Free economic zones to boost Iran’s attractiveness for foreign investments

Sputnik– The final nuclear agreement turned Iran into an attractive destination for foreign investments. After the agreement was signed, a free economic zone on the Iranian island of Qeshm managed to attract investments from 10 countries.

Qeshm Island is located a few kilometers off the Iranian southern coast, opposite the port cities of Bandar Abbas and Bandar Khamir. The 135 km long island, which is the largest in the Persian Gulf, hosts a 300 square kilometer free zone jurisdiction.

In an interview with IRNA, Hami-Reza Moameni, managing director of the Qeshm economic zone, said that among the interested countries were Russia, France, Britain, China and Japan.

“After Iran reached a deal with six international mediators on its nuclear program its economic ties with foreign partners deeply transformed. Iran became a magnet for international business,” Vladimir Sazhin, senior research fellow at the Institute for Eastern Studies, at the Russian Academy of Sciences, told Sputnik Persian.

In 2016, Tehran began to compensate losses in trade and economic ties, after years of Western sanctions. The focus was placed on such centers of power as the European Union and China. Last year, Iran managed to significantly increase trade with France, Italy, Britain, Japan, Turkey etc.

Currently, foreign investments play the key role in developing the Iranian economy. According to estimates obtained by Sputnik, Tehran will need nearly $500 billion in the coming five-seven years. For example, by 2020, Iran eyes attracting $185 billion of investments only in the oil, gas and petrochemical industry.

In 2016, Iran’s economy received around $12 billion for 113 projects. In the investment field, Iran cooperates with a number of countries, including China, France, the United Arab Emirates, Venezuela, Britain and Russia. In December, the Russian parliament passed a draft bill to ratify a Russia-Iran agreement to promote and secure mutual investments.

Companies from Germany and Spain have been the most active players in the Iranian investment market. For instance, between December 2015 and December 2016 Spanish companies invested $3.2 billion into a few projects, and companies from Germany — $2.9 billion in 17 projects.

“This is still far from the planned $500 billion, and there are several reasons for that. In particular, the Iranian laws do not fully comply with foreign investors’ requirements and interest. Tehran knows that and is currently working to adjust its norms to internationally adopted rules. In addition, not all possible investors see the advantages of placing money in the Iranian economy. They are still prisoners of the stereotypes from the period of sanctions,” Sazhin explained.

In turn, Iran is working to improve and promote investing attractiveness of its economy, including in different sectors and regions.

There are seven free economic zones in Iran. According to Moameni, the Qeshm Free Economic Zone outstands in terms of investment attractiveness because it is a rich in oil region with well-developed logistics infrastructure.

Its advantageous geographical location makes Qeshm Island a transfer point in trade between Iran, the Gulf countries and Europe. The Iranian government expects that the Qeshm free zone will become a major economic center, comprising industrial production, information technologies as well as financial and banking institutions.