Developing the area surrounding Imam Khomeini International Airport to create an airport city has been on the Ministry of Roads and Urban Development’s agenda as part of the objectives outlined in the Fifth Five-Year Economic Development Plan (2011-16).
Accordingly, the government-owned IKIA Airport City Company was officially established in March this year to manage the project’s execution and supervise the investment activities. A report by the Financial Tribune’s sister newspaper Donya-e-Eqtesad reveals details of the project.
An airport city or aerotropolis is an urban plan in which the layout, infrastructure and economy are centered on an airport. The plan stipulates that an airport can do more than extending traditional aeronautical services through new non-aeronautical commercial facilities, services and revenue streams.
The master plan for IKIA airport city includes creating a 1,500-hectare free trade zone and a 2,500-hectare special economic zone in a 13,700-hectare area surrounding IKIA. The plan also aims to establish 25 commercial facilities encompassing a wide range of commercial activities, including manufacturing, telecommunications and logistics, hotels, retail outlets, entertainment complexes and exhibition centers, in a 400-hectare area in the vicinity of the airport.
Parallel with the implementation of IKIA airport city project, completion of four development phases of IKIA is in progress to increase annual passenger capacity to 90 million from the current 6.5 million. Completion of a special pilgrimage terminal within a year and construction of the second passenger terminal of IKIA within the next five years are part of IKIA’s aviation projects.
The Ministry of Roads and Urban Development intends to raise the required financial resources for the project by leasing the surrounding plots of land to private companies and attracting private investments. The ministry will also allocate 10 trillion rials ($300 million at official exchange rate) as initial capital.
Project Objectives
Seven major objectives are pursued by IKIA airport city project: creating sustainable sources of income to improve aeronautical, cargo and passenger operations, boosting foreign exchange revenues, creating sustainable economic growth, increasing airline companies’ revenues, enriching the connection time of transit passengers and evolving IKIA into a multi-modal passenger and cargo hub.
The project is expected to create 500,000 new employment opportunities and generate non-aeronautical revenues amounting to 60% of the airport’s total revenues.
Proposed Commercial Facilities
The project to develop commercial facilities around IKIA is aimed at creating a suitable platform for both national and international companies to cluster around the airport and engage in business activities. The master plan for IKIA airport city includes 25 commercial facilities and townships around the airport.
A health village to provide high quality medical services to both national and international patients, a rest area complex to serve the transit passengers, a media city, a convention city, a knowledge city to enhance knowledge-based economic activities, sports city, an IT park, a cultural village, a clean industries park, an archeological park, a sports complex, a leisure city and a hi-tech park are only some of the facilities to be developed in the airport city.
Investing in IKIA’s FTZ and SEZ
To attract businesses to invest in IKIA’s Free Trade Zone, the government has introduced the following benefits and incentives: tax exemption during the first 20 years of establishment, easy registration procedure, entry and exit of cargo from the zones without complicated customs formalities, exemption from import duties on raw materials and income tax exemption for all employees.
Businesses registered in IKIA’s Special Economic Zone can also enjoy benefits like exemption from duties and value-added tax, exemption from tariffs on import of manufacturing machinery and easy issuance of construction permits.
