Investors in Iran's free zones flying to Turkey, UAE

Speaking to ILNA news agency, Saeed Mohammad said that the amount of investment flight to Turkey in recent years has been considerable and today we see the capital is flying towards the UAE while the country should try to attract the domestic capital by giving incentives and attract foreign investment in the free zones.

Reacting to the decision of the economic commission of Majlis for getting value added tax in the free zones, Mohammad criticized this move and other moves in the commission for levying different taxes in the free zones. He said this decision has actually destroyed the motivation for investment in the free zones, adding that some lawmakers in Majlis have even accepted that elimination of tax exemption in the free zones will lead to the capital flight from these areas and the country to the neighboring countries.

He went on to say that tax exemption in the free zones of the neighboring countries is for a very long time and even in some countries it is over 30 years and even in the UAE it is for 50 years.

Mohammad noted that the period of tax exemption in the free zones is 20 years which is even not observed, and suddenly this incentive is eliminated by a new law. He expressed his opposition to this decision of Majlis which disrupts economic activities in these areas.

He said the country should take advantage of successful experiences of free zones in the neighboring countries like the UAE, Turkey and even China because free zones are considered as the driving force of economy in those countries but in Iran by creating more restrictions and laws, the economic activists have lost their interest in investing in the zones.

Mohammad admitted that currently the investment in the free zones is facing the downward trend and every year the figure shrinks more and it is because of approval of the overnight laws.

He then said 40-45 percent of Iran’s export is from the country’s free trade zones (FTZs) and special economic zones.

Mohammad also mentioned investment making in these zones and said that about 110 trillion rials (about $423 million) plus $300 million of investment has been made in the free trade zones, and 700 trillion rials (about $2.692 billion) plus $530 million in the special economic zones during the past five years.

The mentioned investment resulted in the establishment of 2,500 industrial units in these zones, leading to the export of $1 billion of products from the free zones and $15 billion from the special zones per annum, which equals 40-45 percent of Iran’s export.

The establishment of free trade zones in Iran dates back to the Iranian calendar year 1368 (March 1989- March 1990) following the fall in the country’s oil income in the preceding year which prompted the government to promote the non-oil exports.

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