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Dividing $5 Billion

Hotels and trade centers in Kish, factories and shopping malls in Qeshm, and industrial plants in Chabahar. Is that all we know about free trade/special economic zones? There are at least 19 Special Economic Zones (SEZs) around the country, each with their own specific commercial and industrial advantages. While free trade zones are taking on increasingly important roles in advancing economies throughout the world, in Iran they are rather fledgling and need to be developed yet.
A glance at the performance of free trade/industrial zones in Iran indicates that only those zones that have offered tailor-made advantages for special activities have been able to secure relative success. Examples of such zones are the Petzone in Mahshahr and Assaluyeh, both of which located by the Persian Gulf and largely operated by the country’s oil, gas and petrochemical industries.
Hossein Nasiri, Presidential Advisor and Secretary of the High Council for Free Trade/Industrial Zones, recently provided an update on the capabilities of FTZs and SEZs.

Foreign Investment: Free trade and special economic zones in Iran have so far drawn $5 billion in foreign investment. The South Pars Field and Petrochemical Special Economic Zone account for $3.7 billion of the total. Three free trade zones have attracted one billion dollars in foreign investment. Another $500 million has gone to other zones.
Foreign countries generally lay the economic infrastructure in such zones before inviting investors over. In Iran, revenues brought in by economic activity in free trade zones are used to develop the infrastructure. Iran’s economy has never had a compilation of theories. Some measures have been taken already but they don’t go far enough. With infrastructure problems in existence, such theories will be non-existent.

Potentials: Free trade zones can fetch a great deal in hard currency. For instance, Chabahar Port in southeastern Iran could serve as a major spot to transit goods to Central Asian countries.
Foreign experts are of the conviction that the Chabahar route could save Iran 30% in transport costs. Selling oil products and rendering services to vessels passing by the Qeshm Free Trade Zone can bring in substantial amount of revenues.
The advantages Qeshm holds over UAE’s Fojaireh can help it draw the bulk of the UAE zone’s $2 billion in revenues.

Future Plans: Iran’s High Council for Free Trade/Industrial Zones seeks to turn the southern island of Kish – already a free trade zone – into an information technology base. This doesn’t need much capital since investment risk factor in Kish is fairly low. We can go around middlemen and utilize the potentials of Iranian experts in this zone.

Smuggling: By some accounts, $13 billion in smuggled goods slip in and out of Iran each year. A look through realistic lens put the figure at between six and seven billion dollars. That mainly stems from economic fraud. However, only a meager percentage point of smuggling is conducted at free trade zones.