Economy, Business And Markets

An Introduction to SEZs

An Introduction to SEZs
An Introduction to SEZs

Following our introductions to Iran’s Free Trade Zones, we will now move on to the next section in commercial areas, this time the Special Economic Zones.

The term special economic zone (SEZ) is commonly used as a generic name to refer to any modern economic zone, where business and trades laws differ from the rest of the country.

Broadly, SEZs are located within a country’s national borders – unlike free trade zones on the edges -- and aim to increase trade and investment, create jobs and effective administration.

To encourage businesses to set up in economic zones, liberal policies have been enacted which include investing, taxation, trading, quotas, customs and labor regulations.

The creation of special economic zones by Iran may be motivated by the desire to attract foreign direct investment (FDI). The benefits a company gains by being in such a zone may mean it can produce and trade goods at globally competitive prices. The operating definition of an economic zone is determined individually by each country.

Iran in recent years has created many of these zones mainly in regions which need jobs. Many international companies in recent years have entered these zones including Korean electronics manufacturers and foreign and local auto-parts producers.  Currently Iran has 18 official and well-documented special economic zones including Sirjan, Sarakhs, Payam, Khuzestan, Salafchegan, Khorramshahr, Persian Gulf Ship Building, Arg-e Jadid, Petrochemical, Bandar-Bushehr, Bandar Amirabad, Bandar Shahid Rajaee, Mines and Metals, Pars, Sang Lorestan, Shiraz Electrical and finally Yazd Textile special economic.

The closest SEZ to the Iranian capital is Payam special economic zone constructed in a 3,600 hectare area near Karaj, 40 kilometers west of the capital Tehran. The zone is located next to the Payam International Airport which aims to improve air cargo and postal transportation services.

The Payam zone is the only SEZ in the region with the privilege of its own airline. The area is also close to the industrial, economic and agricultural areas of the capital, with easy access to railroad, subway and world class standard highways.

To attract foreign direct investment, the zone has created equal opportunities for both male and female workers. It also offers investment opportunity for both Iranian and foreign businessmen on every scale of partnership. In addition, it provides guarantees on foreign investment in accordance with the Law on Attraction and Protection of Foreign Investment.

However, there is no border in the zone, thus goods made in the zone have the ability to be transported outside without the burden of customs duties. Machinery products and materials are also tax-exempt when they are brought in and out of the special zone.