Transfer of FTZs to Economy Ministry Sparks Debate

One hundred forty-eight parliamentarians approved last week a motion to hand over all Iranian free trade zones to the Ministry of Economic Affairs and Finance.

The measure was added by the legislators to the sixth five-year development plan (2016-21) bill and is mostly aimed at tightening supervision over free trade zones.

In other words, the economy minister will be accountable to parliament for the operations of free, industrial and special trade zones.

MP Kazem Delkhosh, who is against the move, noted that this flies in the face of the economy minister’s announcement that he cannot take responsibility for the FTZs, the Persian daily Shargh reported.

“Today, the overburdened Economy Ministry has been left to its own devices. It cannot provide answers to countless questions on banking and insurance. This system of management will take a toll on the government,” he said.

Akbar Torkan, the secretary-general of the High Council of Free Trade and Special Economic Zones, the body charged with overseeing the FTZs, said the transition of the council’s secretariat from the Presidential Office to the Ministry of Economic Affairs and Finance would undercut and restrict the authority of FTZs’ managing directors.

“The question is can the Ministry of Economy—with the same authority as other ministries—oversee the performance of organizations active in the FTZs?” Torkan asks.

He noted that the call for supervision cannot justify their vote, adding that “inspectors of the Supreme Audit Court have time and again inspected Iranian FTZs. This is the supervision Majlis is calling for and there is no cause for concern”.

Jafar Ahangaran, advisor to the secretariat of FTZs’ high council, said it is not possible to integrate free trade zones with only one ministry because they are multi-sectoral entities encompassing a variety of areas, such as trade, industry, services and tourism.

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 from a port, airport or border obstacles to trade caused by high tariffs and complex customs regulations. They are also meant to help the government increase exports at a lower cost, create employment and attract foreign direct investment and revive deprived and stressed regions.

Nonetheless, some lawmakers argue that with imports many times more than exports from Iranian free trade zones, they have practically turned into platforms for imports.

Some even go further by claiming that these zones have given rise to smuggling. They also oppose the establishment of new free trade zones in the country by claiming that they have always been synonymous with a rise in corruption, land value and land grabbing.

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.