Iran’s Free Trade Zones: Challenges and Opportunities

For over a century, governments around the world have sought to boost and exploit the economic power of their particular regions and zones by designating them as „special‟ or „free‟ economic zones. This trend has gained momentum in the last four or five decades with the number of zones proliferating in recent years. According to ILO estimates, by 2006 there were 3,500 zones in 123 countries accounting for 60 million direct jobs and in excess of $400 billion total trade (ILO, 2003 and 2007).
Iran‟s interest in free zones can be traced back to the 1970s when the potential development of Kish Island as a flagship free trade zone in the Persian Gulf was first advocated.
After the end of the war with Iraq and with economic reconstruction under way in the late 1980s, first concrete steps were taken – under the auspices of the First Five Year Development Plan – to realise this objective. In this first wave, three so-called „Free Trade-Industrial Zones‟ (FTZS, hereafter) were announced in the two Gulf Islands of Kish and Qeshm in the south, with a third one in Chahbahar (also in the south but on the littoral of Sea of Oman). After about a decade and a half, another three FTZs have been established: two in the north (Aras and Anzali) in the proximity of the CIS states, with another (Arvand) in the south, bordering Iraq and Kuwait.