Economy, Domestic Economy

Qeshm Prospects

Qeshm Prospects
Qeshm Prospects

Qeshm Island located on the southern coast of Iran’s share of the Persian Gulf is the country’s biggest free trade zone by landmass. The island sits adjacent to the port cities of Bandar Abbas and Bandar Khamir -- both in Hormozgan Province.

Qeshm is the largest island in the Persian Gulf region. With a 135 km length, it is lying strategically in the Strait of Hormuz, just a stone’s throw from the Omani port of Khasab on the north end of the Arabian Peninsula. Although it’s 2.5 times the size of the country of Bahrain, it has a small population of just over 113,000 full time residents. This number does jump through busier tourist seasons.  But, how does Qeshm compare with another famous island, Kish, located just a few hundred kilometers up the coast?

One of the many benefits of Qeshm Island is that it is a visa-free entry site. Recently Qeshm Free Zone Managing Director Ahmad Habibi said that foreign nationals can now enter the island without holding visa, adding that foreigners may extend their two-week stay in the free zone.

In his announcement in mid September, Habibi highlighted the importance of visa free entry as a way to attract foreign investment, adding that foreigners can invest in Qeshm with no restrictions on amount. He also pointed to the tax exemption rules there, saying that commodities traded on the island also receive fair services. The island also allows foreigners to buy out properties and company assets to 100 percent ownership. And authorities are offering streamlined procedures for foreigners wishing to live and work on the island.

Additionally, the island also offers offshore banking for expatriates and foreign currency exchange at rates in matching bureaux de change in Iran’s capital Tehran.  

Qeshm in recent years has had the fantastic title of being the cheapest place in the country to buy goods. It is also a second/third home for many merchants’ to pick up goods before taking them to mainland Iran.

Although one shouldn’t just see Qeshm as a touristic destination, the long term plan of the island’s authorities seems to be much broader in terms of ambition and scope. Qeshm as one of the major energy hubs on the southern coast has the enviable position of being the closest of the country’s gas centers near the Gulf of Oman, and then beyond to the Indian Ocean.

In one interview, an oil official said that the National Iranian Oil Company (NIOC) was resolved to develop the oil and gas fields of Qeshm Island to turn the island into an energy hub within 10 years.

Mohammad Hossein Daneshfar, a senior official at the Iranian Offshore Oil Company (IOOC), said that is in addition to the Hengam oil field, which is currently the only field producing light oil in the region.

He further added that the island was expected to produce over 12,000 megawatts of electricity if enough finance was provided, given the vast reserves of natural gas situated around the island. The electricity could meet the energy need of power plants in the region for the next three decades.

Like Kish, Qeshm Island is one of Iran’s special free trade zones. The island is attempting to specialize a broader range of services and sectors as part of the major development plan of the island. One quick look at the Qeshm Free Trade Zone Investment Organization’s home page, suggests that the island is seriously thinking out of the box when it comes to future growth areas. The investment section of the website says it is willing to offer lucrative contracts for companies willing to set up in a host of different industries including, oil, gas, cereal production, date production, glass manufacturing and hotels, among many others.

Recently the QFZO announced it has penned a contract with a Turkish company to set up a new hospital on the island for both international and local patients.

In another announcement the organization said it has initiated a new monorail project with the German AGL company to span the length and breadth of the island.  The PR department of the organization announced that the initial project would begin from the main Shahid Zakeri port area to the Zeytoon (Olive) Park area. Further phases are expected at later stages to connect other parts of the island. Currently there are no further public details related to the project, though it would be expected to be in the hundreds of millions of dollars when the project comences.  Projects like the aforementioned monorail would greatly increase efficiency.

The prospect that Qeshm Island could become the main strategic energy and trade hub on the edge of the Gulf of Oman, may radically transform the long term prospects for the islands economy and for Persian Gulf littoral states. It may also in the long term receive larger amounts of foreign funding due to its relatively large size in comparison to other free trade zones along the Persian Gulf.