Saeed Mohammadi: Filtering and Security-Oriented Approaches Are the Biggest Barriers to Digital Economy Growth
As the 14th government enters its second year with promises of transforming the digital economy, stakeholders in this sector believe that despite efforts to support startups and the establishment of a Digital Economy Facilitation Committee, fundamental challenges remain unresolved. Saeed Mohammadi, a board member of the Tehran E-Commerce Association, states in this interview: “Filtering, lack of international cooperation, and capital shortages have stalled the engine of digital economy growth.” He emphasizes that until the security-focused perspective on the internet changes and a level playing field is established between online and traditional businesses, achieving a 10% share of the digital economy in the country’s GDP will remain an unrealistic dream. Below is the full interview with Saeed Mohammadi conducted by the Tehran E-Commerce Association.
How do you evaluate the government’s one-year performance in the digital economy under Mr. Pezeshkian?
Significant efforts have been made to support the digital economy and its players, but serious challenges and barriers to growth still persist. The Seventh Development Plan targets a 10% share of the digital economy in GDP, but currently, that share is estimated between 4% and 7%. Achieving this target requires substantial investments and removal of existing restrictions.
On the other hand, ongoing limitations on international interactions, internet restrictions, and sanctions have prevented businesses from engaging with the global economy, causing Iranian digital economy actors to fall behind global technological advancements despite the country’s considerable potential.
While the government has made commendable efforts by establishing a Digital Economy Facilitation Committee and allocating significant funds to the Innovation Fund, some issues require more attention:
In legislation and regulation, certain government approaches hinder innovation. For example, because online retail is more visible than offline retail, numerous restrictions are imposed by the government and regulatory bodies, making it difficult for online services to compete with traditional markets. Bans on selling certain goods online that are freely available offline and price controls favor offline and traditional businesses. Fintech services, especially the relatively new lending tech sector, face regulatory challenges that stifle innovation. Similar problems persist in online transportation, insurance sales platforms, and digital health services, with issues remaining unresolved despite the passage of time.
What about the importance of completing the business growth cycle?
Access to the stock market and benefiting from its advantages is a crucial step for the maturity of a business and the growth of the industry. This encourages more investors to fund startups. For instance, the entry of platforms like Hezardastan and Digikala into the stock market has created success stories for investors and young entrepreneurs alike.
Serious limitations on foreign currency allocation and import restrictions are another government policy that has hindered business growth. Due to the nature of online businesses, these restrictions have posed even greater challenges for this sector of the economy.
What do you consider the government’s most important achievement in this field?
While tangible progress on promises like lifting filtering has not yet been observed, the most significant achievement is arguably the establishment and operationalization of the Digital Economy Facilitation Committee within the National Cyberspace Center. This committee can take fundamental steps to prevent extralegal interventions, protect the legal rights and freedoms of digital economy actors, and expedite the resolution of digital business issues. In an environment where numerous legal and administrative obstacles restrict the free growth of digital businesses, this initiative could be a positive move toward creating a secure and transparent ecosystem.
What is the biggest weakness or challenge faced by the government during this period?
The continuation of internet filtering, ongoing sanctions and lack of international cooperation, insufficient capital for financing businesses, the increasing migration of skilled labor, and problems related to energy and budget imbalances have been among the most critical challenges and shortcomings confronting the government.
How do you assess the quality of internet and digital infrastructure in the past year?
In recent years, the quality of Iran’s internet and digital infrastructure has significantly declined. While other countries are investing in and improving their infrastructure, this trend has widened Iran’s gap with the rest of the world. According to the Internet and Infrastructure Commission report by the Tehran E-Commerce Association, Iran ranks 97th out of 100 countries in overall internet quality. User experience can be summed up in three words: slow (rank 84), unstable (rank 92), and restricted (rank 99).
Moreover, cybersecurity in the country is almost in a critical state. Reports of hacking attacks on private companies and government organizations have become common in recent years.
The insistence on filtering and reliance on Iranian access points to secure services has not been an effective policy. For example, during critical moments like the 12-day war, the biggest damages to the banking system and major financial organizations came through domestic servers.
What about AI technology and its future role?
Competence in AI technology will soon become essential for e-commerce. Given the fragile condition of the private sector, without government investment in developing the necessary infrastructure for AI, the country risks irreparable backwardness in this field.
Has the government sufficiently addressed private sector concerns?
The government has made some efforts to pay attention to private sector concerns, but these efforts lack a systematic and integrated approach. Many major decisions are made without considering the requirements of the digital economy, and the private sector’s opinions and suggestions are often ignored in the decision-making process. This has created a disconnect between policymakers and digital economy activists. For example, after the IPO of Tap30, there was hope that this would pave the way for other companies and encourage more investment in e-commerce, but subsequent obstacles have made Tap30 an exception.
How do you foresee the future of the digital economy under the current government?
The digital economy, like many other sectors in the country, has great potential for progress and growth. Some of this potential has already been realized. However, overcoming current challenges and entering a rapid growth trajectory requires changes that the government must pursue, with the active support of the private sector.
Changing the security-oriented view of the digital economy, aligning financial market regulations with digital economy requirements, removing internet access restrictions for all citizens (not just select business groups), strengthening AI infrastructure, and supporting startups are key factors that can lead to a brighter future for the digital economy.
If you could give the government one key recommendation for its second year, what would it be?
Lift filtering and provide unrestricted internet access to all people without exceptions.
As mentioned earlier, current restrictions keep us detached from the global growth trend. Some argue that limiting access to foreign services has helped domestic services grow, but this is a superficial view of the digital economy. These restrictions have created various obstacles to the growth of businesses and innovation in the digital economy sector.