Economy, Business And Markets

Bid for Financial Hub in Free Zones

Bid for Financial Hub in Free ZonesBid for Financial Hub in Free Zones

The Rouhani administration seeks to create an international financial hub in one of the free economic zones as Iran moves towards opening its market and securing its place as the region’s frontier for economic growth.

The decision to create the international financial hub was made by the Supreme Council of Iran’s Free Trade, Industrial and Special Economic Zones – a body in charge of supervising the affairs of the economic free zones.

The secretariat of the council is looking to get the president’s order to create the hub in the economic free zones.

“The need for a financial hub, in which all firms can operate within international norms, was felt [by the supreme council],” said Naser Khormali, the council’s chief banking and insurance official.

The secretariat is also in talks with the Central Bank of Iran to work on the required regulations. The central bank has been tasked with providing the financial framework for the project.

“We will correspond with all affiliated organizations,” the official told ISNA on Wednesday.

The secretariat of the council has prepared a letter officially requesting the creation of the financial hub, addressed to President Hassan Rouhani. It will be submitted to the president in the coming days promptly, said Khormali.

He touched upon the importance of economic free zones for Iran’s economic growth and expansion of trade. “Developing economic free zones is one of the priorities that the government must pay attention to,” said Khormali.

There are risks associated with doing business in Iran due to unstable economic conditions. That is why businessmen must be assured by the government that they can safely invest and work in free economic zones, Khormali said.

The supreme council is trying to reduce investment risk in these zones, and concrete steps are being taken, according to the banking and insurance official.

The paradigms of the insurance market in the free zones should be changed to attract more investment. Insurance penetration rates in the free zones are low under current regulations. The council wants to revise some of the regulations in this regard to make the situation favorable for investors.

The council has also signed a memorandum of understanding with the Export Guarantee Fund of Iran. The memorandum is at its final stages, Khormali told the press, though he did not specify the details of the deal.

Affiliated to the ministry of commerce, the Export Guarantee Fund of Iran was created in order to expand and promote exports, protect exporters against non-commercial risks – which are normally not covered by the insurance companies – and guarantee credits used for export of goods and services.

The Supreme Council of Iran’s Free Trade, Industrial and Special Economic Zones is a governmental body that coordinates government efforts with organizations and businesses to expand and regulate economic affairs at free trade zones.

The council is composed of ministers, vice presidents and the governor of the central bank.