The head of the Aras Free Zone Organization stated that the sixth generation of free zones is capable of transforming borders into a platform for economic interaction. Hadi Muhammadzadeh emphasized that free zones require appropriate tools to fulfill the tasks set before them.
Modern free zones are designed to work with states, develop economic diplomacy, and form strategic ties. According to Muhammadzadeh, if this approach is implemented, free zones will cease to function as isolated entities in industrial and commercial spheres, but will become a driving force and a strategic instrument of the country, allowing them to play an important role both in the state's macroeconomy and in the sphere of economic sustainability under current conditions.
However, for free zones to perform their function as a special operational tool in the field of economic diplomacy under the current special circumstances, there are a number of problems and obstacles, some of which are characteristic of the country's free zones in general.
The first problem, named by the head of the Aras Free Zone Organization, is the multiplicity of decision-making bodies and the lack of coordination between departments. This complexity of structures and lack of consistency hinder the implementation of the single window concept, making it unrealistic for investors.
Muhammadzadeh noted that many issues get stuck in administrative bureaucracy, which effectively prevents the achievement of free zone goals and complicates investor activities.
Addressing the situation in the Aras Free Zone and at the Norduz border, he highlighted the critical importance of accelerating and facilitating the movement of goods in the Aras Free Zone's Norduz zone. This zone is one of the country's active entry and exit points in the northwest and is considered the country's only land access to the Eurasian Economic Union.
The head of the Aras Free Zone Organization reported that he personally pays special attention to accelerating the movement of goods in the northwest of the country and at the Bazarghan border, and although various agencies are making attempts, the lack of integrated management in this area leads to each department acting according to its own principle, resulting in no real optimization at the border.
Muhammadzadeh added that the border should not be a place of stopping, and unnecessary delays should not occur there. Although necessary control and monitoring must be carried out, it is observed that the Border Service, the terminal, and the governorship may act according to their separate schemes.
He also stated that the free zone, in accordance with the country's spatial planning document and its responsibility in this area, and taking into account Article 65, can carry out the necessary organization in this area within its competence.
The head of the Aras Free Zone Organization mentioned that Dr. Purmohammadi visited this region three times and sent written messages to resolve these problems, but due to the arbitrary approaches of the departments, these decisions and measures were not fully implemented.
The second obstacle identified by Muhammadzadeh was the weakening of fundamental laws and incentives for free zones. Instability in the legislative base and motivational mechanisms of free zones has gradually reduced their competitive advantages.
He noted that many economic activities in free zones have suffered from these problems, facing difficulties that actually go beyond the powers of the free zones.
Regarding tax benefits, he pointed out that the 20-year tax exemption and profit tax exemption, considered the main incentives, have been, frankly speaking, overshadowed by arbitrary interpretations and organizational interests.
The head of the Aras Free Zone Organization stressed that one of the most obvious advantages of free zones is tax relief. According to paragraph 'A' and Article 10 and the relevant note, the Aras Free Zone meets all three specified conditions: it is enclosed, has a positive trade balance, and is located far from populated areas, but the Tax Service does not accept this.
Muhammadzadeh concluded that at least in the case of the Aras Free Zone, this advantage cannot be maintained under current conditions, which represents one of the serious problems of free zones.
He then touched upon the topic of regional development and the need to strengthen economic ties with neighboring countries. A few days ago, he conducted a mission studying the current situation in Armenia. He noted that the Azerbaijani market had effectively been lost, and recent regional agreements only decided on the need to define common interests.
The head of the Aras Free Zone Organization noted that such an opportunity exists in Armenia, and the issue of creating joint free zones was raised. Previously, a memorandum of understanding was signed between the Aras Free Zone and the Armenian side on this issue, but it has not been implemented so far.
Muhammadzadeh defined the third challenge as the lack of common understanding and beliefs in the country's executive and management structure regarding the role of free zones. For free zones to participate best in economic diplomacy, there must be a common concept in the country's leadership about the functions of free zones.
He honestly admitted that such a common understanding does not exist in practice, and there is serious resistance to it.
The head of the Aras Free Zone Organization continued that in joint commissions with Armenia and Azerbaijan, given the geopolitical and geographical location of the Aras Free Zone, they should naturally be present in these commissions to best present existing investment opportunities, but this has not happened yet.
Emphasizing that this zone has not remained a passive observer despite the country's limitations and special conditions, Muhammadzadeh stated that the Aras Free Zone was not merely a bystander. He also raised this issue at a meeting with Dr. Pezeshkian.
The head of the Aras Free Zone Organization specifically highlighted that in the country's industrial free zone, under special wartime conditions, the production cycle did not stop for a single day. Moreover, the production cycle was not only not suspended but was activated.
Muhammadzadeh clarified that the Aras Free Zone currently plays a role in ensuring vital goods for the northwest of the country, as well as supplying raw materials to production enterprises. As is known, Tabriz and East Azerbaijan province are an industrial and commercial region, and more than 95 percent of the economy here is in the hands of the private sector.
He added that to date, no industrial enterprise has been closed due to the special war conditions, and none will be closed.
The head of the Aras Free Zone Organization, referring to the energy sector and the president's emphasis on developing renewable energy sources, noted that the president pays special attention to the energy sector. Before the National Unity government, there were practically no solar power plants in the free zones, but today the Aras Free Zone is acting as a driver in this direction.
In conclusion, Muhammadzadeh stressed that if the legal norms of free zones, especially Article 65, are fully complied with, and the existing obstacles to the activity of these zones are removed, free zones will be able to transform from an isolated aggregate in industry and trade into a strategic instrument of the country's economy and economic diplomacy.