iran and the United Nations for the period 2017-2021, providing broad guidance for coordinated, and
more detailed, planning and implementation of specific UN agency work programmes in partnership with
the GOI.
The UNDAF outcomes are presented under four pillars, i) Environment, ii) Health, iii) Resilient Economy,
and iv) Drug Control.
The primary role of UN development agencies in Iran is not to deliver services directly, but rather to
support GOI initiatives to deliver development services and benefits more effectively for the Iranian
people. The main measure of the UN system’s success is therefore the extent to which UN support and
advice has been accepted and used by partner GOI agencies.
The UN’s common implementation strategies are as follows:
Supporting GOI in developing its institutional capacities,
Supporting the GOI in achieving multi-disciplinary approaches to development,
Suggesting policy advice and providing technical expertise,
Supporting knowledge generation and sharing of best practices,
7
Facilitating south-south cooperation.
The following are the framework principles of the collaboration between the GOI and UN in the
implementation of this UNDAF:
The principle of national ownership shall underpin all UN programmes of cooperation in Iran. All
programmes, projects and activities thereof should contribute to the national development policies and
priorities of Iran.
The GOI is the prime partner of the UNCT. Subject to the agreement of the GOI partners and under
their responsibility, other partners such as officially-registered civil society organizations and the
private sector may also contribute to the implementation of the programme.
Formulation and implementation of all programmes and projects shall fully respect the cultural, social,
ethical and religious values of the Islamic Republic of Iran.
Using only official data/information/statistics as the point of reference.
The UN system in Iran and Iranian partners will continue to work together in the spirit of mutual respect
and partnership. It is assumed that the UN system in Iran is resourced to carry out its core functions and it
is expected to mobilize additional resources as required to implement specific development programmes.
The GOI takes leadership in implementing and sustaining the identified institutional capacity
improvements (at policy and programme implementation levels) where the UN system has been asked to
provide support. It is important to provide key official data to the UN system in a timely manner to
facilitate the effective planning, monitoring and evaluation of programmes of collaborative work.
1.2.1. Environment
The Environment pillar encompasses two outcomes: i) Integrated natural resource management, and ii)
Low carbon economy and climate change.
The state of the natural environment is of global concern. Economic development has often come at a
high environmental cost, and it is increasingly recognized that sustainable economic development now
depends more and more on protecting and conserving key environmental assets. Because of Iran’s dry
climate, rapid urbanization and high economic dependence on oil and gas production, it faces some
particularly acute environmental challenges, including water resource scarcity and desertification, which
are expected to be compounded by ongoing climate change. Also, Iran’s energy use intensity and per
capita CO2 emission levels are among the highest in the world. High levels of air pollution are
experienced in Iran’s major cities. In order to de-carbonize its economy, the GOI has adopted a low-
carbon economy approach to improve energy efficiency in residential, industrial, transport and urban
systems as well as the application of renewable energy. These greenhouse gas mitigation options will also
produce economic benefits if energy is used more efficiently. Iran can also increase the share of solar,
wind and geothermal in its energy mix.
1.2.2. Health
The Health pillar encompasses four outcomes: i) Universal Health Coverage, ii) Prevention and control of
Non-Communicable Diseases, iii) Prevention and control of HIV/AIDS and other Communicable
Diseases, and iv) Promoting health throughout the course of life.
Iran’s health system is generally cited in WHO and global health literature as one of the most robust in
the world, drawing its strength from its pioneering and well-established primary health care system,
which emphasizes equity, community and inter-sectoral participation. The primary health care system is
the foundation of the country’s good national health indicators.
8
1.2.3. Resilient Economy
The Resilient Economy pillar encompasses seven outcomes: i) Inclusive growth, poverty eradication and
social welfare, ii) Food security, sustainable agriculture and improved nutrition, iii) Sustainable
urbanization, iv) Natural disaster management, v) Sustainable employment, vi) Population and
development, and vii) Sustainable tourism and cultural heritage.
Inclusive growth, poverty eradication and social welfare: The past few decades have witnessed a solid
reduction in absolute poverty in Iran. However, inequality on the Gini scale still stands at around 0.36.
Despite the significant improvement in living standards across the country, the gap between the leading
and lagging regions in Iran has widened since the early 1990s. Of particular concern is child poverty,
given that children are disproportionately represented in poor households. Preventing the persistence of
disadvantage across generations is a crucial investment in the country’s future, with long-term benefits for
children, the economy and society as a whole.
Food security, sustainable agriculture and improved nutrition: There have been major improvements
over the last three decades in reducing food insecurity in Iran. Since the 1990s, the number of people
suffering from hunger has steadily declined. However, there are serious environmental issues in
agriculture, as noted above under section 1.2.1, Environment. Iran is facing growing warnings that its
deteriorating water supply could eventually undermine its food security. The agricultural sector uses the
major proportion of Iran’s water. Sustainable management of water supplies will be needed, as will
investment in more sustainable agricultural production practices generally.
Sustainable urbanization: The urban population of Iran has increased from in the last years to more than
double. Tehran is expected to reach the 10 million megacity threshold around 2030. Urban living offers
many potential advantages over life in rural areas, in particular access to a wider range of employment
opportunities and services. However, rapid urbanization can also cause huge challenges, including with
respect to environmental problems (air pollution and waste disposal), high energy consumption and CO2
emissions, urban poverty, and growing demands for essential infrastructure (including adequate housing,
transport, water supply and sanitation, health and education facilities). Policy making and planning for
sustainable urban development require on-going strengthening.
Sustainable employment: The official unemployment rate in Iran reached 10.6 per cent in 2014, up from
10.4 per cent in 2013. The GOI estimated that 8.5 million additional jobs were required in the following
two years to reduce the unemployment rate to 7 per cent by 2016. Around 62 per cent of the unemployed
in Iran are young people (15-29 years old) and tackling this is a particularly pressing policy issue. The
combination of a “youth bubble” in the demographic pyramid, the increased level of education among
youth and the economic crisis and recession represent a very complex situation to address through proper
policies. Although the overall unemployment rate is 11 per cent, the unemployment rate among youth is
26 per cent. This rate among young educated women is more than 50 per cent.
Sustainable tourism and cultural heritage: The rich culture and heritage of Iran provides significant
potential for the development of the tourism sector. Iran currently has 19 inscribed UNESCO Cultural
World Heritage Sites as well as 10 elements of intangible cultural heritage, with 27 more sites having the
potential to be added to these two lists. Recognizing this potential, Iran has set a target of attracting 20
million foreign tourists in 2025. Achieving this target will require close cooperation between the Iranian
Cultural Heritage, Handicraft and Tourism Organization (ICHTO) and the various public and private
stakeholders involved in the tourism sector. Enhanced policies for sustainable tourism need to be
developed, institutional capacities need to be built, and cultural industries need to be effectively promoted.
1.3. Industrial Development Challenges
After 37 years of international isolation, sanctions, embargo and troubled relationship at regional and
international level, Iran is confronting a new and equally challenging scenario. After the signature of the
Joint Comprehensive Plan of Action (JCPOA) in July 2015 and the official removal of sanctions in
9
January 2016, foreign government officials, multinational, private companies, investment banks as well
as tourists are flocking into Iran, opening up immense opportunities, but also calling for major strategic
decisions.
Furthermore, Iran is aiming to join WTO which has long-term implication for the structure of Iranian
economy. While joining WTO would facilitate foreign direct investment, productivity increase, transfer
of knowledge and technologies to Iranian manufacturers, enhancement of R&D capacity and innovation
etc., Iranian manufacturers might be exposed to competitions from imported goods and thus its share in
domestic market might be threatened due to removal of trade barriers.
This is indeed a big challenge for the Iranian government, at stake there are the cultural, economic and
environmental integrity of Iran and its population.
The CP mission has identified eight key challenges facing the industrial sector, and these can be
summarized as follows:
1. Upgrade the existing industrial base by improving productivity and quality, and by promoting
innovation and diversification; develop a new industrial base ready to meet the challenge of
international markets;
2. Upgrade technical and management skills;
3. Boost market access and integration to regional/international value chain and markets;
4. Safeguard the environment through improved use of natural resources and energy efficiency,
minimize industry and agriculture resource depletion and environmental degradation;
5. Assure a sustained and sustainable industrial growth and resilience, through technological
development and innovation;
6. Develop cost effective industrial policies that integrate industrial development, job creation and
environmental impact;
7. Ensure competitiveness by optimizing infrastructures, support services, and the administrative
framework for businesses; and
8. Monitor and evaluate existing policies, support enforcement, assess impact and cost effectiveness,
and propose corrective measures.
Below, each of these challenges are discussed briefly. UNIDO, being an UN specialized agency and
drawing on its best added value experience. UNIDO has a long tradition and experience can be a reliable
and independent partner for the Iranian government.
Upgrade the existing industrial base by improving productivity and quality, and by promoting
innovation and diversification; develop a new industrial base ready to meet the challenge of
international markets.
Iran’s rankings in the Global Competitiveness Report, from 2012 to 2015, were respectively 66th, 82
nd,
83rd
and 74th. As a resource-based economy Iran has been affected by the international economic outlook
and particularly by the drop in raw material prices, and also by decreased productivity and reduced
competitiveness.
In the period of political isolation, the Iranian economy developed in a semi-autarchic form. Government
intervention is still very strong in support of national industry, and this has led to a semi-monopolistic
market that ultimately has undermined the capacity of the Iranian industry and services sector to develop
in a “healthy” manner. The Iranian economy, cut off from commercial relationships with the global
10
economy, was not large enough to develop in isolation, either on the demand or on the supply side. In
addition, sanctions and embargos exacerbated the situation.
Given this background, the industrial sector faces two challenges. Firstly, industrial policies developed
during the period of isolation are no longer appropriate for the industrial sector today. Secondly, although
sanctions have been lifted, their shadow remains; foreign governments and foreign partners are still
hesitant about investment in Iran, and Iranian entrepreneurs and policy-makers also need time to adjust to
a new way of doing business. It will take time before the system is back to normal.
In fact, despite the new conditions, the economic recovery in Iran is progressing slowly and uncertainly,
and it is taking longer than expected to show the concrete impact than Government expected.
However, the recent sharp change in the external environment will allow more government flexibility at
the macro level, not only through access to the frozen funds abroad but also through the increased oil and
gas revenues expected in the future.
The GOI has various tools to upgrade the existing industrial base, and to develop a new one. These can be
summarized as follows:
- State intervention: the present industrial policies were developed initially during the sanctions,
embargo and political and economic isolation. The GOI struggled to develop and keep alive an
industrial infrastructure that had developed, as mentioned earlier, in isolation and in a semi-autarchic
form. Ultimately, the GOI succeeded in ensuring good living standards for its population of 80 million. However, it is obvious that, under the new circumstances, with new approach the state will focus its
attention on setting the broad guidelines and seeing that they are followed.
- Competitiveness: given fragile economic recovery, increased competitiveness must be the driver for
improving productivity and boosting economic growth and resilience, as indicated by the Supreme
Leader in his “resistance economy” plan. To promote competitiveness the GOI must step back from its
direct intervention in various industrial sectors, free up semi-monopolistic markets and release the
potential of the economy as a whole.
- Quality: Some constraints will be addressed by the lifting of sanctions but, in order to improve export
performance, more focus is needed on quality upgrading, both in products and processes. The close-
related question of standards needs also to be addressed; dissemination, implementation and
enforcement of standards, and participation of Iran in international standard setting, are a priority.
- Skills: developing and putting in place the right skills is essential for resolving productivity and
competitiveness concerns, higher education sector can now be reversed and this will improve the skill
base for the industry of the future. Furthermore, an economic upturn and improved business
opportunities will encourage some emigrants to return and may also stimulate investment from
Iranians abroad.
- Productivity: despite the fact that the latest investment trends in Iran show a tendency towards the
capital-intensive, instead of the labor-intensive as in the past, productivity has not increased in the last
decades, and it might take some time before it shows consistent sign of recovery. Increasing
competitiveness in the future will require shifting from a resource-based to an innovation-based
economy. To do so it is essential to establish new linkages and partnerships with the global market,
particularly through FDI. In this context, linking Iranian enterprises to global value chains could be the
best and most cost-effective solution.
- Value chain: policy makers have been focusing their attention on general economic policy, with a
focus on macro-economic elements such as fiscal, monetary and exchange rate policies. Therefore, in
view of the need for inclusive and sustainable growth, UNIDO assistance can focus on elements new
to Iran, such as value adding and value chain management, in order to meet global market demand,
11
generate quality jobs, and bring about high added value chains and growth in sectors that have higher
multipliers.
Upgrade technical and management skills
The workforce in Iran is relatively young and is being added to rapidly. New jobs should come from a
general boost to the economy given by the removal of sanctions, from increased foreign direct investment,
and from the expansion of services and tourism. For manufacturing, the biggest share of new jobs is likely
to result from the growth of the Micro Small and Medium Enterprises (MSME) sector. The targeting of
the MSME sector will come in policy terms as much as in institutional development and support
programmes. Policy has to take account of MSMEs more than other parts of the economy because
MSMEs usually have no access to government and usually do not have the power to lobby for decisions
in their favour.
The implementation of a skill development programme for educated youth, in the context of a structural
transformation of the industrial and services sectors in Iran, can be part of a solution strategy to address
youth employment. Also, the development of high added value jobs in sector such as automotive, IT,
tourism and agro-industries could be part of this strategy, and fall under UNIDO’s mandate. In this
regard, Iran has also to overcome an outdated concept of education focusing on the academic perspective,
and characterized by weak connection with the production sectors. Besides the difficulty of connecting
R&D in the university with the industrial and services sectors, there is an evident mismatch between the
demand for skills and those on offer. Diversification of the economy should include not only the
development of a range of industrial sectors but also more focus on MSMEs.
MSMEs will contribute to the diversification of the economy in many ways. Firstly they are likely to have
a broader sectoral spread, secondly they tend to be more labour-intensive, and since they have a small
numbers of employees, any MSME based economy will respond rapidly in employment terms to any
upturn. The sixteen special economic zones represent recognition of the importance of regional
diversification of the economy also, and this should be followed up by more comprehensive programmes
of support to MSMEs. This support would not necessarily be in capital terms, but it could include
selective taxation changes and also a reorganisation of the industry-led training schemes. The
Government should develop a comprehensive “Business Enterprise and Employability” programme
(BEE) for MSME, as they represent 96.5 per cent of all enterprises in Iran. Despite the fact that MSMEs
also employ 85 per cent of the total labour force and their share of GDP has increased, the business
environment is yet to be supportive.
Innovation is the core for long-term economic development. This is a rather complex programme to
develop and will need significant government support. A country innovation programme, both at national
and regional level, addressing key priority sectors in Iran, could be the best tool to promote innovation
policies, the innovation environment and behaviour across MSMEs and sectors, UNIDO could play an
important role through the science and technology park programme and its extensive network of
technology clusters.
In this regard, UNIDO has implemented a cluster development programme in Iran from 2005 to 2010,
including a number of industrial clusters and policy development activities. As a result, Iranian policy
makers and enterprises are familiar with the concept of a cluster and this concept is well integrated into
Iranian policies and regulations. However, innovation clusters are a new concept that UNIDO should
promote through the private sector as well as with Government and policy makers.
Boost market access and integration to regional/international value chain and markets
Iran is still a rather closed economy. Full participation in global value chains represents a step change
from the existing semi-monopolistic positions and will require concerted efforts. Trade openness must
12
continue to be pursued as a goal by administrative action, trade promotion, improvement in procedures
and trade facilitation and quality upgrading. Since it will not be possible to promote all sectors equally in
every possible source of foreign direct investment, a strategy should be developed that identifies the key
sectors for promotion and determines the resources to be allocated to them. Business partnerships with
third level institutions will also be critical offerings if Iran is to insert itself into global value chains.
Consideration should be given also to partnerships with other countries, either with those at an advanced
technological level, or with those at an intermediate level that complements the range of skills and
companies available in Iran.
Trade facilitation: the processes for goods and services move in and out of Iran need to be carefully
scrutinised, since they will determine how quickly and at what price Iranian companies can compete on
world markets and can secure their raw materials and equipment in a timely way. Thus aspects of
industrial standards, quality, customs administration and the role of different state agencies and inspection
bodies all need to be streamlined and improved as quickly as possible.
Trade-related services: Increasingly a large range of services are drawn upon for manufacturing to supply
its clients abroad. These include not only transport and logistics, inspection services and quality assurance,
but also a range of financial services such as credit insurance and foreign exchange facilities, together
with trade-based lending, and other services. The reluctance of the international banking system to
become involved in Iranians business operations is a concern in this regard.
Iran has an existing law since 2006 that defines the conditions under which foreign direct investment can
take place. A review of this legislation is needed to make sure that it is fit for purpose. For instance, their
might be a need to simplify further the processes of labour and capital movements or to elaborate on a
dispute resolution mechanism. The role of investment promotion needs to be developed and expanded.
The establishment of a UNIDO ITPO will be one step, but other steps may also be needed. The
restrictions on the operation of international banks operation in Iran will need to be reviewed.
Iran’s foreign direct investment share of the economy is low in comparison to other countries of similar
size and location. However this will certainly change with the increased investment activity, and will have
the effect of allowing more trade openness. Recent data indicates that exports are becoming more
diversified, but this is mainly because of the decline in oil exports, which has exaggerated the importance
of other products.
Safeguard the environment through improved use of natural resources and energy efficiency;
minimize industry and agriculture resource depletion and environmental degradation
In the recent years, again due to the economic and political isolation, the GOI has had to push economic
development beyond a sustainable level. As a consequence, agriculture and industry, including the
construction sector, have been depleting Iranian natural resources at an unprecedented pace, with little
concern about cost effectiveness and long term effects. This is translating into an environmental debt that
will be very expensive to pay back. Desertification, salinization of land and water, erosion, sand and dust
storms, pollution of soil and water, urbanization, and loss of arable land, are all affecting vast areas of the
country. All these factors are precluding a future development based on high added value agriculture,
agro-industry, and tourism.
Land management, planning, monitoring, and enforcement must be part of future policies to prevent
natural resources depletion.
Agriculture plays an important role in the Iranian economy, accounting for about 11 per cent of GDP and
23 per cent of the labour force. Apart from a few large enterprises in the food industry, the downstream
processing landscape is dominated by a multitude of small and micro-enterprises operating in the local
context.
13
Agro-industry in Iran suffers from three main weaknesses:
- A very large number of micro and small-enterprises lacking the human, technical and financial
capacity to step into higher added value markets.
- A relatively long value chain, with a disproportionate number of dealers between producer and
consumer. Technical, cultural and logistical problems preclude the access of producers to the end
market.
- A supply-based market, often creating considerable mismatching between demand and offer.
Besides this structural problem in the agro-industry sector, Iran is affected by even greater challenges in
terms of land and water management that seriously undermine the sustainability of agriculture and agro-
industry activities.
The agro-industry problem is a complex one and has multiple connections with rural employment,
urbanization, land degradation, food security, country self-sufficiency in terms of food supply, etc. A key
issue is water, whose scarcity is a limiting factor on the growth of the sector.
Some diversification of energy supply has also taken place, away from oil and hydrocarbons: there is
considerable foreign direct investment interest in photovoltaics and large-scale solar and wind farms.
These developments not only offer additional growth possibilities for indigenous companies but also
wider opportunities in the production of core technologies. Diversification of energy supply in this way
will not only give a boost to manufacturing but will also meet the government's wider concerns for
diversification of the economy as a whole and will ensure that any additional oil production achieved will
contribute to meeting the government’s foreign exchange requirements.
With regard to energy efficiency in industry, building and transportation remains the more cost efficient
and rapid way to fix the energy problem in Iran. We have to keep in mind that Iran will see fast growth
during the next few years, and this will need to be backed up by additional energy. However, if this
growth is based on old and energy-inefficient technologies and policies, these factories, buildings and
vehicle will keep consuming more energy that they should for many years to come, aggravating the
energy problem in Iran.
It is vital for Iran to set, monitor and enforce energy efficiency policies in industry, building and
transportation. This will have a very positive feedback on employment, industrial development, and
growth and prosperity generally, it will make available greater volumes of oil and gas for export, and it
will reduce the negative environmental effects of economic activity.
Assure a sustained and sustainable industrial growth, and resilience, through technological
development and innovation.
A technology foresight exercise is being conducted in Iran for providing a starting point for development
of technology policy keeping in view the key technological global advancement. Good understanding of
the industrial base and assessment of inventory of the existing technology resources, including institutions,
people and their levels of competence. Once this has been done, it will be possible to make a logical
allocation of resources to the difference technologies identified. In practice, this means determining which
universities should have what kinds of research facilities and what kind of education and training courses,
and which industries should be encouraged to undertake their own research and development and how.
While this would be a government-led initiative, the exercise should include a full participation by
industry and international expertise.
Government resources will however be constrained in the future for investment in such areas and this can
be compensated through the provision of specific incentives and the modification of the tax code to
encourage investment in business R&D.. Indigenous technological development, including high-tech
14
start-ups and research oriented projects should be encouraged. Finally, particular attention must be paid to
intellectual property rights by devising a legal framework for innovation in Iran. Without protection of
intellectual property, this will deter indigenous innovation and will make it much more difficult to attract
the kinds of FDI or technology under license that are required.
Develop cost effective industrial policies that integrates industrial development, job creation and
environmental impact.
Actual industrial policies and industrial infrastructure in Iran were developed during the war with Iraq and
the years of sanctions, embargo and political and economic isolation. It goes without saying that the new
conditions need a different set of tools to address industrial development, environment protection and job
creation in Iran.
To begin with, the broad impact of different aspects of government policies needs to be assessed,
including areas that are the responsibility of other ministries apart from the Ministry of Industry. This
essentially means a review of national competitiveness, as distinct from the competitiveness of individual
firms. All the key policy areas that affect business, R&D, innovation, export, subsidies, etc. need to be
comparatively assessed and addressed, through good coordination between different ministries. If the
broad competitiveness agenda is pursued in a comprehensive and consistent way, the industrial sector will
then be able to contribute much more to employment generation and regional development.
The competitiveness agenda is one that is very close to the heart of businesses; if they are to succeed in
the market, they need to be quicker, more cost-effective, and more innovative than companies in the same
market. The domestic market is no exceptions; if Iran is going to open the door to foreign technologies,
and investment, it is also opening the door to more competition. If it wants to increase exports, it will also
have to open its markets to more imports. But this also means that if domestic industries do not catch-up
in terms of quality and efficiency they will lose also their domestic market share.
Ensure competitiveness by optimizing infrastructures, support services, and administrative
framework for businesses.
Policies need to ensure that costs of key inputs, such as power, telecommunications, rents, wages, tax,
custom duties, etc. are in line with international levels and in any case do not undermine the ability of
Iranian enterprises to compete internationally, or to compete against imports on the domestic market.
Careful government oversight and regulation are needed to ensure that businesses, and consumers, do not
pay the price for inefficient management and low productivity.
According to the World Bank's Doing Business survey, Iran does not rank very highly. There are several
key policy areas in this regard, in some of which the Government is already taking action:
- Permissions/Licenses: delays in administrative interactions between business and public
administration impose costs on business. Such burdens are particularly costly for SMEs, associated
with this are the costs of corruption, according to Transparency International, Iran has problems in this
regard.
- The Government is promoting a “Business enabling environment” programme, which is focusing on
the management of the number and duration of Business Licenses development is not addressing
sustainability and quality of business development.
- E-governance should be considered in an administrative burden reduction programme in Iran. This
would reduce costs for business and government, also enabling better cooperation across government
departments, and giving better insights to policy makers of what is happening in the economy.
Telecommunications: this has developed efficiently and successfully in Iran, with both 3G and 4G
15
widely available in the main business areas and considerable take-up of smartphone usage. This means
that businesses, especially SMEs, have basic services available. The rollout of FTTH will also be
critical for improving the framework conditions for industry. For MSME’s access is also very
important, both for e-commerce and for market and technology information needs.
- Government procurement: although generally considered as an obstacle to international trade and
competition can be used as a more refined tool of policy. The most common practice is to use it to
favour small business, by specifying that a specific proportion of the contract in question is to be
fulfilled by small businesses; it can also be used to encourage innovation in industry, by including
specific requirement on the selection criteria for the award of the contract.
Monitor and evaluate existing policies, support enforcement, assess impact and cost effectiveness,
propose corrective measures.
As mentioned earlier, the changed business environment needs a change in the policy framework if the
market is to develop in a positive way. The proposals made above will need above all a change of
behaviour, brought about by a participatory process. This will need the involvement, and support, of civil
society, the private sector, legislators, academia, and so forth. The bases of a fair participatory process are
knowledge, awareness and scientifically based decisions.
Earlier we have also highlighted the interaction between industry, environment and employment. A
careful analysis of these three areas and the way they interact between each other will allow the
development of cost effective policies to maximize the benefits in all three areas.
2. Past Cooperation and Lessons Learned
As the specialized agency of the United Nations System that promotes industrial development for poverty
reduction, inclusive globalization and environmental sustainability, UNIDO endeavours to promote and
accelerate inclusive and sustainable industrial development in Iran. Linking the present situation with
UNIDO’s mandate and competences, several areas are of particular interest, including youth
unemployment, resources management, and environmentally and economically sustainable industrial
development. Since 2002, UNIDO has fostered a strong relationship with governmental institutions and a
wide-ranging presence in the country. UNIDO supports a diverse portfolio of development projects in
both rural and urban centres.
The Islamic Republic of Iran joined UNIDO in 1985 and the UNIDO Country Office opened in Tehran in
1999. Since 1963 UNIDO has implemented projects in Iran for a total value of US$ 78 million, the
present portfolio is about US$ 23 million. The composition of UNIDO’s projects in Iran has follows the
changes in industry internationally shifting from assisting the heavy industry sectors of the 1970s and
1980s, including pulp and paper, iron and steel, and fertilizers industries; to assisting the tertiary sector
developing in the 1990s and 2000s, including the agro-industry sector, SMEs development, market access
and trade capacity building, IT and environment related projects.
The Islamic Republic of Iran is home to one of the Field Offices of UNIDO. A total of 183 Projects have
been completed in the country since 1963, UNIDO’s official counterpart is the Ministry of Industry Mine
and Trade.
UNIDO has also developed straight line cooperation with multiple partners, among them: the Ministry of
Energy, Ministry of Oil, Department of Environment, Ministry of Jihad and Agriculture, Ministry of
Foreign Affairs, Ministry of Interior, and national financial institutions.
Within UNIDO, the cooperation among UNIDO TC division for projects development and
implementation and the simplified project approval process are significant steps towards more effective
16
and efficient services delivery. UNIDO’s internal processes are kept under continuous review to further
improve its capacity for support.
As agreed with the government of the Islamic Republic of Iran, the aim of UNIDO’s work is to support
Iran’s efforts in reducing social imbalance by creating employment opportunities, to add value to non-oil
related products, to promote sustainable development through the development of non-oil industries, and
to mitigate the environmental impact of industrial activities. Specifically, UNIDO works in four strategic
areas namely: Strengthening small and medium enterprises; Business environment improvement;
Modernization of agro/rural-based industries; and Resources efficiency and environmental and climate-
change related issues.
From the 1990s UNIDO has also assisted Iran in the implementation of international environmental
protocols, such as the Montreal Protocol for the protection of the ozone layer, the Stockholm Convention
for the management of persistent organic pollutants (POPs), and the Global Environment Facility (GEF),
for the reduction of greenhouse gasses emission. Most recently, UNIDO has extended the coverage of its
assistance to the implementation of the Minamata convention for the control of mercury emissions, and to
the compliance with greenhouses gasses emission targets agreed at the COP21 meeting in Paris in
December 2015.
With regard to the Montreal Protocol, with the assistance of UNIDO, the Government of Iran is one of the
first to meet the 2015 HCFCs phase-out target set by the Montreal Protocol. In an effort to integrate
ozone layer protection with climate change and industrial development, UNIDO has introduced
hydrocarbon technology in the production of polyurethane foam in Iran. This technology, besides
protecting the ozone layer, reduces the impact of polyurethane foam manufacturing on climate change,
because it is based on a very low Global Warming Potential (GWP). Further, this UNIDO activity has
also brought about job creation in Iran, since this technology and equipment are entirely manufactured
domestically.
In terms of strategy, from the implementation of UNIDO’s project, particularly in the area of energy and
environment, it is clear that technology is not the main barrier to fostering environmental sustainability
and industrial development in Iran. Rather, the barriers are in lack of awareness, financing at reasonable
interest rate, a semi-monopolistic market in many sector, and a consistent and strict implementation of
existing policies that hold back Iranian sustainable development.
In terms of awareness, there is the need for a change in production and consumption patterns in Iran.
UNIDO’s Energy Management System project, implemented with Iran Fuel Conservation Organization
(IFCO), within the GEF Industrial Energy Efficiency project has demonstrated that an Energy
Management System alone can deliver an annual 8 per cent of energy consumption reduction in key
industries, at nearly zero costs. Unfortunately, bad habits are usually entrenched and cultural changes take
time to emerge.
In terms of financing, when addressing global environment issues such as climate change, the size of the
tasks and problems are so big and complex that no government or international fund can confront the
problem. Pilot and demo projects, including the UNIDO/IFCO/GEF Energy Efficiency project in Iran
have demonstrated that the net unitary cost of interventions is small if not irrelevant, but the total cost is
nevertheless huge due to the size and scale of the sectors that are addressed.
Another case is that of solar water heaters for domestic uses, which noticeably reduce natural gas
consumption and thus greenhouses gasses emissions. These systems have very marginal costs. These
systems, in addition to saving energy, could be manufactured in Iran and would thus create long term
sustainable enterprises and jobs.
Some sectors in Iran are characterized by semi-monopolistic markets. This indeed is not an incentive for
innovation and optimization, holding back private companies that could deliver better services at a lower
cost. In the end, businesses and consumers pay the price for inefficient management and low productivity.
17
In the years ahead UNIDO will assist the Government of Iran to assess the impact of energy and
environment policies on industrial development, jobs creation and environment, and establish the
foundations for the behaviour change and resource mobilization that is required to deliver sizeable
impacts and thus achieve inclusive and sustainable industrial development.
UNIDO is now at the forefront assisting Iran to comply with new challenges, within the Sustainable
Development Agenda approved in September 2015 by all member states of the United Nations. UNIDO
will work together with the Government of Iran to contribute to the achievement of SDGs and, in
particular, two of the seventeen Sustainable Development Goals (SDGs): Goal 9, to build resilient
infrastructure, promote inclusive and sustainable industrialization and foster innovation; and Goal 13, to
take urgent action to combat climate change and its impacts.
The new five years plan 2017-2021, has a strong focus on environmentally and economically sustainable
industrial development and recognizes that international assistance is needed to develop adequate policies
and implementation strategies as well as to transfer the required technologies.
The tasks ahead are paramount, for the international community and for the Iranian people as well.
UNIDO’s assistance will meet the needs of the Iranian government in managing Inclusive and
Sustainable Industrial Development. Very complex challenges such as job creation, environmental
sustainability, market access, diversifying the economy from the oil sector, fostering resource efficiency,
and providing government subsidies, have to be integrated into a renewed industrial and social strategy
and policies that carefully balance costs and benefits to maximize the impact.
During the last 35 years, due to sanctions and the international political environment, the Iranian economy
has been isolated and developed at a slower pace than its potential. Today, after the signature of the
nuclear deal in July 2015, the Iranian economy is projected to grow at a fast pace for several years ahead
and therefore, strategic decisions made today will have a major impact in terms of resources and
environment exploitation, climate change and finally economic and social stability.
3. Iran Country Programme 2017-2021
UNIDO has a strong portfolio and is currently implementing 8 projects in the Islamic Republic of Iran.
During several high-level meetings with the Director General UNIDO, the Iranian counterparts expressed
the need to further strengthen the UNIDO TC programme in Iran. Received an official request from the
Iranian Ministry of Industry, Mine and Trade which expressed readiness to formulates a Country
Programme (CP). As a result, UNIDO fielded a programming mission in May 2016, which held a series
of meetings with various Government Ministries and related departments.
The purpose of the mission was to assess the country’s industrial development needs and opportunities,
and to discuss the outline and main components of a Country Programme for Iran with relevant
counterparts, stakeholders including private sector and potential counterpart institutions. Project level
discussions were also conducted with counterparts on implementation aspects of ongoing projects by the
project managers (PMs).
The collected data and information on the country situation, the development trends, and the current
development activities being undertaken by various development partners, was assessed, along with the
current UNDAF (2017-2021). On the basis of this assessment, the industrial development priorities for
UNIDO engagement in Iran were identified, leading to the formulation of the Country Programme.
The overall objective of the Country Programme is to provide support to the Government in achieving the
strategic goals set out in the 20-year vision document and the sixth 5-Year National Development Plan for
the 2017-2021 period and outcomes being proposed by the UNCT for the new UNDAF.
18
The identified components of the Country Programme are also in line with UNIDO’s Inclusive and
Sustainable Industrial Development (ISID) framework, in the form of programmatic interventions which
use industrial development to combat inequalities by providing increased and improved employment, but
which also transform production processes and promote business models to ensure a sustainable industrial
development.
Within the framework of the Government’s development policies and strategies as well as of the
upcoming UNDAF, the UNIDO Country Programme is aimed at supporting the industrial development
and economic transformation of Iran from a predominantly oil-based economy into one that is
industrialized and export-oriented. The design of the programme takes cognizance of four important
opportunities and challenges, and targets technical assistance to address them.
First, it is recognized that the country is at an important phase of economic development and international
outreach, combined with significant trade and investment opportunities arising from lifting of sanctions.
Supporting industrial development through policy advice, market access, value addition, technology
sharing, and networking would enable a trade-driven development opportunity.
Second, the geographic and socio-economic diversity, demographic advantage, availability of large
number of qualified young people with significant representation of women in the country necessitates an
approach that ensures that interventions are inclusive of all segments of the society. Rapid transformation
without due regard to the risk of leaving behind such segments of the population can lead to future social
injustices and threats of social instability.
Third, Iran is facing more and more environmental challenges, both from the ongoing and increasing
growth in the industrial and other economic sectors, and from the need to implement the commitments
from the Paris Agreement. Industrialization without due regard to sustainable consumption and
production and green industry will be unsustainable.
Fourth, the transformation from an economy based on oil production towards a more industrialized and
export-driven economy requires the acquisition and development of technological know-how and the
development of significant skills. Having had the growth of competitiveness and comparative advantage
disrupted over the years and having been cut off from technology exposure, Iran now has a deficit of both.
UNIDO’s interventions at all stages would build in human capacity development at the levels of
government policy makers, supporting institutions, and the private sector.
In light of these observations, aligned with the comprehensive strategy encompassing market-based
reforms reflected in the GOI’s 20-year vision document and the sixth 5-Year National Development Plan
for the 2017-2021 period, the Government and UNIDO have agreed on a Country Programme for
UNIDO’s activities in the country over the next five years.
This Country Programme recognizes that Iran has the physical and human resources to drive the
transformation of its economy, based on SMEs, through knowledge and technology transfer, market
access and dedicated policies. It is built around five pillars as follows:
1. Policy: assist the Government of Iran to elaborate sector specific industrial policies contributing to
international environmental targets, financially and environmentally sustainable industrial
development, and job creation.
2. Market: enhance enterprise competitiveness, market access and export performance.
3. Partnership: establish networks for knowledge sharing and building partnerships at the regional and
international level.
4. Environment: promote environmentally sustainable industrial development through green industry,
waste management, resources management, energy efficiency, systems optimization, and most
importantly a behaviour change.
19
5. Job creation: create job opportunities in MSMEs.
The programme will address traditional manufacturing sectors but also emerging sectors such as
automotive, IT, e-commerce, high value agro-industry, tourism, health tourism, handicraft, and the
knowledge-based economy.
Various projects are being developed, in line with the strategy set in this Country Programme, to
contribute to the five pillars listed above.
Table I: CP Priority areas and their links to other development priorities
CP Priority areas
Alignment with
relevant
national sector
priorities
Alignment with
relevant
UNDAF priorities (or
UN programming
tool)
Alignment with
Other
national/regional/
international
frameworks
and commitments
MDGs and IADGs
Alignment with UNIDO’s
priorities ISID
1. Policy: assist the Government of
Iran to elaborate sector specific
industrial policies contributing to
international environmental targets,
financially and environmentally
sustainable industrial development
and job creation
Development of a
resistance economy
(Sixth Five-Year Plan
2017-2021)
Progress in Science and
Technology (Sixth Five-
Year Plan 2017-2021)
UNDAF 2017-2020
1.1, 1.2, 3.1, 3.2, 3.3, 3.4,
3.5, 3.7
SDG1: no poverty
SDG5: gender equality
SDG7: affordable and
clean energy
SDG8: decent work and
economic growth
SDG9: industry,
innovation and
infrastructure
SDG10: reduced
inequalities
SDG 11: sustainable
cities and communities
SDG12: responsible
consumption and
production
SDG13: climate action
Advancing economic competitiveness:
industrial growth increased trade and
technological progress via modern
industrial policies creating shared
prosperity
2. Market: enhance competitiveness,
market access and export
Development of a
resistance economy
(Sixth Five-Year Plan
2017-2021)
UNDAF 2017-2020
3.1, 3.5
SDG8: decent work and
economic growth
SDG9: industry,
innovation and
infrastructure
SDG5: gender equality
Advancing economic competitiveness
industrial growth increased trade and
technological progress via modern
industrial policies creating shared
prosperity
3. Partnership: establish networks for
knowledge sharing and building
partnerships at the regional and
international level.
Progress in Science and
Technology (Sixth Five-
Year Plan 2017-2021)
UNDAF 2017-2020
3.1,3.5
SDG8: decent work and
economic growth SDG9:
industry, innovation and
infrastructure
SDG5: gender equality
Inclusive growth with equal
opportunities for all people via
partnerships with all relevant
stakeholders
4. Environment: promote
environmentally sustainable
industrial development through
green industry, waste management,
resources and energy efficiency,
and a behavior change.
Development of a
resistance economy
(Sixth Five-Year Plan
2017-2021)
UNDAF 2017-2020
1.1, 1.2 , 3.1, 3.2,
3.4
SDG9: industry,
innovation and
infrastructure
SDG5: gender equality
SDG12: responsible
consumption and
production
SDG13: climate action
SDG15: life on land
Safeguarding the environment
environmentally sustainable growth, via
cleaner industrial technologies and
production methods
20
5. Job creation: create quality jobs
opportunities in MSMEs.
Development of a
resistance economy
(Sixth Five-Year Plan
2017-2021)
UNDAF 2017-2020
3.1, 3.3, 3.5, 3.7
SDG1: end poverty
SDG5:gender equality
SDG8: decent work and
economic growth SDG
11: sustainable cities and
communities
SDG12: responsible
consumption and
production
Inclusive growth with equal
opportunities for all people via
partnerships with all relevant
stakeholders
3.1. Component 1 Policy: elaborate sector specific industrial policies contributing to international
environment targets, financially and environmentally sustainable industrial development and
job creation
Previous experiences from successfully industrializing countries such as the Republic of Korea and other
Asian Tigers show that the elaboration and implementation of industrial policies were significant drivers
of their growth. The ability of the Government to design industrialization strategies and the related
industrial policies will therefore be crucial to its future industrialization.
The Government of Iran is striving to address challenges the country is facing in fostering inclusive
growth, reducing unemployment, and increasing labor force participation rates, especially for women and
the youth, and it is about to initiate the Sixth Five-Year Economic, Social, and Cultural Development Plan
of Iran. Taking into account past experiences, it is crucial that the upcoming planning cycle adopts a set of
industrial and export-oriented trade policies affecting the economy’s non-oil productive sectors for
environmentally sustainable, pro-employment, and inclusive growth. UNIDO’s Country Programme
supports “the development of macro-planning models, monitoring & evaluation systems and coordination
mechanisms to ensure job-rich growth patterns,” which is also reflected in the Country Program Action
Plan (CPAP). For this, UNIDO will provide assistance to the Institute for Trade Studies and Research
(ITSR) to improve its capacity to carry out research, training, and advocacy on pro-employment industrial
and trade policies through the establishment of a Center of Excellence (CoE) toward inclusive growth and
sustainable development goals.
As mentioned, Iran is undergoing significant economic and political transformation, as are the regional
and global economies. In this context, defining a national as well as sector industrial strategies and the
translation of that strategy into an effective policy framework is a pre-condition for supporting the reform
and development agenda, combining international environment agreements, financially and
environmentally sustainable industrial development and job creation.
UNIDO has been providing its Member Countries strategic policy advice, to help them accelerate their
industrial development and competitiveness. It has been assisting them in the design of industrial
strategies and policies and in enhancing the institutional capacities of key stakeholders to develop
industrialization strategies and policies, whose importance is increasingly recognized. UNIDO has also
been supporting Member Countries in the elaboration of development strategies for specific industrial
sectors. A country such as Iran, with a broad and diverse industrial and services infrastructure and high
qualified human resources, has the tools and means to integrate industrial development with international
environment agreements and job creation in a financially and environmentally sustainable manner. As an
oil and gas rich country, a lack of financial resources is not an obstacle, but their allocation in a cost
effective manner and the behaviour change needed to drive the transformation of Iran economy is critical.
To do this, policy makers need to make informed decisions based on scientific evidence that UNIDO can
help to provide, based on sophisticated modelling and experience exchange with major developed and
developing countries. In particular, UNIDO will establish a policy support for SME development,
21
industrial upgrading, industrial resource efficiency and optimization, market access, networking and
knowledge sharing.
Current industrial policies and the industrial infrastructure in Iran were developed during the war with
Iraq and under several years of sanctions, embargo and political and economic isolation. It goes without
saying that the new conditions need a different set of tools to address industrial development,
environment protection and job creation in Iran.
To begin with, the broad impact of different aspects of government policies needs to be assessed,
including areas that are the responsibility of other ministries apart from the Ministry of Industry. This
essentially means a review of national competitiveness, as distinct from the competitiveness of individual
firms. All the key policy areas that affect business, R&D, innovation, export, subsidies, etc. need to be
comparatively assessed and addressed, and that means that the scope of industrial policies may be wider
than is traditionally found.
Under this component, four projects are envisaged. Details are provided in Annex II.
3.2. Component 2 Market: enhance competitiveness, market access and export
In the past the Government pursued a strategy of industrialization that was driven by the exploitation of
the country’s oil and gas resources. However, Iran’s industrial sector is broad and diverse; Iran’s
automotive industry is the second most active industry of the country, after the oil and gas industry,
accounting for 10 per cent of Iran's GDP and 4 per cent of the workforce, about 700,000 people.
Recently, the Government has started a programme of divesting the state of its role in the manufacturing
sector, combining this with an aggressive programme to establish dedicated industrial parks, science and
technology zones in the different provinces of the country. The industrial zones have relatively good
infrastructures and are mainly targeted at attracting both domestic and foreign investments, and also at
encouraging domestic private SMEs and start-ups. However, weak management, lack of high quality
common services such as waste and wastewater treatment facilities, R&D, logistics, marketing, financial
services etc. have undermined the expected results.
In the past, private sector activity has been limited in medium and large enterprises and the related
markets, where the government and semi-government enterprises have played a monopolistic role.
Sanctions and related trade and technology restrictions have undermined the development of medium
sized private enterprises and favoured the proliferation of micro and small private enterprise, limited
mostly to small trading and services. As a result, the county has significant potential for creation of new
micro, small and medium-sized enterprises (MSMEs) in the manufacturing sector and developing
existing MSMEs in the trading and services sectors. In both cases, MSMEs will have to engage in a large
variety of industrial value-addition interventions and export-oriented production.
In the wake of the lifting of sanctions and a surge in international interest in investment and cooperation,
opportunities for Iranian SMEs to access new markets have increased. However, the economic and
investment opportunities are also exposing Iran’s SMEs to increasing competition. In this new context,
therefore, isolated enterprises confront severe challenges in establishing an export presence in foreign
markets and keeping pace with global competitors. In addition, Iran’s WTO accession, which the
government plans to realize, without prior readiness is likely to harm the Iranian industries particularly
the automotive industry; the second largest industry.
The Government is keen to diversify the country’s rural-agro based and service economy to differentiate
its GDP mix and create new jobs. Iran’s recent strategic policy documents identify the need to strengthen
trade and manufacturing capacity in industrial sectors such as automotive sector, stone, leather, carpet,
textile and garment, handicrafts and food products, and their access to global value chains. For the
promotion of private sector development, the main strategies should include inter alia:
22
- Elaborating a national entrepreneurship development strategy focusing on women and youth;
- Fostering pro-business legal and regulatory reforms;
- Developing MSME and cluster development policies;
- Providing supportive infrastructure and services for both start-ups and expanding enterprises,
including online registration;
- Developing cluster-based industrial zones;
- Promoting growth of local MSMEs;
- Building linkages between local MSMEs and foreign enterprises, including TNCs and FDIs, in a bid
to increase local content in foreign production;
- Promoting private sector investment in rural areas;
- Strengthening the capacity of private sector supporting institutions and PPPs;
- Enhancing dissemination of business information;
- Promoting adoption of modern and appropriate technologies;
- Building a local capital market and establishing more shareholding companies, promoting and
strengthening the development of cooperatives; and
- Improving the innovativeness and competitiveness of the automotive, leather, carpet, textile and
garment, and agro-processing industry.
The government has recently reinvigorated regulatory reforms, targeting the Ease of Doing Business
indicators. In this regard, to further strengthen these frameworks, institutions, and their objective of
industrial development, Iran needs additional support, UNIDO’s technical cooperation being targeted
towards institutional and entrepreneurial capacity building. On the basis of a recent successful experience
in Vietnam, UNIDO could support the creation of a nationwide single-point registration for business tax,
statistics and seal engraving permits.
The main factors hindering the competitiveness of enterprises in Iran and their ability to move up the
value chain and supply regional and global markets are high trading costs, competition from high quality
products from other countries, and NTBs. Other constraints are the lack of effective integration of skilled
labour, the need to raise the skill set of the new graduates, weak national quality infrastructure, weak
networking opportunities, and limited access to finance. The removal of these constraints is necessary if
Iran is to exploit emerging opportunities for participation in regional and global value chains.
Iran has a history of craft-based small industries such as handicrafts, lacquer ware, carpet, woven textiles,
stoneware etc. The country’s growing tourism could create additional demands for these products, as
well as the need for quality and safety assurance of handicrafts. These craft industries are based in natural
clusters, and giving them know-how and technical assistance on cluster development, customized
production and marketing could lead to efficiencies and further growth. Moreover, the experience gained
from supporting these clusters could feed into a policymaking process able to address SMEs’ real
problems. Considering the gender disparity, projects in this area are also appropriate for increasing
employment opportunities for women and would contribute to reducing the gender gap in terms of
income generation and economic opportunities.
23
In addition to cluster development per se, a promising industrial policy tool to support the SMEs sector
and generate employment is cluster-based industrial zone development2. Iran’s high transaction costs
necessitate the development of large numbers of firms in industries where economies of scale, intra-
industry knowledge spill overs, forward and backward linkages, good supply chains and logistics, and
other agglomeration effects can all be achieved. The country also needs better infrastructure, quality
improvement, competitiveness and economic diversification to cope with the risk of sector-specific
external shocks. The development of cluster-based industrial zones, combining the positive
agglomeration effects produced by cluster development, on the one hand, with the infrastructure and the
opportunities for economic diversification associated with the industrial zones, on the other, could yield
significant economic and social payoffs to the country.
To establish a vibrant SME sector, additional interventions such as entrepreneurship development,
facilitating the business environment, and creation of youth employment are needed. Here, also a gender-
segregated data on youth would be targeted to ensure development of strategies. Furthermore, the
Chamber movement (Federation of Commerce & Industry) is well established in Iran, and needs
partnership-building interventions and effective coordination to ensure solid public-private interventions
in the SME development effort.
UNIDO has implemented many SME development projects the world over, focusing on entrepreneurship
development, SME cluster development, promotion of industrial parks, and business registration reforms
and market access.
Six projects fall under this component, of which one is ongoing. Details are provided in Annex II.
3.3. Component 3 Partnership: establish networks for knowledge sharing and building
partnerships at the regional and international level
SMEs are often unable to take advantage of market opportunities that require large volumes of
production, broad product range and regular supply. They lack information and marketing skills and have
little access to expertise and finance. As a result, they are often unable to enter the global circuits of
production and sales. These obstacles to growth can be overcome when small-scale enterprises join
forces in collective endeavours. Through networking and by combining knowledge, skills and resources,
SMEs can improve their export potential and reduce the costs and risks involved in penetrating new
markets
The networks allow SMEs to acquire direct export experience and to benefit from the advantages of
collective action. It must also be emphasized that, if their members so require, these bodies are flexible
enough to expand their activity into new areas. Indeed, in order to strengthen their members’ export
potential, they can forge partnerships with related agencies, e.g. training centres or service companies, or
offer additional services ranging from certification of compliance with international standards, through
staff recruitment and training, to R&D.
UNIDO ITPOs, Resource Efficient and Cleaner Production (RECPs) and South- South Centers (SSC) are
tools as well as institutional mechanisms to address these challenges providing access to international
networks and partnerships agreements.
In Iran, there is a growing awareness among business leaders as well as of policy makers of the necessity
to break with old practices and set foot on a new path of more sustainable and more socially inclusive
business that would also help in achieving global development goals. With its partnership models,
UNIDO supports and assists countries as a partner to accompany businesses on this new path towards
2 Policy Research Working Paper. 5900. Cluster-Based Industrial Parks. A Practical Framework Action. Célestin Monga. 2011. The World Bank.
24
healthier societies, flourishing markets and sound economic progress for the future well-being of the
generations to come. Companies aiming at long term success must ensure that their operations are
sustainable and responsible, creating lasting value – not just financially, but also socially,
environmentally and ethically. There is growing evidence that principles and profits are not mutually
exclusive. They can go hand-in-hand and create competitive value additions and promote social,
environmental and economic progress that can foster competitiveness, business value and long-term
sustainability of business operations. They can help meet the growing consumer demand for green
products, make employees take pride in their work and build markets of the future.
Further, the capacity building needs of the “Organization for Investment Economic and Technical
Assistance in Iran” (OIETAI) being the country’s official investment promotion agency need to be met. UNIDO can help OIETAI to develop an FDI monitoring system through a system of regular FDI surveys
and strengthen OIETAI’s support to existing FDI subsidiaries in the country. It is expected that this
would have a positive effect on how existing and potential foreign direct investors perceive Iran’s
investment climate while maximizing the impact of FDI inflows in Iran in terms of employment growth,
technological competitiveness and global value chain integration through FDI surveys and analysis of
empirical evidence.
Also there is the potential in upscaling the SPX approach at the national level with several SPX Centres
and eventually overseen by a national coordination body, attached to the Ministry of Industry, Mine &
Trade or the National Chamber of Iran.
Three projects fall under this component of which one is ongoing. Details are provided in Annex II.
3.4. Component 4 Environment: promote environmentally sustainable industrial development
through green industry, waste management, resources management, energy efficiency,
systems optimization, and most importantly a behaviour change
UNIDO is currently implementing four projects in Iran in the area of environment, and has long
experience in implementing projects to improve the energy efficiency and resource efficiency of
enterprises through the adoption of cleaner production methods and cleaner technologies. It also has a
long track record in assisting countries to implement the commitments that they have made through
Multilateral Environmental Agreements, in particular the Montreal Protocol for the Protection of the
Ozone Layer, the Stockholm Convention for the control of Persistent Organic Pollutants (POPs), the
Minamata Convention for the control of mercury, the Global Environment Facility for the reduction of
greenhouses gas emissions, and others.
There is a long history, and accurate analysis, of countries that have achieved a “temporary” GDP growth
and wealth at the expense of their natural environment, including the wellbeing of their citizens. This is
commonly called “environmental debt”. Sanctions and a tight embargo in the past, including on access to
financial markets, have had an impact on the Iranian environment, from which the Iranian government
had had to “borrow” heavily to support a semi-autarchic economy. Nowadays, with sanctions lifted and
embargos removed, Iran faces both challenges and opportunities.
The magnitude of environmental challenges is enormous, and the financial cost to address them is similar.
No government or international institution has the financial resources to address these challenges; a
viable option therefore, is first to minimize the impact of human activities on the environment and
secondly to charge the costs of mitigation of the current impact, as well the costs of addressing previous
problems, to the market through smart policies. This is a very delicate exercise of policy making,
balancing between boosting the economy, avoiding environmental impacts of industrial activities, and
charging environmental costs to those whom most benefit from these harmful activities. Balancing
industrial development with environment protection is a very difficult exercise, and there is hardly ever a
25
zero cost balance. At best the impact can be mitigated, and whatever impact is unavoidable must be
offset.
UNIDO’s contribution to Iranian policy makers will be in terms of capacity to make informed decisions
based on scientific evidences and establish an effective monitoring and evaluation system.
At this particular point in time, Iran find itself in a very positive circumstance, the country is politically
stable, there is, and there will be, a sustained and long term flow of financial resources through the export
of energy resources, and most likely through FDI also. In 2013, inward foreign direct investment flows in
Iran surpassed the US$ 3 billion mark, whereas outward foreign direct investment (FDI) flows amounted
to US$ 380 million3. Foreign investors have concentrated their activity in a few sectors of the economy:
primarily the oil and gas industries, vehicle manufacture, copper mining, petrochemicals, foods,
and pharmaceuticals. It is estimated from local sources that Iran absorbed US$ 24.3 billion of foreign
investment from 1993 to 2007 and US$ 34.6 billion for 485 projects from 1992 to 2009 period. Foreign
investment flows have been facilitated by a burgeoning domestic economic sector and a thriving
economy driven by domestic investment, both private and state-led. Indeed, the main promoted avenue
for investment promotion is to promote joint-venture agreements between foreign and public and/or
private Iranian partners which often is the main entry mode of FDI firms in view of restrictive entry
regulations for a range of sectors that are considered to be of strategic and national interest. The existing
level of absorptive capacity of technology and infrastructure in domestic companies coupled with an
abundance of a highly skilled local work force, makes local firms suitable for joint venture and
technology partnerships. Accordingly, the necessary conditions for successful long term planning are
present. Iran has a number of low-hanging fruits which if addressed will bring about an environmentally
sustainable industrial development. Through accurate modelling, UNIDO can assist policy makers to
identify cost effective policies to tackle environmental emergencies, promote industrial development and
create job opportunities.
Four projects fall under this component, of which all are ongoing. Details are provided in Annex II.
3.5. Component 5 Job creation: create job opportunities in MSMEs
According to the World Bank, poverty is estimated to have fallen from 15 per cent to 9 per cent between
2009 and 2013, using a poverty line of US$ 5.5 per day (PPP), as Iran has no official poverty line.
However, unemployment remains a persistent problem, and tackling youth unemployment in particular is
a pressing policy issue in line with the evolving demographic profile of the country, which is
characterized by more than 60 per cent of its population estimated to be under the age of 30 in 2013.
Further, especially unemployment among women is very high. Although Iran has a cadre of well-
educated women, despite their education, women have a hard time to enter the labour market due to
restrictive measures as to what women can do. Figures shows that only 25% of higher-educated women
succeed in gaining entrance to the labour market and overall only 15% of women in Iran have a formal
job. Furthermore few educated women enter into decision-making positions in government or the private
economy. This is a waste of human resources and economic potential that is lost as is shown by
numerous studies. For instance, a recent OECD which study showed that worldwide income loss
associated with gender discrimination in social institutions is estimated at up to US$ 12 trillion, or 16 per
cent of world income.
The Inception Phase Report of the UNIDO project “Business Development and Sustainable Job Creation
in Iran” finds that while informal jobs and micro and small enterprises play in the short-term a key role
3 UNCTAD 2014, World Investment Report.
26
for securing the livelihood of a vast number of workers, any long-term strategy to promote better living
and working conditions for people should focus on the development of wage-employment. The report
also finds that Iran has experienced a reverse process in terms of structural transformation in recent years,
and focuses on the potential of sectoral strategies to remove binding constraints in sectors that have
substantial employment potential. In turn, this means that restructuring towards inclusive and job-rich
growth will require both sector-wide policies and also more targeted priority sector policies to get results
in terms of job creation as quickly as possible.
Two projects fall under this component, which are all ongoing. Details are provided in Annex II.
4. Management Framework
4.1. Programme Management
The promotion of national implementation is one of the key targets and modalities of the Country
Programme in order to achieve improved effectiveness of the national counterparts. National institutional
capacity development is therefore mainstreamed in all programme activities: the abilities of key
stakeholders, national counterparts and partners in the private sector will be fostered and enhanced in this
regard.
4.2. Programme Implementation and Coordination
The implementation of the CP in Iran is guided by the priorities expressed by the Government as well as
by the country’s existing needs and challenges for it to be able further to develop the industrial sector in a
manner that will generate employment opportunities, and assure inclusive growth and gender equality.
To this end, the CP’s implementation will be guided by Iran’s comprehensive strategy encompassing
market-based reforms as reflected in the government’s 20-year vision document and the sixth 5-Year
National Development Plan for the 2017-2021 period. It will also be guided by the priorities in the UN
Development Assistance Framework (2017-2021) that will follow on from it. In close cooperation with
the UN country team responsible for the implementation of the UNDAF, UNIDO will collaborate with
other development partners to address the main challenges.
The CP will incorporate the established coordination arrangements. For programme-specific coordination
arrangements, the key counterpart to UNIDO will be the Ministry of Industry, Mine & Trade (MIMT).
The establishment of a Joint National Steering Committee to oversee the implementation of the CP is
also envisaged, within the first months of the launch of the CP. It is envisaged that it will include
members of the relevant Ministries, including the Ministries of: Cooperative, Labor and Social Welfare;
Environment; Energy; Agriculture etc., UNIDO; and private sector stakeholders, including the Chamber
of Commerce and relevant business associations. Additional technical coordination committees, if
needed, will be established on an ad hoc basis.
Implementation and monitoring of individual projects implemented within the framework of the CP will
be carried out as described in the individual project documents. Considering the demographic
characteristics and higher number of women in the country, the proposed projects will be designed,
implemented and monitored with due consideration given to increasing the employment opportunities,
entrepreneurial skills and overall economic empowerment of women in Iran. Efforts will be made to
retrieve disaggregated data on women and men that attend higher education, the composition of the
labour market as well as agro-industry which would enable to understand what different problems
women and men face and also what potential abilities they have that can contribute to the success of the
Country Programme.
27
The Results Framework in Annex II provides additional details on the main national partners involved in
the activities of the programme.
4.3. Monitoring and Evaluation
Monitoring, reporting and evaluation under the CP are bolstered through a combination of government
and CP monitoring and reporting procedures. The CP monitoring and evaluation strategy includes project
monitoring, field visits, regular reporting, and data collection on a biannual basis. In order to reach its full
potential this programme will also tackle women’s access to resources and to the labour market as well as
aiming at assisting Iran at the policy level. A fully-fledged gender analysis will be aimed to develop,
when assessing the broad impact of different aspects of Government policies as well as when monitoring
the entire CP. This would be an essential for the creation of the setting of a competitive market, where
both men and women are able to participate.
Annual progress reports will be prepared on the status of results (outputs), as well as resource
mobilization and utilization. The focus will be on the achievement of the benchmarks indicated in the
results framework of the CP. The monitoring process of the CP will also strive to be gender balanced,
with a focus on the involvement of women in the evaluation process.
The CP will be subject to a mid-term review and a final evaluation. A mid-term review, during the
second year, will be carried out in collaboration with national partners. The review will seek to assess the
design of the CP, examine performance against outcomes, and assess the actual delivery against planned
outputs, whether outputs are being converted into expected outcomes, and whether the strategies and
partnerships are effective and efficient. Regular monitoring reports will be distributed to all stakeholders
to assess relevant achievements and address remaining challenges. Donor partners will play a central role
in monitoring CP interventions.
At the end of last year of the Country Programme an in-depth independent evaluation will be carried out
in collaboration with the Evaluation Group, the UNIDO Regional Programme, the UNIDO Field Office,
and national partners. The evaluation will be conducted to document lessons learned and outline options
for the way forward.
Further, Government ownership is a critical feature of the CP and goes far beyond government
consultation and endorsement of the Programme. It is imbedded in the design of the Programme and is
demonstrated through the actions of the Government of Islamic Republic of Iran. The Government is
responsible for overall guidance and leadership of the CP and coordinates through a high-level Steering
Committee (SC), chaired by the highest authority in the Government, and is responsible for guidance and
oversight of the CP. The Steering Committee will be coordinated by the Ministry of Industry, Mine and
Trade being the nodal counterpart of UNIDO. It is envisaged that UNIDO will engage with members of
the relevant Ministries, Chambers and private sector.
A Technical Team from line Ministries and Chambers will be established to have daily working level
communications with UNIDO and among themselves so as to ensure the free flow of information.
Coordination of individual projects implemented within the framework of the CP will be carried out as
described in the individual project documents.
28
TABLE II: Indicative M&E work plan for the Country Programme
Type of M&E activity Responsible Parties Time frame Joint National Steering Committee
Meeting UNIDO Country Office and Joint
National Steering Committee
Members
At a minimum every six months;
more frequently if required for urgent
decisions that need the Steering
Committee’s approval. Bi-annual Progress Reports, which
will assess progress and performance Country Office to prepare draft report
for submission to Joint National
Steering Committee for its approval.
The report can include proposals for
corrective actions
Every six months
Inputs from the monitoring activities
undertaken by individual projects
elaborated under the umbrella of the
CP
Individual PMs As described in the individual project
documents
Technical Committee meeting Country Office; Technical Committee
Members On an ad-hoc basis, if and when
needed. Mid-term Country programme review Country Office, Joint National
Steering Committee During 2
nd year of CP
Terminal Country Programme
Evaluation/ independent evaluation
report
Country Office, Joint National
Steering Committee; Programme
Officer at HQ;
Evaluation at the end of the fourth
year.
4.4. Risks and Mitigation Measures
Some of the risks and mitigation measures considered are the following:
Knowledge gaps: A major part of the interventions relate to knowledge transfer. The disruption of
international cooperation and the lack of adequate global exposure over the past years due to sanctions
have led to a weak higher level knowledge base. Appropriate measures will be taken to have training
inputs, fellowships and study tours in the individual projects elaborated within the framework of the CP
to address this weakness.
Changing policy and legislative frameworks: The country is undergoing a reforms and new
institutional and legal frameworks are being put in place. This will directly affect the individual projects
implemented within the framework of the CP, but this in turn will impact the overall success of the CP.
The project management units will need to monitor such developments closely and, through appropriate
Project Steering Committee decisions, ensure that policy/legislative changes are taken into account.
Cultural and other established social impediments: Considering the demographic characteristics and
higher number of women in the country, the proposed projects gives due emphasis to increasing the
participation of women in economic activities and income generation through the proposed development
interventions. However, the success of this depends largely upon the participation of women. It has to be
noted that established cultural and other social practices and traditional ways of life can act as
impediments. Strategies will be aimed to be developed to overcome these barriers.
29
4.5. The Legal Context
The Government of the Islamic Republic of Iran agrees to apply to the present country programme,
mutatis mutandis, the provisions of the Revised Standard Technical Assistance Agreement concluded
between the United Nations and the Specialized Agencies and the Government on 2 February1956.
5. Indicative budget and fund mobilization strategy
5.1. Indicative budget
Table III. Indicative budget table CP Iran 2017-2021
Components Resources Needed Funds mobilised Resources to be
mobilized
Component 1
Policy: Elaborate sector specific industrial
policies contributing to international
environment targets, financially and
environmentally sustainable industrial
development and job creation
US$ 2,670,000 0 US$ 2,670,000
Component 2
Market: Enhance competitiveness, market
access and export
US$ 11,060,300 US$ 310,000 US$ 10,750,300
Component 3
Partnership: Establish networks for
knowledge sharing and building
partnerships at the regional and
international level
US$ 7,250,000 US$ 250,000 US$ 7,000,000
Component 4
Environment: Promote environmentally
sustainable industrial development through
green industry, waste management,
resources management, energy efficiency,
systems optimization, and behaviour
change
US$ 8,448,777 US$ 8,448,777 0
Component 5
Job creation: Create job opportunities in
MSMEs
US$ 13,900,000 US$ 13,900,000 0
M & E US$ 50,000 0 US$ 50,000
Total US$ 43,379,077 US$ 22,908,777 US$ 20,470,300
5.2. Fund mobilization strategy
The funds mobilization strategy will be tailor made to three thematic areas. The objective is to identify
counterparts’ specific requirements and develop proposals that clearly identify the objective of the
intervention and the expected added value and that represent a good investment and value for money.
30
The three thematic areas derive from the five components illustrated in this CP, and are as follows:
Policy/Job creation - Government: the Government of Iran is looking at UNIDO’s global forum
function as a tool to asses and develop policies with the objective to enhance industrial development and
create jobs. In this area the fund mobilization strategy will target Iranian Government institutions and
funds, bilateral donors (Governments) and UNIDO’s funds. The aim of the strategy will be to stimulate
bilateral cooperation between the Government of Iran and foreign Governments and public/private
institutions eager to engage in an open discussion and mutual exchange on specific topics such as energy
and environment and their impact on industrial development and job creation. The strategy will leverage
on policy dialogues as a tool to create new market segments in Iran, particularly in the areas of energy
efficiency and environmental protection, as policies pave the way for the development of new market
opportunities.
Market/Partnership - Private sector: in this area the target is the private sector, UNIDO will leverage
its capacity for building partnerships, in order to link the Iranian manufacturing sector with export
markets, and to facilitate technology transfer. Programmes such as the ITPO, SPX, marketing, consortia,
standards and certification, market access strategies, etc., will be employed. The natural candidates for
the implementation of this programme, and to mobilize funds, are Chambers of Commerce, sector
associations, and private/public funds.
Environment - International conventions: Iran is a signatory of several international agreements and
conventions addressing environmental protection and climate change. UNIDO, as an implementing
agency for major international agreements and conventions, has the capacity to deploy strong technical
skills and knowledge to Iran and its industrial sector. Industries are often the cause but also the solution,
of environmental problems and UNIDO, as the specialized agency mandated to address Inclusive and
Sustainable Industrial Development, has strong capacities for implementing environmental programmes
that take into account environmental impact, technical and financial sustainability, and job creation in a
comprehensive and integrated way. The partners that UNIDO will target within this thematic area are the
National Focal Points for the various international conventions, national implementing partners and the
Secretariats of International Conventions. With a strong office based in Iran and liaison offices in the
HQs of main international conventions. UNIDO is well placed to mobilize these types of funds.
Funding institutions, either public or private look for value for money, for concrete results and for
measurable impact. Accordingly, based on the three thematic areas above, the funds mobilization
strategy will be designed with these criteria in mind and tailored as far as possible to the priorities of the
funding institution in question.
As shown by experience in Iran, large programmes need a key focussed framework within which
partners can concentrate to achieve a common objective in a cost-effective way. Such an approach builds
on existing infrastructures and therefore reduces start-up costs and management costs. The Job Creation
and the Energy Efficiency projects still under implementation have demonstrated this very clearly.
Various institutions, either public or private, have recognized the quality of the infrastructure, of the
human resources and of the methodology, and have therefore been eager to join the programme with
additional components sharing the same overall objective but at the same time addressing specific
detailed objectives.
It is important to emphasise that the indicative budget in this CP is to initiate the planning process for the
specification of detailed budgets and the securing of funds. Joint efforts to mobilise the necessary funds
will be made by all stakeholders involved in the programme. In this regards, a practical and sound fund
mobilization strategy and action plan will be developed addressing the three thematic areas, following the
principles and criteria set out above, and in line with agreements reached between the Government and
UNIDO during the programming mission. The strategy will explore various sources of funding for the
CP including from the government, One UN funds, bilateral and multilateral donors, as well as the
private sector. The need for aid coordination and harmonisation will be emphasised, and addressed
31
through close engagement between UNIDO and the UNRC/UNCT as well as through the focussed
framework approach for large programmes outlined above, which provides an environment in which the
Government, donors and agencies can not only reach agreement on overarching objectives but also on
detailed implementation mechanisms.
The potential bilateral and multilateral partners and the opportunities for extra budgetary resource
mobilization include the following:
- Government of Islamic Republic of Iran: National governments are expected to contribute both in
kind and hard funds for the implementation of the CP. It is expected that the Government of Iran will
take the lead in funds mobilization efforts with the support of UNIDO.
- UNIDO: It is envisaged that limited UNIDO financing will be made available as seed money/
bridging funds and will serve for coordination purposes, fund mobilization and other activities related
to development of the Programme.
- Global Environment Facility: funds from the GEF are not yet available for Iran. UNIDO, UNDP
and FAO are coordinating with the GEF Focal Point for a submission plan for the GEF-5 and GEF-6.
The potential areas of intervention for UNIDO are climate change and mercury management.
- Green Climate Fund (GCF): this fund has been established within the framework of the UNFCCC,
as a mechanism to assist developing countries in adaptation and mitigation practices to
counter climate change. The Green Climate Fund will support projects, programmes, policies and
other activities in developing country based on thematic funding windows.
- Multilateral Fund to implement the Montreal Protocol: the HPMP Stage II has been submitted to
the MLF and will be considered at the 77th ExCom, Dec 2016.
- One UN Joint Vision: As part of the UN family, UNIDO will, at the local level, continue to explore
the opportunities for mobilization of funds through the established channels such as the Multi-Donor
Trust Fund (MDTF) or the newly established ‘Delivering Results Together’ Fund (DRT-F) designed
to support Delivering as One countries. Various modalities including joint programming with other
UN agencies will be explored to increase the chance of mobilizing additional resources.
- Bilateral sources: Various governments will be approached to support several projects under the CP
including major donors such as Germany, Japan and European Union.
- Private Sector and Development Banks: In cooperation with various national bodies in the country,
including the investment authority, several private sector players and Development Banks will be
approached to partner on selected projects or provide financing respectively.
32
ANNEX I: Ongoing UNIDO Programmes in Iran (as of November 2016)
Ongoing Status/Results
MPIRA11001Halon Management
Program
US$ 397,500
Department of Environment (DoE)
To phase-out Halons in Iran (Firefighting sector). Throughout the project UNIDO is
going to equip the existing national Halon bank with a Halon recycling and recovery
machine. DoE will set a proper set of regulation to facilitate collection of Halons. To
be completed Dec 2016
HCFCs - Phase out Management
Program Stage 1 Phase IV
US$ 2,506,277 MP funding
Department of Environment (DoE)
To phase-out HCFC-141b from the domestic refrigerator manufacturing. In this
phase, UNIDO will equip one factory (Emersun) with polyurethane equipment
based on pentane technology.
UNIDO will also conduct monitoring and evaluation of the overall HPMP Stage 1.
Funds released in May 2015-To be completed Dec 2016
HCFCs - Phase out Management
Program Stage 2
US$ 95,000
Department of Environment (DoE)
Formulate the Stage 2 of the HPMP Iran.
HPMP Stage 2 will be submitted at the May 2016 ExCom meeting.
The survey is completed, in the domestic refrigeration and rigid panes sectors and in
the Room Air Condoning manufacturing sector.
In coordination with the National Ozone Unit, UNDP, UNEP and GIZ- To be
completed by Dec 2016
GFIRA12001, Industrial energy
efficiency in key sectors
US$ 5,450,000
Ministry of Petroleum / Iran Fuel
Conservation Organization (IFCO)
Financed by the GEF and implemented
by UNIDO.
The objective of the project is to accelerate the uptake of energy efficiency (EE) by
setting up voluntary energy agreements with industrial sectors, providing a
framework for National Energy Management Standards, assisting in capacity
building through training, developing targets, providing benchmarks and, most
importantly, by identifying technology improvement options to these high energy
intensive industrial sectors. To be completed Dec 2017
Development of saffron value chain in
Iran
US$ 1,900,000
Bank of Agriculture
The objective of the project is to increase the export volume and export value of
saffron and saffron by-products and increase the income of stakeholders along the
value chain. The expected outcomes of the project are: improved saffron production;
improved processing and packaging technology; increased direct share of Iranian
SMEs in saffron global market.
The activities due to this project will be merged with the project “Business
development and sustainable job creation in Iran”
Business development and sustainable
job creation in Iran
US$ 12,000,000
Ministry of Cooperative Labour and
Social Welfare
The objective of the project is to create job opportunities by expanding and
strengthening existing business.
The overall project duration is 5 years. The project will address 6 priority sectors
including: handicrafts (e-commerce), tourism, leather products, garments, IT tools
and agro-industry (saffron and honey) in pilot provinces. To be completed Dec 2020
Achieving good governance and
sustainability through quality policy
formulation in the ECO region
US$ 260,000
The Economic Cooperation Organization
(ECO)
Assist ECO Secretariat to develop a regional quality policy and guidelines for
developing national quality policies.
The goal will be achieved through building the capacity of ECO Member States
policy makers in the development and implementation of an effective and efficient
National and Regional Quality Policies through. To be completed Dec 2017
UNIDO’s Subcontracting Partnership
Exchange (SPX) global network for
internationalization and investment
promotion efforts of domestic enterprises
US$ 250,000
Esfahan Chamber of Commerce, Industry,
Mines and Agriculture (ECCIMA)
The project aims to assimilate the Subcontracting Exchange Centre (SEC) within
ECCIMA into the UNIDO SPX global network.
The objective of the Project is to establish the first official and UNIDO-supported
SPX Centre in Esfahan, Iran and to leverage this Centre to provide added value
subcontracting and matchmaking services to domestic firms as well as provide
increased opportunities for internationalization as well as investment promotion and
targeting emanating from the SPX UNIDO global network. To be completed Dec
2018
33
ANNEX II: PROPOSED PROJECT INTERVENTIONS
COMPONENT 1 Policy: Elaboration of sector-specific industrial policies
1.1. Industrial strategy
Indicative budget: US$ 2,000,000
Objective: Development of industrial strategy based on detailed sectoral and market analysis, for national
and international development of industrial sectors formulated in accordance with national economic
plans and socio-economic goals.
Key Outcomes:
- New industrial policy for the Government of Iran improving analytical and monitoring capacities (incl.
statistical) ;
- Overview of domestic and international markets for Iran’s existing and potential products;
- Identified potential for national and int. cooperation in investment, production & technology;
- Indication of impact of policy choices on income distribution, women, disadvantaged regions.
1.2. National Competitiveness
(Council, ABR, government procurement, e-Government)
Indicative budget: US$ 120.000
Objective: Establishment of National Competitiveness Council at which cross-cutting issues are reviewed.
Key Outcomes:
- Contributed to social partnership through dialogue between government business leaders, economic
and technology experts and civil society;
- Integration of environmental and industrial policy through shared understanding of the issues among
stakeholders;
- Continued growth and employment opportunities for women.
1.3. Science and Technology strategy based on Technology Foresight
Indicative budget: US$ 350,000
Objective: Selection of priorities to include future needs of industry as well as agriculture, health, energy
and other priorities.
Key Outcomes:
- Achievement of industrial policy vision through essential support from R&D;
- Industry moved up-market and improving productivity and innovation;
- Support in development of products and processes for green industry, energy efficiency, resource
management;
- Secured existing jobs and created new ones for sensitive groups as women and youth.
34
1.4. Supporting ITSR’s Pro-employment and Export-oriented Industrial and Trade Policy toward
Sustainable Development through the Establishment of a Center of Excellence
Indicative budget: US$ 200.000
Objective: Improved national capacities to advocate pro-employment industrial and trade policies for
inclusive growth, sustainable human development, poverty alleviation, and enhanced human welfare.
Key Outcomes:
- Knowledge Development;
- Production of Standard Operating Procedure (SOP);
- Capacity Development and Institutionalization;
- Training of government staff and private sector for rapid expansion of non-oil export.
COMPONENT 2 Market: Enhance Competitiveness, Market Access and Export
2.1. ICT Broadband Plan (with ITU): Fibre to the Home (FTTH) e-commerce
Indicative budget: US$ 250,000
Objective: Improved productivity through knowledge access and IT applications and new services as well
as increased competitiveness through better responsiveness, e-commerce, innovation and new MSMEs.
Key Outcomes:
- Coverage including rural and urban areas as well as national target coverage;
- Commitment of resources to implementation;
- Financial sector commitment to provision of e-commerce platforms;
- Increased in number of employments (for women) created through MSMEs.
2.2. Support to Iran’s WTO accession by strengthening its quality infrastructure system to facilitate
the implementation of the WTO agreements on TBT, SPS and Trade Facilitation.
Indicative budget: US$ 6,200,000
Objective: Support to Iran’s accession for WTO, through increasing the capacity of its quality
infrastructure system (standardization, metrology and accreditation) and conformity assessment
(calibration, testing, inspection and certification) to provide services along international good practice,
including through internal co-ordination and capacity building.
Key Outcomes:
- Increased capacity to implement WTO Agreements on TBT, SPS and TF
- Increased coordination of quality infrastructure system’s development and sustainability through a
National Quality Policy
- Increased implementation of international good practices in standardization, metrology, accreditation
and conformity assessment (calibration, testing, inspection, certification)
- Increased availability of internationally recognized conformity assessment services for key value
chains and products
- Reduced costs of proof of compliance, reduced cost of trading through locally available and
internationally recognized conformity assessment services.
2.3. Supporting sustainable development of stone industry in Iran
35
Indicative budget: US$ 2,000,000
Objective:
Overall goal of the project is to contribute to the Government‘s efforts for implementation and
achievement of the goals of the 20-year vision and the sixth 5-Year National Development Plan for the
2016-2021 through industrial upgrading and modernization of the stone industry of Iran. In particular, the
project is aimed to enhance technological and managerial performance and market competitiveness of
pilot industrial enterprises operating in the stone industry of Iran.
Key Outcomes:
Overall expected impact of the proposed project is sustainable economic and industrial development of
Iran, in particular, increased production of processed stones of enhanced quality and range that facilitates
improved competitiveness of these products at the national, regional and international markets.
- Pilot beneficiary pilot industrial enterprises operating in the stone industry of Iran form networks,
modernize their businesses to expand and diversify their production, improve productive performance
and material and energy efficiency, human resource and financial management, marketing practices
that facilitates better access to regional and international markets
- Increased value added from the local, regional and international operations of the project beneficiary
pilot enterprises
- Enhanced export capacities and stronger linkages across the stone processing value chain
- Increased job creation and development of sector specific skills
- Strengthened institutional and management capacities of national stakeholders and enhanced
managerial capacities and marketing skills of the national expertise
- Institutional, regulatory, business and financial frameworks favor the development, upgrading and
market access for the Iranian dimension stone industry
2.4. Development of Science, Technology and Innovation Zones in the Islamic Republic of Iran
Indicative budget: US$ 350,300 (Counterpart Ministry of Science, Research and Technology commitment
is US$ 50,000 for PA)
Objective: Enhanced industrial competitiveness and improved market access for inclusive and sustainable
economic transformation in the five selected innovation zones in Iran, namely, Isfahan Science and
Technology Town, Tabriz Technology Region/Zone, Mashad Technology Region/Zone, Persian Gulf
Innovation Region and Bushehr Technology Region/Zone.
Key Outcomes:
- Encouraged economic development by job creation and human capital enrichment, legal, executive
facilitation, and investment;
- Established Science, Technology and Innovation regions;
- Joined innovation and entrepreneurship through leading-edge anchor institutions, business clusters and
incubators.
2.5 Enhancing competitiveness of automotive industry in Iran to be integrated into regional as well
as global market
Indicative budget: US$ 2,000.000
36
Objective: Support Iranian automotive component producers to become competitive in the regional and
international market and establish themselves as reliable suppliers to national and international large
suppliers and OEMs.
Key Outcomes:
- Reach a production of 3 million units by 2025;
- Improved quality of products produced by local component suppliers to be able to export their
products;
- Linking local supplies to OEMs and promote investments through business matchmaking between
local suppliers and international investors.
2.6. Ongoing project: Achieving good governance and sustainability through quality policy
formulation in the ECO region
Budget: US$ 260,000
Objective: Quality Policy Guidelines for national policies developed with ECO Secretariat.
Key Outcomes:
- Strengthened consideration of quality in national industry policy;
- Enhanced competitiveness of enterprises and export capabilities;
- Increased cooperation among ECO countries and economies of scale and scope in addressing key
competitiveness issue.
COMPONENT 3 Partnership: Establish networks for knowledge sharing and building
partnerships at the regional and international level
3.1. Cluster and Network Development: specialization and spatial development
Indicative budget: US$ 2,500.000
Objective: Development of new cluster networks.
Key Outcomes:
- Improved competitiveness of participants through quality upgrading;
- Rising skills of women and therefore employment opportunities;
- Strengthened cooperation, increasing network autonomy;
- Environment enhanced through improved spatial development;
- Improved income distribution addressing regional disparities.
3.2. Institutional development for global value chains access
Indicative budget: US$ 4,500,000
Objective: Establishment of a UNIDO ITPO, the SSC Centre and the expansion of the SPX Network
across Iran
Key Outcomes:
- Capacity building of the “Organization for Investment Economic and Technical Assistance in
Iran”(OIETAI) being the country’s official investment promotion agency on investment monitoring
and FDI data collection, on investment promotion targeting and international marketing strategies and
on FDI after care support
37
- Supported internationalization strategies and providing insights on competitiveness issues requiring
policy interventions;
- Improved inward and outward FDI and technology exchanges, supporting international trade strategy;
- New jobs created through international investment and technology partnership;
- MSMEs expanded;
- Rise of employment opportunities for women.
3.3 Ongoing project: UNIDO’s Subcontracting Partnership Exchange (SPX) global network for
internationalization and investment promotion efforts of domestic enterprises
Budget: US$ 250,000
Objective: Establish the UNIDO supported SPX Centre in Esfahan, Iran and integrate SPX-Esfahan into
the global SPX network.
Key Outcomes:
- New production agreements between Esfahan and foreign companies;
- New country coverage of agreements for production and investment in Esfahan;
- Induction of quality upgrading and enhanced enterprise competitiveness;
- Increased FDI.
COMPONENT 4 Environment: Promote environmentally sustainable industrial development
through green industry, waste management, resources management, energy efficiency, systems
optimization, and behaviour change
4.1. Ongoing project MPIRA11001 Halon Management Program
Budget: US$ 397,500
Objective: Reduction in halon emissions.
Key Outcomes:
- Phased out halons in the firefighting sector through recycling and recovery;
- Achievement of MP targets.
4.2 Ongoing project HCFCs - Phase out Management Program Stage 1 Phase IV
Budget: US$ 2,506,277
Objective: Reduction in HFCF emissions.
Key Outcomes:
- Achieved MP targets;
- Enhanced competitiveness of industry;
- Established linkages within the industry;
- Phased out HFCFs from domestic refrigerator industry;
- Created jobs on manufacturing of equipment for women and youth and provision of services.
4.3 Ongoing project HCFCs – Formulation of the Phase-out Management Program Stage 2
Budget: US$ 95,000
38
Objective: Project formulation and approval at the 77th ExCom meeting, Dec 2016.
Key Outcomes:
- Formulated phase 2 HPMP;
4.4 Ongoing project GFIRA12001, Industrial energy efficiency in key sectors
Budget: US$ 5,450,000
Objective: Technology, management and capacity building upgraded for energy intensive sectors.
Key Outcomes:
- Targets and national standards development for intensive industrial sectors;
- Improved cost competitiveness and enhanced marketability of goods as energy-efficient;
- Established learning network on energy efficiency demonstrating benefits to wider industry;
- Protected resources and encouraged emergence of new green technologies and associated MSMEs;
- New employment opportunities through increased competitiveness and generation of support services
and enhanced skills for women and youth.
COMPONENT 5 Job creation: Create job opportunities in MSMEs
5.1. Ongoing project Development of saffron value chain in Iran
Budget: US$ 1,900,000
Objective: Upgraded production of saffron production, packaging and marketing capabilities in MSMEs.
Key Outcomes:
- Increased competitiveness of production and fostering of higher value-added product development;
- Linkage of agricultural producers and small scale enterprises in productivity improvements and
innovation;
- Improved resources management and land utilization;
- Increased opportunity for more stable and long-term employment in rural communities;
- Rural development and women’s employment.
5.2. Ongoing project Business development and sustainable job creation in Iran
Budget: US$ 12,000,000
Objective: Long-term programme of advisory and training developed for selected MSMEs in handicrafts
(e-commerce, tourism, etc.)
Key Outcomes:
- Improved competitiveness and export potential of enterprises involved;
- Established large-scale networks whose experiences have been drawn upon for expansion in future;
- Increased opportunities for more stable and long-term employment especially for women and youth in
selected regions;
- Rural development.
39
ANNEX III. RESULTS FRAMEWORK FOR THE COUNTRY PROGRAMME
Intervention Item Indicators Means of verification Risks
Impact
Inclusive and Sustainable Industrial
Development;
Government of Islamic Republic of Iran achieved
strategic goals as set out in their National
Development Plan for the period 2016-2021.
Stakeholder interaction, meetings
and preparation of draft policy
document;
Number of women enrolled in
training workshops and participating
in agro – and handicraft production;
Improved ranking of Iran in
international reviews of economic
and social performance
Annual Progress Report on CP;
Annual CP review to assess
progress & performance;
Mid-term CP review;
Monitoring visits to field sites and
regular monitoring reports;
Terminal CP
evaluation/independent evaluation
report.
Growth of alternatives to newly established clusters;
Changing interest of private sector and investor choice;
Absence of government support;
Commitment of stakeholders not sustained;
Imperfect assessment of market demand;
Inadequate reception of learning and adaptation of new
skills among rural communities;
Changing Policy and Legislative frameworks;
Knowledge gaps and lack of absorptive capacity/;
Duplication in donor activities;
Deterioration in political climate and change in
government and priorities.
Component 1
Policy: Elaborate sector specific industrial policies contributing to international environment targets, financially and environmentally sustainable industrial development and job creation
Outcome Component 1:
Industrial strategy for Iran is established and
accepted, consistent with wider socio-economic
and environmental goals and the changing
industrial landscape internationally, and the
national competitiveness needs of industry are
taken fully into account in policy-making
Number of key drivers of industrial
performance (finance, skills,
investment, infrastructure and
regulation) identified
Number of expert group meetings
held for consultations with
stakeholders, private- and civil-sector
representatives.
National and international statistics
Government policy statements
Industry association reports
International comparative reports
and studies
Project reports
Change in government or industry priorities
undermining implementation
Regional instability reducing business confidence
Failure to act on key aspects of competitiveness
endangering future growth
Output 1.1. Industrial strategy
Strategy for national and international
development of industrial sectors formulated
in accordance with national economic plans
and socio-economic goals
Formal commitment to support from industry
associations
Budget for action plan implementation
included in State budget on an annual basis
Number of key drivers of industrial
performance (finance, skills,
investment, infrastructure and
regulation) identified
Number of alternative scenarios
made by experts in terms of external
conditions, including foresight
exercises and benchmarking to
provide international practice in
terms of industrial policy-making
Number of expert group meetings
held for consultations with
stakeholders, private- and civil-sector
representatives.
Project reports
Government publications
Budget allocations
Industry association reports
Need for consensus within government hampers
prioritisation
Inputs from industry support existing structure,
inhibiting new entrants
Insufficient consideration of likely developments in
world industry and market change
40
Output 1.2. National Competitiveness
(Council, ABR, government procurement, e-
Government)
Establishment of National Competitiveness
Council
Adoption of administrative burden reduction
plan,
Adoption of new government procurement
procedures covering significant share of total
government expenditure
Programme for pilot phase of e-Government
approved and resourced
Interest among companies risen that
do not only want to compete on price
Number of companies competing on
basis of design, quality,
responsiveness and innovation
Number of companies from business
sector involved
Competitiveness Council reports
Government notices
Project reports
International consultant reports
Surveys of business
Public procurement notices
Mandate and membership of Council not wide enough
Report from Council not sufficiently evidence-based
and not action-oriented
ABR programme not directed to priority concerns of
business due to lack of inputs
Output 1.3. Science and Technology strategy
based on Technology Foresight
Effective public-private sector dialogue on
innovation needs and engagement of the high-
tech entrepreneurial sector
Balanced selection of priorities to include
future needs of industry as well as agriculture,
health, energy and other priorities
Designation of institutions to be expanded and
associated resources commitment
Legislation for incentives for business R&D
Ratification of additional WIPO-administered
treaties
Number of alternative scenarios
made by experts reflecting
alternative futures taking
international practices and
conditions into consideration
Number of expert group meetings
held for consultations with
stakeholders, private- and civil-
sector representatives
Number of experts involved into
foresight process
Number of legislative documents
improved through foresight
consultations
Project reports
National consultant review
Media sources
National plan documents
Budget allocations
Institutions annual reports and
websites
Published legislation
IP-related legislation
WIPO Treaty notifications
Pace of decision-making failing to meet that of
technological change
Existing S&T strengths may bias selection of
competitive requirements for the future
Rivalry between institutions and regions inhibiting
optimum selection
Failure to respect existing international IP undermining
acceptance of new legislation
Output 1.4. Supporting ITSR to Improve Its
Capacity to Carry Out Research, Advocacy,
and Training on Pro-employment Industrial
and Trade Policies through the Establishment
of a Center of Excellence toward Inclusive
Growth and Sustainable Development Goals
-Develop policy and planning frameworks;
-Transfer of international experiences and best
practices;
-Conduct research, studies and translations;
-Produce standards and operating procedures;
-Strengthen institutional coordination
mechanisms;
-Preparation of manuals and handbooks;
-Establishment of a Centre of Excellence;
-Establishment of a “community of practice”.
Number of training workshops held
Number of expert group meetings
held for consultations with
stakeholders, private- and civil-
sector representatives
Number of legislative documents
improved through foresight
consultations
Final evaluation report
Project reports
Revised innovation zones
development plan
Prototypes, guidelines for the
design and development of
innovation zones
Enterprises have capacity and capabilities to innovate;
Stakeholders show interest and participate in sharing
best practices.
41
Intervention Item Indicators Means of verification Risks
Component 2
Market: Enhance competitiveness, market access and export
Outcome Component 2:
Enhanced industrial competitiveness and
improved market access for inclusive and
sustainable economic transformation
Number of enterprise employees
trained (management and production
Significant percentage of relevant
government staff retrained
UNIDO’s industrial
competitiveness indicator
International trade statistics
IT infrastructure and
telecommunications reports (ITU,
ICANN, MNCs)
Failure to adapt educational system sufficiently for
industry needs
Failure to link R&D institutions with industry
Lack of sufficient access by SMEs to skills, finance,
markets, support
Slow development of access to international capital
Output 2.1. ICT Broadband Plan (with
ITU): Fiber to the Home (FTTH) e-
commerce
Targets for coverage to include rural and
urban areas, as well as national target
coverage
Coverage targets to include intermediate years
Access target speeds to be defined in terms of
download, upload and latency targets
Commitment of resources (public and private)
to implementation
Financial sector commitment to provision of
e-commerce platforms, with consistent target
dates
Number of high-tech entrepreneurial
sector participating
Higher interest of MSMEs as well as
large enterprises to reach global
audiences and target global markets
effectively at a low cost
Project reports
International and national expert
reports
Budget allocations
Preparation of necessary
legislation and regulation initiated
Financial sector regulator
Financial institutions reports
International e-commerce
monitoring reports
Failure to take technological advances correctly into
account
Failure to engage fully with existing business and with
start-up community in developing plan
Regional disputes hampering development of
international connectivity
Output 2.2. Support to Iran’s WTO
accession by strengthening its quality
infrastructure system to facilitate the
implementation of the WTO agreements on
TBT, SPS and Trade Facilitation
National Quality Policy developed
WTO Enquiry points for TBT and SPS
established
Key Quality Infrastructures (Standard Body,
Metrology Body, Accreditation Body)
operating along good practices
Conformity assessment bodies (calibration,
testing, inspection, certification) implement
good practices for priority value chains,
products
Quality culture promoted
Significant percentage of relevant
government staff retrained
Improved proof of compliance
services
Metrology body and Accreditation
body recognized by their peers for
specific functions
Conformity assessment services are
internationally recognized
Policy published
Enquiry points included in
WTO listings
Proceedings of peer assessments
Results from conformity
assessment participation in
international proficiency testing,
comparison, international
accreditation of conformity
assessment scopes
Private sector participation in
quality policy definition, in
awareness campaigns, event
Survey of proof of compliance
services (availability, cost, time
needed)
Interest in WTO accession has to continue
Various stakeholders (ministries, private sector, etc.)
have to be ready to cooperate
Private sector has to be motivated to join forces
42
Output 2.3. Supporting sustainable
development of stone industry in Iran I. Support an international benchmarking and
gap assessment of stone industry and evaluate
existing policy instruments currently in use
ii. Support innovation/technology centre(s) to
develop and implement sectoral training
programs on different matters of technology
use, standards compliance, marketing and
business administration.
iii. Upgrade industrial performance and
competitiveness of pilot industrial enterprises
operating in the stone industry of Iran in
domestic, regional and international markets
Coach pilot beneficiary enterprises of the
stone industry on the implementation of
comprehensive enterprise upgrading and
modernization activities, including on
developing and implementing action plans that
improve their technology cycle, productive
performance and material and energy
efficiency, human resource and financial
management, marketing practices and ability
to produce cost-effective, safe, reliable, quality
products in sufficient volumes and according
to international technical requirements;
iv. Facilitate local, regional and international
industry support network and business
linkages for export promotion of Iranian
products on regional and international
markets; support collective marketing and
export activities with potential establishment
of export consortia.
Number of enterprise employees
trained (management and
production)
Project reports
International and national expert
reports
Training reports
Market study
Commercial performance reports
Enterprise annual reports
Surveys
Internal and external political, economic, geopolitical
and security factors that may affect the project
implementation or partly divert the attention of
policy- and decision-makers from the industrial sector
development issues
Individual companies do not actively collaborate with
the project throughout its different stages.
Output 2.4. Development of Science,
Technology and Innovation Zones in the
Islamic Republic of Iran
Better design and management of innovation
zones;
Workshop and visits to innovation zones;
System of innovation survey.
Number of participants attended as
planned, male and female
Number of visits to innovation
zones
Number. of regional system of
innovation survey reports
Number of study tours
Attendance sheet
Self-evaluation report
Proceedings of the workshop
Database created and used for the
regional SI surveys
SI reports for five innovation
zones
Study tour reports
The participants do not have the ability and capability
of to be part of the whole workshop
The participants do not have the ability and capability
of to complete the visits
Delays in the selection and contracting of the national
experts
Up-to-date data not easily accessible
National experts do not have sufficient technical
background to fully work on SI surveys and reports
Participants compromise the intentions of study tours
43
Output 2.5 Enhancing competitiveness of
automotive industry in Iran to be integrated
into regional as well as global market
Action plan for suppliers’ development in
order to be better integrated in the regional
market.
Suppliers upgraded in terms of quality and
productivities.
Innovation survey specified for the Iranian
automotive industry to better understand
obstacles / barriers
Benchmarking activities and policy advisory
services.
Number of suppliers
supported/upgraded by UNIDO
Innovation survey report examining
obstacles / barriers to innovation
that suppliers are facing and
explaining the innovation process
in the automotive industry in Iran.
Benchmarking report and policy
advisory formulated.
Action plan.
List of suppliers.
Innovation survey report.
Benchmarking report.
Policy advisory.
Internal and external political, economic, geopolitical
and security factors that may affect the project
implementation or partly divert the attention of policy-
and decision-makers from the industrial sector
development issues
Unwillingness of owners to take part in trainings and
or surveys.
Output 2.6. Ongoing project
Achieving good governance and sustainability
through quality policy formulation in the ECO
region
Quality Policy Guidelines promoted by ECO
Secretariat with follow-up bilateral contacts;
Quality policy initiatives in individual ECO
member states
Analysis of experts measuring the
progress quality policy formulation
Increased interest of private sector
to use internationally recognized
quality assurance and conformity
assessment services.
Action plan.
Innovation survey report.
Benchmarking report.
Policy advisory.
Delays in the selection and contracting of the
national experts
Internal and external political, economic,
geopolitical and security factors that may affect the
project implementation or partly divert the attention
of policy- and decision-makers from the industrial
sector development issues
Unwillingness of owners to take part in trainings
and or surveys.
Intervention Item Indicators Means of verification Risks
Component 3
Partnership: Establish networks for
knowledge sharing and building partnerships
at the regional and international level
Outcome Component 3: Increased levels of
partnerships and cooperation between
national and international firms and
institutions
Increased inward and outward FDI
Increased inward and outward royalty
payments and licencing agreements
Increased high-tech trade
Total value of inward / outward FDI
Amount of inward / outward
payments and licencing agreements
Total value of trade in the selected
high tech industry
International statistical sources,
including UNCTAD, IMF
National statistical reports
International reports on Iran’s
economy and business
performance
Failure to improve infrastructure and administrative
systems to accommodate increased international
trade and investment
Regional instability affecting business confidence
Output 3.1.Cluster and Network
Development: specialization and spatial
development
Inventory of existing clusters and networks
completed and accessible;
Number of clusters and networks
listed in the inventory.
Number of access to the inventory.
Number of interventions suggested
International and national expert
reports
Training reports
Budget allocations
Insufficient engagement of businesses leading to
inadequate perspectives on future enterprise
development
Failure to reach consensus between national and
regional authorities on specialisations
44
International review of clusters and networks
completed Selection of interventions
completed and resources committed
to the counterpart.
Amount of budget allocated.
Output 3.2.Institutional development for
global value chains access
Establishment of UNIDO ITPO
Establishment of SSC
Establishment of a Network of SPX Centres
in different regions of Iran
Capacity building of the “Organization for
Investment Economic and Technical
Assistance in Iran”(OIETAI) being the
country’s official investment promotion
agency
Number of companies utilizing
services of assisted intermediary
providers
Number of investment and
technology transfer opportunities
identified/promoted
Number of sectors/clusters/value
chains identified and mapped
Number of additional SPXs
established and total # of associated
SPX SME constituents
Approved strategies and work
programmes (ITPO,SSC)
Budget allocations(ITPO)
Signed international agreement
(SSC)
ITPO progress reports
Funding from participating
countries(SSC)
Project reports (SPXs)
Failure to establish good communications and
involvement of Iran private sector(ITPO,SSC)
Regional conflicts affecting investment climate
(ITPO,SSC)
Reduced interest by investors in entering into
foreign markets
Reduction of support by host government due to
reduced financial, technical and resources capacities
Slow infrastructure development and administrative
obstacles to business hindering intra-regional
growth
Output 3.3. Ongoing project
UNIDO’s Subcontracting Partnership
Exchange (SPX) global network for
internationalization and investment
promotion efforts of domestic enterprises
New production agreements between Esfahan
and foreign companies
New sectoral coverage of production and
investment agreements
New country coverage of agreements for
production and investment in Esfahan
Level and frequency of interactions
and cooperation with other UNIDO
SPX Network members
Number of additional SME services
offered by Esfahan Chamber of
Commerce, Industry, Mines and
Agriculture (ECCIMA)
Number and volume of buyer
opportunities matched with Iranian
subcontractors
Project reports (SPXs)
Training reports
Aggregated and sector-level
reports generated from the SPX
Management Information System
Lack of interest or cultural barriers from SPX
enterprise members to engage in
regionalization/internationalization activities
Difficulties in accessing capital for realization of the
firm’s expansion plans
Intervention Item Indicators Means of verification Risks
Component 4
Environment: Promote environmentally sustainable industrial development through green industry, waste management, resources management, energy efficiency, systems
optimization, and behaviour change
Outcome Component 4:
-Series of Negotiated Energy Agreements with
relevant Iranian Government Body
-Phase-out 71 ODP Ton of HCFC-141b
Up to 10 national trainers trained
in EMS and systems optimization.
Number of fully developed
trainings for EnMS training and
system optimization
On site verification, data from
the National Ozone Unit.
Top-down (National statistical
level) data gathering sets
Bottom-up monitors for
reporting of energy and output
data,
Adjustments to BY to
accommodate changes to output
mix
Embargo to Iran on import of equipment,
Market request for recycled Halons;
Market price of Halon in comparison with
alternative technologies
45
Output 4.1. Ongoing project MPIRA11001
Halon Management Program 78 MT of Halons recovered;
Halons bank established
On site verification, data from
the National Ozone Unit.
Embargo to Iran on import of equipment,
Market request for recycled Halons;
Market price of Halon in comparison with
alternative technologies
Output 4.2 Ongoing project HCFCs - Phase out
Management Program Stage 1 Phase IV
phase-out 71 ODP Ton of HCFC-
141b
On site verification, data from
the National Ozone Unit.
Safety issues with the implementation of flammable
alternative technology, procurement of suitable
technology and embargoes to Iran.
Output 4.3 Ongoing project HCFCs - Phase out
Management Program Stage 2 project document formulated and
approved
project approved list at the 77
ExCom meeting (Dec 2016)
No agreement on phase-out terms and funding
between the Government of Iran and the MLF.
Output 4.4 Ongoing project GFIRA12001,
Industrial energy efficiency in key sectors Series of Negotiated Energy
Agreements with relevant Iranian
Government Body, for an
estimated 150-200 large, energy-
intense Industrial sites and/or
several sub-sectors and clusters
Up to 10 national trainers trained
in EMS and systems optimization.
Top-down (National statistical
level) data gathering sets
Bottom-up monitors for
reporting of energy and output
data,
Adjustments to BY to
accommodate changes to output
mix
Energy subsidy for industry to increase over next 5
years
Companies lose their interest in making energy
efficiency investments
Intervention Item Indicators Means of verification Risks
Component 5
Job creation: Create job opportunities in MSMEs
Outcome Component 5:
Support to the Islamic Republic of Iran (i.e. the
Ministry of Cooperatives, Labour and Social
Welfare , MCLS) in the creation of decent and
productive jobs for youth, women and people
with disabilities through the development of high
potential sectors with specific emphasis on agri-
businesses, tourism, handicraft and IT
% improvement of performance of
sectors in terms of production of
tradable products for the local and
international markets
M&E established by the
project implementation unit
The date from the
MCLS as well as national
statistics
Government got used to manage the employment
through only macro level policies
The organizational processes and structures in the
Governmental organizations are not matched with
proposed mechanism of intervention in private
sector
Output 5.1. Ongoing project Development of
saffron value chain in Iran Comprehensive analysis of
selected saffron value chains with
competitiveness potential on
national and regional markets
available;
Number of new demand-driven
services provided to local
industrial saffron market
Number of female and male
Project reports
International and national expert
reports
Training reports
Corruption that might undermine technical support
Reduction of support by host government due to
reduced financial, technical and resources capacities
46
national experts trained acquiring
new skills on methodologies, tools
and best practices
Output 5.2. Ongoing project Business
development and sustainable job creation in
Iran
Number of sectors and firms which
could absorb the proper skilled and
qualified staff member
Types and number of technical and
financial services provided by
institutions
Number of people who could find
proper job related to their
qualification and skill.
Number of new created enterprises in
the target sectors
Number of new sustainable jobs in
the target sector
Experts report
Project M&E system
Baseline data collected during
Inception Phase
Government and private sector got used to manage
the business challenges through providing loans
which in some cases are subsidized
Government got used to manage the employment
through only macro level policies
The organizational processes and structures in the
Governmental organizations are not matched with
proposed mechanism of
Outcome CP Management and M&E
-Strong M&E strategy developed to monitor all
projects under umbrella of CP
Number of meetings held of
Technical Team
Number of meetings held of Steering
Committee
Evaluation mechanisms developed to
monitor implementation
Field visits
Bi-annual progress reports
Project Manager’s reports
Evaluation report
Data collection
Government commitment
Stakeholders’ and national partners’ willingness for
cooperation
47
ANNEX IV: Gender Checklist
GENDER MAINSTREAMING CHECKLIST FOR PROJECTS
Date: 29 September, 2016 Project Manager: Zhen Wang
SAP#: 160023 Project Name: Country Programme for Iran 2017-2021
Project
Component Question Yes No Partially Comments*
Analysis/
Justification
1. Does the project explicitly address a gender issue or issues?
If so, please describe how and if not, please provide explanation. CP intends to address fully fledges gender
issues
2. Does the background/context analysis of the project examine:
a) the different situations of women and men
b) the impacts the project will have on different groups
Data & Statistics 3. Will the project collect and use sex disaggregated data and qualitative information to analyse
and track the gender issues?
Results Framework
4. Are outcomes, outputs and activities designed to meet the different needs and priorities of
women and men? Has a gender marker been assigned at the output-level (‘central focus of
output’, ‘significant attention’, ‘limited attention’ or ‘no attention to gender’)? **
5. Does the results framework include gender responsive indicators, targets and a baseline to
monitor gender equality results?
Gender responsive targets will form part of the
projects/ activities deriving from the CP.
Budget 6. Have adequate financial resources been allocated for the proposed gender activities (vis-à-
vis % of total budget)?
Stakeholders &
Participation
7. Are women/gender focused groups, associations or gender units in partner organizations
consulted/included in the project?
8. Does the project ensure that both women and men can provide inputs, access and participate
in project activities (target at least 40 % of whichever gender is underrepresented)?
Gender
Capacities
9. Has a gender expert been recruited OR does the project staff have gender knowledge and
have gender related tasks incorporated in their job descriptions?
It is expected that national authorities intend
to have gender knowledge and have gender
related tasks incorporated in their job
description. 10. Will all project staff be sensitized to gender (e.g. staff will complete basic online course; I Know
Gender Course on UN Women’s eLearning Campus https://trainingcentre.unwomen.org)?
Project
Implementation
11. Is there gender balanced recruitment of project personnel and gender balanced
representation in project committees?
Monitoring &
Evaluation
12. Will the monitoring and evaluation of the project cover gender issues and monitor behavioural
changes towards greater gender equality?
*Comments are mandatory for each question answered “No” or “Partially”.
** A user guide on how to assign a gender marker within UNIDO’s SAP PPM system is found on the Intranet and OpenText