Aras Free Trade Industrial Zone or AFZ for short is one of Iran’s most popular and bustling business frontiers anywhere in the country.
Situated in northwest Iran bordering Armenia, Azerbaijan Republic and the semi-autonomous Nakhchivan region which belongs to Azerbaijan, Aras has become the main gateway to mainland Iran from the northern CIS states.
According to a government decree in 2005, board members of the newly formed Aras free zone designated some 9,700 hectares of land to be within the zone. In 2008 the area was expanded to 51,000 hectares, which now includes the areas of Jolfa and Kaleybar.
Connections
The AFZ has become one of the major transit hubs for shipping north and south and includes Iran’s first railway line, which connects to the Turkish city of Van a few hundred kilometers away. In fact, the first electric railroad in the entire of Iran was inaugurated on this line and it runs around 150 km from Jolfa to the ethnic Azeri city of Tabriz.
Unlike many free zones in the country, Aras currently doesn’t offer internal flights; however, the AFZ officials have announced they can now shuttle people via a new helicopter service to Tabriz on a daily basis. The new service which has sped up transit times has shortened the commute of 90 minutes from Tabriz to fewer than 45 minutes. The officials haven’t announced whether they intend to start fully fledged flights into the zone but you can expect plans currently in motion to improve accessibility in the near future.
Production
The free zone in its entirety plays host to a multitude of different startup businesses. These include textiles, furniture manufacturing, cosmetics, auto-parts manufacturing, household appliances and other industrial manufacturing facilities. As of 2012, the AFZ announced that over $250 million of direct investment had been absorbed in the zone, with additional companies applying for licenses and purchasing land to create new manufacturing facilities.
Latest statistics from the Free Zone Organization state that the area now employs thousands of workers who live in the surrounding areas. This, coupled with its advantageous ethnocentric makeup of Turkish speaking people, has made the area a source of much excitement for nations who speak varying forms of Azeri and Turkish. This is also beneficial for the workers as they are able to communicate with many of the foreign Turkish and Azeri investors in the region.
Interviews conducted back in 2013 by the Iranian national television (IRIB) with a local official suggested that “54 hectares” of land had been designated for petrochemical and automobile production, which would presumably be shipped to their neighboring countries for large profits. In terms of foreign investment Aras is number one as 13 out of 17 companies based in the zone are foreign owned.
Like our previous reports on free zones, authorities in the AFZ offer special incentives to entice foreign investors into the zone. The free zone gives potential business people tax exemption for over 20 years once investment plans are submitted and provides complete access for foreign investors to partake in the area. There is no restriction on foreign ownership. Foreigners are free to bring in or take out their capital and profits. The zone provides investors with support and guarantees on foreign capital, visa exemption and facilitation of residence permits on submission of foreign passports, simplified rules and regulations on labor relations, and social security.
The AFZ also offers transfer of some parts of manufactured goods to mainland Iran without customs duties. It also offers customs waiver on imported and exported goods and fast-track visas for foreign workers.
International Standards
The free zone is also being touted as a duty-free shopping center, with developments underway to provide new international standards in home purchasing. The area will become an international hub in the next ten years with deals comparable to other free zones in the Persian Gulf.
The AFZ has also begun construction of new facilities to add to the already burgeoning sites on offer, these include the Sattar-Khan Shopping Center, which looks similar to the Cuban parliament building, and also the 4 star Aras Hotel, which is currently under construction. In addition to the large scale projects, developers have laid out plans to develop a new area on the edge of the Jolfa town called Aras Riverside Complex, which includes a European-esque retail and residential area which covers 130,000 square meters. The area will also include a tower, on top of which you’ll be able to see into the surrounding countries bordering the Aras River. The developers state that the area will be ready in the next two years with more projects added to the master plan later.
Last week the AFZ announced that foreign transit passing through the free zone in the first six months (March 21 – September 21) of the current Iranian calendar year reached a total of $103 million. This is coupled with over $93 million worth of new industrial investment in the zone. According the PR department of the AFZ, the major transit goods from Aras were machineries and mechanical equipments, food items, electrical appliances, and fabric, plastic and rubber products.
In all, although one of the newest trade zones in the country, the Aras zone is likely to become a far more central and a major player in the years to come, given the fact that the area has historical links with its northern neighbors.
