The free trade zones played a major role in meeting a portion of the country’s need for electronic goods and appliances when entry of goods to the country even on tariff bases was practically banned and European, East Asian and other countries were not allowed to establish representative offices and provide after-sale services inside Iran. Local visitors, like foreign visitors to these free trade zones, were entitled to carry to the mainland goods worth less than $80 without paying any custom charges and duties once every year. Although transformation of the free trade zones into ports of entry for foreign goods into the mainland had nothing in common with the original objectives and legal frameworks set for these entities but at that particular time, this arrangement was the only way to boost trade activities and create employment opportunities in free trade zones while creating at the same time through limited luggage trade a certain degree of equilibrium in supply and demand in the country’s household goods markets. Regrettably, these unsustainable and indefensible attractions led to the influx of capital, trade and mercantilism in the free trade zones, especially in the Kish and Qeshm islands.

The primary objectives which were aimed at transforming the free trade zones to export oriented industrial and production poles faded away and the zones became a center for a flood of foreign products into mainland markets.

With respect to new developments in global economy, Iran’s unavoidable membership in World Trade Organization (WTO) is fast approaching and recent liberalization of import policies as a prelude to such a membership, prove that the situation is entirely different from what it was two or three years ago. Liberalization of import policies which started with abolishing duties on 1400 items is a reflection of the fact that free trade zones will not be able to exist only through export of goods to the mainland for much longer.

Instead of establishing their representative offices in free trade zones, most European, Japanese and South Korean companies, are setting up their offices in Tehran these days and in this way not only the customs duties and commercial benefits will be added to the public coffer but widespread access to domestic markets will provide better and broader after sale services throughout the county; something which was not possible before when the goods were delivered only to mainland markets through free trade zones.

Establishment of the representative offices of manufacturing companies in Tehran has reduced the price gap significantly between similar goods available in free trade zones and mainland markets and has made irrelevant the main attraction of these trade centers to the public.

New circumstances and free flow of foreign goods into the country have provided the Iranian consumers with an opportunity to procure their required goods form shops and authorized distributors in their resident cities and feel confident of after-sales services.

Under the latest irreversible conditions, with respect to varying geographical locations and natural, commercial and industrial attractions, each free trade zone should become accustomed to new realities. The Kish free trade zone is left with no other alternatives but to become a fully fledged tourist attraction to people from all over the world. In order to achieve this objective, the management of free trade zones organization and investors should reconsider their outlook.