Latest from Interview
Iranian Parliament's Urban Development Commission had recently proposed entrusting the authority to issue licenses to ride-hailing apps to the Ministry of Interior and municipalities, which was met with vehement objection from industry stakeholders and experts. The government intervention, endorsed by a letter from First Vice President Mohammad Reza Aref, has been hailed as a significant move in preventing retrogression in Iran's innovation ecosystem.
In his letter to the Ministry of Interior, Ministry of Industry, Mine and Trade, and the Legal Affairs Office of the Presidency, Aref clarified that under a Cabinet decision, regulatory oversight of passenger and cargo transport within cities will remain in the authority of the Ministry of Interior, with intercity transport regulation falling within the jurisdiction of the Ministry of Roads and Urban Development. Notably, licensing of internet-based businesses remains with their union.
This decision has been interpreted as safeguarding the current regulatory framework for digital transportation platforms while ensuring that local municipalities just regulate in their localities.
Concerns Regarding Municipalities Entering the Licensing Scene
Nima Qazi, head of Iran's E-Commerce Association, commended the government's stance, saying the separation of licensing and oversight is key to maintaining market integrity. Qazi warned that granting licensing power to municipalities would open the doors to conflicts of interest and financial involvement. "Municipalities issuing licenses to ride-hailing apps would open doors to corruption and monopolistic practices since they have financial interests," he said. "Luckily, this verdict does not permit the repetition of past failures."
Qazi further remarked that this step reflects a broader commitment to rational government: "Rather than flouting Parliament entirely, the government held firm to its original position by blocking amendments that weren't in line with its own bill." He expressed the wish that this openness would be extended to other policy spheres.
Strengthening Rational Regulation
President of Iran's Virtual Businesses Union Reza Olfat-Nesab, labelled the government's move as a strengthening of sensible regulatory frameworks in digital transport. "We concur with giving more supervisory roles to ministries like Interior and Roads, but maintain the licensing role within unions," Olfat-Nesab explained. Activities of ride-hailing services have, since 2019, been under the guidance of definitive guidelines that enabled uniform growth based on a single set of regulations. Altering this scheme would destroy established order and harm consumers and investors.
Olfat-Nesab referred to potential chaos if municipalities were able to license: "Iran has over 400 large cities with varying municipal regulations. Decentralized licensing would demolish operations." He urged faster action by officials on such fundamental questions given ride-hailing's scale, processing nearly four million daily trips, and its penetration to millions nationwide.
An Important Test for Governance
Although some players advocated for larger roles at the expense of innovation hubs' growth, this decision attests to government immunity against retrogressive policies in digital spaces. It is also a litmus test for how Iran will govern its future digital economy: Will the government persist in keeping regulatory channels progressive and transparent? Or will domestic bureaucracies get in the way?
