June 25, 2021
Iran has doubled the number of its free trade zones (FTZs) to 14 as the regime tries to boost its trade with other countries in a bid to diversify the economy away from oil.
According to PressTV, Iran’s Expediency Council, the highest legislative vetting body in Iran, endorsed a law on May 6 that had been sitting unattended since 2018 for the creation of the new FTZs.
Trade in the FTZs enjoys lower tariffs while manufacturers can benefit from certain privileges in the mostly border areas where the zones are located.
The seven new FTZs include three on or near the Iraqi border, two on the northern border on either side of the Caspian Sea, one near the border with Pakistan in the east and one on the southwestern coast of the Persian Gulf.
The Financial Tribune recently reported that exports via Iran’s free trade zones and the 30 more limited special economic zones accounted for 40 percent of the country’s total exports during the last seven years.
Hassan Hakimian of Qatar’s Hamad bin Khalifa University, wrote in a 2011 research work that Iran’s free trade zones have not been very successful. He wrote of “Iran’s contradictory and ambivalent approach to international economic integration in general.”
He said, “Liberal policies pursued in the free zones have been in marked contrast to the approach on the mainland, which has been generally inward-looking in much of the post-revolutionary period.”
He argued that the zones serve mainly as “back doors” to the international economy, but said they have “stalled mainly because their promotion has been decoupled from, if not at odds with, official attitudes to the international economy at large. As a result, the zones’ ability to attract investment has been limited by both adverse external perceptions of Iran as an investment destination and internal complexities discouraging such investment.”