TEHRAN- CEO of Kish Free Zone Organization said that free zones are ready to take on country’s major economic missions.

Mohammad Kabiri, expressing appreciation for the efforts of the country’s officials to achieve an honorable peace and also for the resistance of the Iranian nation, stated: “We hope that with the measures taken, the shadow of war will be removed from the country, and we will be able to pursue the path of development and progress with greater calm.”

Kabiri also thanked Hossein Forouzan, Secretary of the Supreme Council of Free Trade-Industrial and Special Economic Zones, for his presence and continuous follow-ups, and added: “In this opportunity, I want us to first take a look at the experience of free zones in the world and see what achievements these zones have brought for their countries, what characteristics they have, and if we want to use these experiences and global best practices, what challenges we face in Iran and what the executive solution is.”

Referring to the extent of free zones in the world, he stated: “More than 169 countries in the world have free zones and special zones, and there are more than 6,000 free and special economic zones in the world, whose total exports reach about $3.5 trillion. These figures show that free zones play a significant role in the global economy.”

The CEO of Kish Free Zone Organization continued: “Successful free zones in the world have numerous common characteristics, and about 65 features and indicators have been identified in these zones. We have also reviewed the world’s top 50 free zones and identified their characteristics, among which five very important issues are seen as driving factors for the development of free zones and as laying the groundwork for increasing their share in the national economies of countries.”

Kabiri said: “The first characteristic is tax exemptions, the second is customs facilities, the third is special bank credit lines and dedicated banks, the fourth is support for the innovation sector, and finally, the most important issue, is managerial independence and the authorities that exist in many successful free zones of the world.”

He added: “Incidentally, our legislator has also envisaged such authorities for free zones in Article 65, but this article is not fully implemented. In many free zones of the world, healthcare, education, and other public infrastructure were first created, and then the regulatory system and laws distinct from the mainland were implemented in these zones.”

Referring to the experience of China’s Shenzhen Free Zone, the CEO of Kish Free Zone Organization stated: “Shenzhen covers only about two-hundredths of one percent of China’s area and houses about one-thirtieth of the country’s population, but its export value reaches about $383 billion, which is about 10 percent of China’s exports.”

Kabiri noted: “An important feature of free zones in the world is that they act as governance sandboxes. In these zones, more than a thousand reform measures in the field of governance have been implemented, and among these measures, China’s central government transferred 164 successful ones that could be generalized to the mainland to the entire country. Free zones can be places for testing new policies in areas such as energy and governance.”

He then referred to the experience of the free zones of the United Arab Emirates and Dubai and said: “In southern Iran, several free zones are also active in Dubai, including JAFZA in Jebel Ali and the Dubai International Financial Center. JAFZA is one of the most important logistics free zones in West Asia, and the Dubai International Financial Center is one of the most important financial free zones in the Middle East, with more than $240 billion in assets under management and having issued more than $150 billion in securities over the past 10 years.”

The CEO of Kish Free Zone Organization continued: “The important feature of these zones is also three issues: independent management and regulation, the existence of an independent and specialized judicial system, and also specialized and supportive credit lines for entities operating in these zones.”

Kabiri, raising the question of whether the world’s experience can be used to reform the situation of Iran’s free zones, said: “The answer is definitely positive. Article 65 of the Free Zones Law was formed precisely on the basis of this global experience, but unfortunately, this article is not fully implemented.”

He stated: “More than half of the time of free zone managers is spent on conflict and interaction with other bodies, while this time should be spent on driving, developmental work, and carrying out national missions. If Article 65 is implemented clearly and completely in free zones, many existing challenges will be solvable.”

The CEO of Kish Free Zone Organization described taxation and social security as one of the main challenges of free zones and said: “Free zones do not have one rial of government budget, and their resources are supplied from their own revenues. However, since 1401, taxes are also collected from free zones.”

Kabiri added: “A business operating in a free zone must, on the one hand, pay taxes to the central government, and on the other hand, must also pay duties, while the philosophy of free zones is that part of the resources generated in the zone should be spent on the development of that same zone.”

The CEO of Kish Free Zone Organization considered the lack of a dedicated bank to be another fundamental problem of free zones and said: “We do not have a dedicated bank, and during the war I realized more what a great injustice has been done to free zones in not having such a capacity.”

Kabiri continued: “When credit resources reach the provinces, free zones practically receive no share of them, because it is said that free zones have their own resources. As a result, instead of becoming a development capacity, free zones have faced an anti-development process in the banking and credit sector.”

He proposed: “Given that 19 free zones have now been formed in the country, creating a dedicated bank for free zones can be one of the important solutions to solve the financing problem of these zones.”The CEO of Kish Free Zone Organization, emphasizing the importance of implementing Article 65 in the customs and trade sector, stated: “One strange example of the existing restrictions is that from many parts of the world it is possible to send a postal parcel to Tehran, but from Kish there is a restriction on sending a parcel to the mainland.”

Kabiri said: “You can send a postal parcel from Washington and Tokyo to Tehran, but from Kish such a possibility faces restrictions. For about 6 months, we have been following up on this issue in the corridors of the government.”

He also described privatization and the revenue model of free zones as other important issues and said: “One of our revenue axes should be investment by investment companies and the profit from it, but free zones are accused of land selling.”

The CEO of Kish Free Zone Organization added: “The only thing that can change this paradigm and move free zones toward sustainable revenues is the use of micro duties and profits from investment. But in this part, we also face problems.”

Kabiri stated: “On the issue of vehicle duties, the State Tax Organization has intervened, and on the issue of investment profits, the Privatization Organization has intervened, while the government had no role in these investments. Even the resources generated from investment, instead of being reinvested in the zone itself for redevelopment, are supposed to go to the treasury.”

Emphasizing that solving these problems can change the position of free zones in the country’s economy, he said: “If the super-challenge of implementing Article 65 is solved and the five main challenges of free zones in various areas are removed, Iran’s free zones can take on national missions like the successful free zones of the world.”

The CEO of Kish Free Zone Organization continued: “We can carry out major missions for the country in the areas of financing, logistics, and the digital economy. The country needs about $300 billion in financing, and if this figure is to be provided with the best performance and by benchmarking examples such as DIFC and Shenzhen, it may take decades. Therefore, free zones can take on part of this burden.”

Kabiri, referring to the performance of this zone in wartime conditions, said: “In the two recent wars, we tried not to stop our activities. Rail investment increased sevenfold, the imbalance reached zero, 11 hectares of land were reclaimed, and the problem of more than 18 vessels and about 10,000 billion tomans of problems were solved in the same period.”

He added: “Kish Airport and Port have also ranked first among these achievements.”

-------------------Request for immediate support for Kish businesses

The CEO of Kish Free Zone Organization, referring to the pressures imposed on businesses in southern Iran and especially Kish, stated: “I kiss the hands of all businesses in southern Iran, especially Kish businesses. These businesses have been under pressure for 9 months, and their conditions have become extremely difficult.”

Kabiri continued: “At one point, we had no flights for 80 days, but the bazaar merchants did not turn off the lights of their shops even for one day, even though they knew that no airplane would land at Kish Airport.”

He added: “We held a festival, and from the day we started the festival until today, tourist growth has increased fivefold, but despite all efforts, we have just reached one-tenth of last year’s number of tourists.”

The CEO of Kish Free Zone Organization, stating that the resilience of businesses in southern free zones has reached worrying limits, said: “This 9-month resistance of businesses must be taken into account so that economic pressure does not turn into a security-threatening incident. Some islands have become almost empty, but the people and businesses still stand by Iran.”

Kabiri proposed: “If deemed appropriate, a special representative of the president for the southern islands should be appointed to specially follow up on the issues and problems of these areas.”

He also called for immediate decisions in the areas of taxation, social security, banking, and customs, and said: “Our specific proposal is that, for damaged businesses, taxes and social security should not be collected for three months; we do not mean forgiveness, but deferral of payment so that businesses can stand on their own feet again.”

The CEO of Kish Free Zone Organization added: “The Central Bank must also remove, for free zones, the banking restrictions that have been lifted in some provinces. Also, in the customs area, permission must be given for goods warehoused in Kish to leave the zone for a specified period.”

Kabiri continued: “Because last year the tourism record in Kish was broken, many businesses procured goods, but now these goods are warehoused in Kish. For about four months, this issue has been followed up in the government, and it has even now been raised in the Reconstruction Headquarters.”

EF/MA