A total of 67,900 billion rials ($611.71 million) have been invested in Iran's free trade zones in the last fiscal year (ended March 20, 2019), indicating a 40% growth compared with the previous year’s 48,000 billion rials ($432.43 million).
In Iran, free trade zones were first authorized in 1993 in Kish, Qeshm and Chabahar. Later, Aras, Arvand, Maku and Anzali were added to the list of Iranian FTZs.
According to Secretary of High Council of Free Zones Morteza Bank, as many as 1,400 industrial units are operating in these seven FTZs.
“Free zones account for 0.3% of total land area of Iran and accommodate less than one million people,” he said.
Debates on the merits of FTZs have been based on their impact on several elements: from social issues like labor rights, environmental protection and urban planning to macroeconomic issues related to their impact on government revenues, employment, trade and foreign exchange earnings.
The primary purpose of a free trade zone is to remove trade obstacles caused by high tariffs and complex customs regulations applied in a port, airport or border checkpoint. They are also meant to help the government increase exports at a lower cost, create employment and attract foreign investment and help develop deprived regions.
Last year’s total exports via free trade zones and special economic zones stood at more than $18 billion, of which $16 billion were through special economic zones.
The term “special economic zone” is commonly used to refer to any modern zone where business and trade laws differ from those on the mainland. SEZs are located within a country’s national borders while free trade zones are usually organized around major seaports, international airports and national frontiers—areas with many geographic advantages for trade.
To encourage businesses to set up operations and attract investments in economic zones, liberal policies have been enacted regarding tax regimes, trade, quotas, customs and labor regulations.
The creation of special economic zones was also motivated by the desire to attract foreign direct investment. The benefits of companies based in such zones include production and sale of goods at globally competitive prices. The operating definition of an economic zone is determined individually by each country.
As many as 25,000 new jobs were created at Iran’s FTZs and SEZs last year, IRIB News quoted Morteza Bank as saying.
“From the start of President Hassan Rouhani’s administration in 2013, over $120 billion worth of goods have been exported and around $30 billion have been imported from and to the special economic zones, suggesting a significant trade surplus for the economy of these areas,” he added.
The official was earlier quoted as saying that $118 billion worth of goods have been exported from Iran's free and special economic zones over the past five years while the value of goods imported into the zones during the same period stands at $38 billion, meaning a trade surplus of $80 billion.
He put the total number of industrial, mineral and agricultural units in these zones at 1,607 and said free zones have generated employment for 285,000 people in the country.
According to Bank, no one is jobless in Kish Free Trade Zone, the unemployment rate in Qeshm FTZ (about 6%) is half the country’s average and the number of the jobless is very low in Aras FTZ.
“The highest unemployment rates among FTZs have been registered for Arvand and Khorramshahr due to lack of infrastructures in the aftermath of Iran-Iraq War (1980–88),” he said.
“Easy access to cheaper raw materials has decreased production cost in free and special economic zones considerably.”
The Statistical Center of Iran, the national statistical authority of the country affiliated to the Plan and Budget Organization, will provide exclusive statistics on economic indexes of Iranian free trade zones as per a memorandum of understanding signed between the High Council of Free Zones and SCI last year.
“Non-oil exports through Iran’s FTZs stood at $22 billion in the fiscal 2017-18 while they welcome 13 million tourists annually,” the head of Plan and Budget Organization, Mohammad Baqer Nobakht, said at the signing ceremony.
“Availability of accurate information on economic indicators, including unemployment and inflation, is vital for both domestic and foreign investors to ensure their investment suitability,” he was quoted as saying by IRNA.
In late August 2018, the parliament had approved a government bill on setting up eight new FTZs, namely Incheh Borun in Golestan Province, Mehran in Ilam Province, Ardabil in Ardabil Province, Sistan in Sistan-Baluchestan Province, Baneh-Marivan in Kurdestan Province, Jask in Hormozgan Province, Bushehr in Bushehr Province and Qasr-e Shirin in Kermanshah.
The establishment of a dozen special economic zones, including Fasa and Lar in Fars Province, Abarkouh and Meybod in Yazd Province, Zanjan in Zanjan Province, Gachsaran in Kohgilouyeh-Boyerahmad Province, Serow-Urmia in West Azarbaijan Province, Khaf and Qouchan in Khorasan Razavi Province, Khorramabad in Lorestan Province, Takestan in Qazvin Province and Shahin Shahr in Isfahan Province, was also authorized by the parliament.
However, the Guardians Council rejected the bill passed by the Iranian Parliament on the establishment of new free trade zones and special economic zones as unconstitutional.
