Iran: free zones boost new investment opportunities

vienna-kerryIranian free zones have been offering special status to foreign investors since the very first 90s with the aim to attract FDIs and boost the diversification process of the national economy. Free zones are currently one of the major opportunities in the post Vienna Iran, and are a good channel to match the raising opportunities in the aftermath of the sanctions era.

Free zones offer special benefits, like the exemption from the income taxes for twenty years, single day company establishment processes, and a 100% ownership allowed for foreign investors companies. It’s an unmissable opportunity for proximity economies like India, Turkey, Russia and Pakistan, but a relevant gate to the whole central Asian and Middle East area for all those western economies that rely on exports like Italy, Germany, France among others. Exporting countries could set up local production joint venture with Iranian partners, to meet the raising demand in proximity market and also have and advantage position in the export rush following the removal of the international sanctions. Key industries like automotive, construction and real estate, energy, are the ones expected to attract more FDIs and could be really interesting while facing international competitors or approaching a local market with 80+ mln population and such a positive potential outlook and strategic position.

Iran Qatar Gas

Construction site which is part of the South Pars gas field, on the northern coast of the Persian Gulf in Assalouyeh, Iran.  (AP Photo/Vahid Salemi, File)

Among the seven free zones available, are Qeshm island in the Persian Gulf or Chabahar an interesting commercial port near China and India, and the strategic port of Anzali on the Caspian coastline which could handle more than seven tons of goods every year. There are also Special Economy Zones or SEZ, that are private (sometimes with a share owned by local municipalities) but with an established endorsement by the central government. SEZs offer a less wide range of benefits, but it should be easier to get rid quickly of red tape with a smooth bureaucracy structure compared to the free zones.

lady-driving-bulgariTop players are already making their moves with relevant resources: India recently showed interest to be even more involved into the development programs boosted by the free zones, especially with the Chabahar airport project.

The direct investment opportunities is a further channel to successfully approach the current rush to the key industries already highlighted, which have been driven the exports in the last 2-3 years with different trends.

It’s a complicated market in a complicated context, but shows a very appealing potential.

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