The CEO of the Arvand Free Zone emphasized the potential of free zones in strengthening economic ties with neighboring countries. He noted that enhancing the powers of free zones, establishing integrated border management, and forming coherent economic diplomacy can facilitate trade, increase regional interaction, and lead to more effective utilization of the economic opportunities in border territories.
At a meeting of deputy secretaries and CEOs of free and special economic zone organizations, attended by Executive Vice President Mostafa Khanzadi, a representative from the Public Relations and International Affairs Department of the Supreme Council Secretariat of Free and Special Economic Zones, he thanked the participants for organizing the event, calling it a potentially turning point for activating the work of free zones.
Khanzadi reported that contacts were maintained with Mr. Aref and the Minister of Interior over the last seven or eight months, after which executive provisions to Article 65 were prepared, focusing on the Arvand Free Zone as a pilot project. These provisions went through various stages of approval with the leadership and the governor, but encountered an issue when submitted to the State Committee for Islamic Resources, which is currently under re-review. Thanks to previous discussions with the minister in the Government's Economic Commission, there is hope for the approval of these provisions.
Explaining the necessity of implementing this article specifically in Arvand, the CEO of the Arvand Free Zone pointed to the region's specifics: it has two special governors who are deputies to the governor, and the population is about 600,000 people. Khanzadi added that in addition to the Ministry of Interior's duties towards districts, functions were divided such that parts not directly related to the free zone should be transferred to the provinces, as a significant part of the managerial potential is currently occupied by issues unrelated to the zone's main mission.
He also mentioned that issues of municipalities and the Security Council have always been discussed, and although favorable conditions have been created in the free zone, some matters were resolved verbally, but official government approval is expected. The CEO continued, addressing the taxation of goods, stating that continuing the current practice is illegal, as tax should not be levied on reasonably consumed goods.
Khanzadi stressed that even if goods enter the mainland, the revenue generated from them must return to the free zones to finance infrastructure development. He predicted that under this scenario, the free zone's income could double. He warned that a region with a population of about 600,000 and insufficient infrastructure would suffer serious damage under the current conditions.
The CEO described another important problem in border areas as 'unified economic diplomacy.' He noted that this issue was raised in the presence of the Minister and Mr. Furuzan, and it is unacceptable for different bodies in neighboring countries to express contradictory opinions. Khanzadi cited Iraq as an example, noting that despite having good contacts with the Iraqi side, he feels serious losses in this area. Presence in Mehran and discussion of various issues leads the other side to exploit differences in views.
He insisted on the need to form unified economic diplomacy across different approaches to neighboring countries, including Iraq and Turkey. It was proposed to create a committee of experts on Iraqi affairs with a separate secretariat for standardized conduct of this diplomacy. The CEO concluded that any contact with foreign parties must be carried out within established rules to benefit from a unified economic approach.
Regarding banking issues in free zones, Khanzadi pointed out that the previously adopted decision to deposit resources of all structures and companies into the treasury led to funds being placed at the disposal of banks. This issue is particularly important for regions like Arvand, which possess large state capabilities. Although the Abadan refinery and Abadan petrochemical complex are located in the region, the free zone itself does not receive direct income from these complexes, which limits its ability to provide necessary services to industries.
One of the requests voiced by the CEO is the creation of a specialized bank for free zones, which has been discussed for years. In addition to discussing an offshore bank, either funds must be returned to regional banks, or a mechanism for creating a specialized bank for free zones must be considered.
Khanzadi also drew attention to the need for unified border management. He noted that this problem is simply solvable but is of immense importance. At the Shahlamcheh border crossing, which the Minister visited, there were about 100 people present, and 12 decision-making bodies operate on this border, creating complexities in border management. In this regard, a scheme was developed whereby border free zones should have greater authority, and this plan is under review.
Khanzadi appealed to the Minister of Economy, who oversees this issue, as well as the Ministry of Interior, which has relevant decrees, to clarify responsibility for managing this matter and to determine the body that should ultimately manage it. The CEO, citing recent experience at the Shahlamcheh border, noted that yesterday, when the border between Iran and Iraq was closed, the free zone had the authority to act in this area, allowing it to demonstrate proactive management. This fact was covered by the media, and one reason for Iraq's quick reopening of the border was the initiative shown by the free zone.
In conclusion, it was stated that security issues must remain within the competence of the provinces and relevant authorities, but in the sphere of economic management, trade, and activities related to free zones, special power and responsibility must be enshrined for the free zone itself to ensure faster and more effective resolution of border issues.
The Arvand Free Zone is located in the southwest of Iran, in the Khuzestan province, at the confluence of the Arvand and Karun rivers near the Persian Gulf. It covers an area of 37,400 hectares and includes the cities of Abadan and Khorramshahr, making it the most densely populated free zone in Iran with a population of about 500,000 residents. The zone borders Iraq and Kuwait, providing direct access to the Shahlamcheh land border and the Persian Gulf. It is equipped with multimodal transport infrastructure, including the Abadan International Airport, Khorramshahr port (Iran's second-largest container port), and railway lines. The zone is a major industrial center, housing the Abadan refinery (450,000 barrels per day), petrochemical plants, steel, and shipbuilding industries. It serves as Iran's main trade gateway to Iraq, offering tax incentives and 100% foreign ownership.
The establishment of Free Trade Zones (FTZs) in Iran began in 1368 of the Iranian calendar (March 1989 – March 1990) after the decline in oil revenues in the country the previous year, prompting the government to promote non-oil exports. The first two FTZs were established in the south of the country: the first being Kish FTZ, established in 1368 on Kish Island in the Persian Gulf, and the second being Qeshm FTZ, established on Qeshm Island in the Strait of Hormuz a year later. Since then, five more FTZs have been established in the country, including Chabahar in the southeastern Sistan and Baluchestan province, Arvand in the southwestern Khuzestan province, Anzali in the northern Gilan province, Aras in the eastern Azarbaijan province, and Maku in the western Azarbaijan province, all located in the northwest of the country. The development of existing and the creation of new FTZs has become one of the main economic directions of Iranian government policy.
The Secretary of the Supreme Council of Free and Special Economic Zones recently stated that expanding the powers of free zones and broader utilization of the potential and experience of the private sector can form the basis for attracting investment, developing economic activity, and more effectively utilizing the opportunities of these zones.
Hossein Furuzan stated that opponents expected Iran, like other countries, to surrender under pressure, but courage, planning, and measures taken prevented this outcome. He added that an economic war is currently underway, and under such conditions, free zones need to be trusted more. He called on the government to give free zones sufficient time and authority, and in return, he must be sure that the leaders of the free zones will strive to achieve the set goals and not disappoint the government. He assured that they would work hard for the development of free zones and the country's economy, believing that by granting more authority, existing opportunities can be used to overcome difficult economic conditions. The Secretary of the Supreme Council proposed increasing the share of the private sector in the decision-making structure related to free zones, suggesting that at least two out of the five members of the decision-making body should represent the private sector, as private players can significantly help in attracting investment and solving economic problems.
